Democrats divided over proposal to suspend federal gas tax
A proposal to suspend the federal gas tax is gaining political momentum among Senate Democrats who are worried that high gas prices will hurt them in the midterm election.
The measure sponsored by Sens. Mark Kelly (D-Ariz.) and Maggie Hassan (D-N.H.), who both face competitive reelection races, would suspend the federal gas tax of 18.4 cent per gallon until January.
The idea has never gained much traction among Senate Democrats because the tax is the main source of funding for the Highway Trust Fund, which pays for federal roads and bridges.
But anxious Democratic senators say the rising price of gas, accelerated by the Russian invasion of Ukraine, has become a domestic “crisis.”
They are scrambling for ideas to keep mounting costs in check and discussed suspending the gas tax at their retreat this past week at Howard University in Washington.
“There are a lot of steps … that we either considered or moved forward on that we may not have considered before. That’s the nature of the crisis we’re in,” said Sen. Bob Casey (D-Pa.). “There’s no question that prices are very high, gasoline, food.
“We’ve got to consider measures that directly help families,” he added.
Pennsylvania Gov. Tom Wolf was one of six Democratic governors who wrote a letter to congressional leaders Tuesday calling for a suspension of the federal gas tax.
“At a time when people are directly impacted by rising prices on everyday goods, a federal gas tax holiday is a tool in the toolbox to reduce costs for Americans, and we urge you to give every consideration to this proposed legislation,” they wrote.
Gretchen Whitmer of Michigan, Jared Polis of Colorado, Tim Walz of Minnesota, Michelle Lujan Grisham of New Mexico and Tony Evers of Wisconsin also signed the letter. All five are running for reelection, and Whitmer and Evers are in toss-up races.
Kentucky Gov. Andy Beshear, who is up for reelection next year, announced Thursday that he had joined his fellow governors in calling for a gas tax suspension.
Kelly, a leading sponsor of the proposal, said it is gaining momentum among Democrats nervous about how voters will react to the surge in prices
“I think we’re picking up support. I think most members of the Senate — not only in our conference — recognize how hard this is right now on the American people. The price of so many things has gone up. Ground beef in Arizona is about $5 a pound. Gasoline is over four bucks,” he said.
He pointed out that some governors have already moved to suspend state gas taxes.
Maryland Gov. Larry Hogan (R) is working with Democrats in the state legislature to adopt a one-month emergency suspension of his state’s gas tax. It would cut the cost of gas by 36 cents a gallon in Maryland.
California Gov. Gavin Newsom, another Democrat, has floated the idea of a rebate to help drivers pay for rising gasoline prices. A gallon of regular now costs $5.72 cents in California, according to AAA.
Democrats from those states are rallying behind the idea of a gas-tax holiday.
“This should be an option also,” said Sen. Tammy Baldwin (D-Wis.). “I want to do everything I can to reduce the pain that Wisconsinites are feeling.”
“We have to have multiple strategies to lower gas prices. I recently signed on to a measure to up our biofuel production, and frankly our excess biofuel capacity is almost the same of what will be cut off from Russia,” she added.
Suspending the federal gas tax, however, is getting pushback from Democratic senators worried about cutting off a key source of funding for roads and bridges.
“We have for as long as I can remember … embraced the principle that those who use roads, highways and bridges have an opportunity to help pay for them. We are not even coming close to paying for the roads, highways and bridges that we need,” said Sen. Tom Carper (D-Del.), the chairman of the Senate Environment and Public Works Committee, which has jurisdiction over the construction and maintenance of highways and bridges.
Carper is not a fan of the idea of transferring billions of dollars from the Treasury Department’s general fund to make up for any shortfall in the Highway Trust Fund caused by suspending the gas tax.
Environmentalists in the Democratic caucus are also skeptical of the proposal when they’re making a push to shift the country away from fossil fuels and to renewable energy sources.
“I’m skeptical of it, particularly since the domestic production costs for oil and gas don’t seem to have skyrocketed, but the domestic oil and gas industry has taken advantage of the cartel-controlled world market prices to jack prices at the pump through the roof and pocket huge windfalls,” said Sen. Sheldon Whitehouse (D-R.I.).
Whitehouse noted that major oil companies, including BP, Shell, ExxonMobil and Chevron, are planning to buy back an estimated $38 billion in stock, according to media reports.
“Rather than lower prices for consumers at the pump, they’re going to push money through to stock buybacks that help executive bonuses and to shareholders,” he said. “Particularly while the industry itself seems to be using this crisis to gouge customers, for us to bail them off the hook seems very inappropriate.”
Whitehouse and other Democrats would prefer to enact a windfall profits tax on oil companies and use the money to provide energy rebates for middle- and low-income families.
Sen. Angus King (I-Vt.), who caucuses with Democrats, said he’s undecided on the idea of a gas tax suspension but has concerns.
“We have to pay for the highways,” he said.
Speaker Nancy Pelosi (D-Calif.) has warned that it would be very difficult to write a bill to ensure that consumers themselves see the savings from a suspension of the gas tax.
“There is no guarantee that the oil companies pass that reduction on to the consumer, and it’s very hard to write a bill that requires them to pass it on to the consumer,” she told reporters. “If we can have a holiday that guarantees the consumer benefits rather than more profits for the oil companies, that would be a path we can take.”
Democrats said the idea of suspending the gas tax was discussed at this past week’s retreat but got pushback from several colleagues.
“It came up a couple times,” said Sen. John Hickenlooper (D-Colo.), who supports the idea. “There’s still a certain level of divided opinion.”
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