WASHINGTON (The Hill) – House Democrats are grumbling their way into the July 4th holiday, dubious that President Biden’s proposed gas-tax moratorium would help consumers and frustrated that it’s highlighted internal party divisions heading into the final months of the midterm campaign.
With gas prices approaching — and in some cases topping — $5 per gallon across the country, Democratic leaders are scrambling for ways to provide real-time relief for exasperated consumers. Last week, with July 4th looming, Biden used his bully pulpit to champion one such strategy, urging Congress to suspend the federal gas tax for three months to help ease the financial burden on drivers through the busy summer travel season.
The idea landed like a lead balloon on Capitol Hill, where even some of Biden’s closest Democratic allies — including Speaker Nancy Pelosi (Calif.) — gave it a cold reception.
From a practical standpoint, the president’s Democratic detractors are wary that oil companies will simply siphon off the savings for themselves rather than passing it along to consumers. And politically speaking, the critics are irritated that Biden would push an idea he knew to be unpopular among Democratic leaders in Congress, creating an internal rift just as the party is hoping to show a united front heading into November’s elections.
“I think he was trying to send a message to the American people [that] he was listening. But he sure wasn’t listening to the congressional leadership,” said one House Democratic leader, who spoke anonymously in order to criticize a White House ally. “It didn’t make things better.”
The internal tensions illustrate the frustrations swirling within the Democratic Caucus as inflation has pushed the cost of a host of consumer goods steadily higher since the start of last year, defying the Democrats’ efforts to keep prices in check, pushing Biden’s approval rating well underwater and complicating the Democrats’ chances of keeping control of the lower chamber in the midterms.
Gas is among the staples that’s seen a precipitous cost spike, rising from a national average of $2.33 per gallon in January 2021 to $4.93 last month, according to the Energy Information Administration. The trend prompted Biden last week to urge Congress to suspend the federal gas tax — currently at 18.4 cents per gallon — and for states to do the same with their local levies.
“I fully understand that a gas tax holiday alone is not going to fix the problem,” he said, “but it will provide families some immediate relief — just a little bit of breathing room — as we continue working to bring down prices for the long haul.”
The idea has won support from some moderate Democrats facing tough reelection contests in November, particularly in the Senate, where a number of vulnerable lawmakers are endorsing legislation to suspend the gas tax until January.
Yet the broader sentiment appears to align Democrats squarely against their White House leader.
Rep. Madeleine Dean (D-Pa.) said Biden’s objectives are on target, but like many Democrats she’s doubtful that the consumer benefits would be anything but paltry.
“I’m concerned that the gas-tax holiday, which is well-intentioned, would not really make a great deal of impact on individual people. My fear is that we wouldn’t feel it,” Dean said. “The 18.4 cents, the gas companies I think would probably skim off half of it. And so people would see just pennies on the gallon.
“I want us to find a solution that actually makes a greater difference,” she continued. “So we’re looking at other alternatives.”
Among those alternatives is legislation to apply a one-time windfall tax on the major oil companies that have reported record profits this year, even as consumer costs have soared.
“That’s one way to go to make a difference — to return those excess profits to the American people directly,” Dean said.
A senior Democratic aide said Friday that there are no updates on leadership’s potential plans to consider either proposal. But if the reaction from party leaders is any indication, the gas tax holiday is going nowhere fast.
Rep. Peter DeFazio (D-Ore.), the chairman of the House Transportation Committee, has ranked among the loudest critics of the tax break, warning that it would provide only “minuscule” consumer savings while depleting the Highway Trust Fund that underwrites roads, bridges and other crucial infrastructure.
And House Majority Leader Steny Hoyer (D-Md.) has said he’s “sympathetic” to DeFazio’s funding concerns.
“The challenge on the gas tax is: Is the savings really going to flow to the consumer? Or is it going to be pocketed by the oil companies?” echoed Rep. Richard Neal (D-Mass.), chairman of the tax-writing Ways and Means Committee. “Those are legitimate questions.”
Throughout the debate, administration officials have defended their anti-inflation strategy, arguing that many of the factors driving the painful trend — including Russia’s invasion of Ukraine, supply-chain snags caused by the ongoing coronavirus pandemic, and the Federal Reserve’s decision to keep interest rates at historic lows throughout 2021 — were outside of their control.
Biden has already released millions of gallons of oil from the country’s emergency stockpile, known as the Strategic Petroleum Reserve, in an effort to curb the price at the pump. And the president is planning a much-anticipated trip to Saudi Arabia this month, though he has said he won’t use the visit to press Saudi leaders to increase production.
In that context, officials say, the proposed tax holiday is just one piece of a larger strategy for getting fuel costs under control.
“It’s one of our highest priorities as an administration,” Vice President Harris said this week in an interview with CNN’s Dana Bash.
Such sentiments have not won many converts to the gas-tax holiday concept. But even some of those Democrats critical of the proposal said there’s value in the fight.
“The administration is signaling [that] they realize the pain at the pump, they realize the pain in the grocery stores,” said Dean. “We’re trying to do everything we possibly can.”