Editor's note: This piece was authored by Lindsay Keiser.
President Biden vacationed in Rehoboth Beach, Delaware over the Juneteenth holiday weekend. Gas there is $4.94 per gallon, so we shouldn’t really have been surprised when the president took an unfortunate tumble off of a bike. The fall perfectly characterizes the state of American gas and oil prices since the invasion of Ukraine by Russia.
The Monday after the fall, President Biden announced two potential solutions to remedy the sky-high gas prices: a tax holiday and a gas rebate card. Neither is a serious proposal, and Biden knows it. He and his administration should leave gas price relief to the states.
Theoretically speaking, gas tax holidays would work. They yielded ample praise and success when implemented at the state level in Maryland, Georgia, and Connecticut earlier this year, each of which suspended gas tax collection for a few months at a time. And there is evidence that savings from these suspensions went to consumers directly rather than service stations or energy providers.
Practically, however, it makes no budgetary sense. So little, in fact, that it’s unlikely that the current administration is seriously considering suspending the federal tax on gasoline. Internal divisions proliferate within the administration. While Treasury Secretary Janet Yellen believes that this is an idea that’s “certainly worth considering” in the government’s efforts to curb inflation, Energy Secretary Jennifer Granholm expressed serious reservations about establishing a gas tax holiday. Fuel taxes “fund the roads, and we just did a big infrastructure bill to help fund the roads,” she says. Thus, a gas tax holiday “takes away the funding that was just passed by Congress to be able to do that.”
This dissension within the President’s cabinet should come as no surprise to those who have been following the Biden Administration’s activity for the last few months. In fact, Secretary Yellen admitted earlier this month in an interview with CNN on inflation that she was wrong to downplay inflation’s impact on the American economy earlier this year, something for which the Chair of the Federal Reserve, Jerome Powell, also faced criticism. For a member of the President’s cabinet to admit her own shortcomings in her area of expertise, while humble, is quite taboo. This administration might be “discussing” a policy to help Americans at the pump, but a well-researched, popular plan is unlikely to materialize this week, contrary to the President’s remarks in Delaware.
Biden’s second proposal, the “American gas rebate card” plan, wherein debit cards would be sent directly to households, would prove equally hollow. The President raised this idea back in March, but it was ultimately discarded after facing strong opposition from a House Democratic counsel that feared delaying the public’s tax returns as the IRS would be charged to dole out the rebates. Chip shortages, poor IRS response rates, and mistreatment by recipients all caused debate on a gas rebate to be terminated in March. What makes June any different?
The Congressional Research Service found that suspending the federal gas tax is “difficult for the federal government to enforce” because gasoline is not levied at the pump against each consumer, but instead when gasoline is removed from a refinery or terminal. Furthermore, “owners of vehicles powered by diesel fuel would generally not benefit” from either a gas tax holiday or conventional rebate system. Carriers of agricultural products, whose prices have also skyrocketed within the last five months, are being left behind altogether in the Administration’s gas price relief plans.
While the idea of a federal gas price relief seems noble, the President has proven unwilling to entertain solutions that promote increasing domestic energy supply. He routinely delays oil and gas lease sales, citing concerns from environmentalists and global warming activists. Apparently he forgets that he serves all 330 million American citizens, not only the Green Party. President Biden and his administration would do well to allow gas price relief to remain a state-driven issue.
When gas tax holidays are conducted at the state level, consumers reap dramatic benefits. 72% of Americans currently support suspending their state fuel tax, something that often goes toward resurfacing and lane striping. While federal gas tax dollars support the critical infrastructure mentioned by Secretary Granholm, suspending state gas tax collection has been popular throughout the nation as a temporary solution to the inflationary nightmare that is 2022 gas prices. Some state governors, including Gov. Wolf of Pennsylvania and Gov. Holcomb of Indiana, hope to use remaining ARPA funds to send direct payments to registered vehicle owners.
Almost every state has higher gas tax rates than the federal rate of 18.4 cents per gallon; instead of brainstorming a boatload of bogus solutions at the beach, the President should sit this one out and allow U.S. states to help their citizens tackle an issue that impacts each of us every day. Besides, why should we trust someone to make critically impactful decisions about gasoline policy who prefers to commute by bicycle?
Lindsay Keiser is a congressional intern and a Young Voices Contributor. She is a senior at the University of Michigan studying political science and astronomy. Previous bylines include the Detroit News, the International Policy Digest, and Fox5 DC.