On Wednesday, the Biden administration officially called for Congress to enact a “holiday” on the federal gas tax lasting from July through September. The stated reasoning is that pausing the tax would provide relief to consumers who are facing high gasoline prices and corrosive inflation across the board. Yet federal fuel taxes currently constitute less than 4 percent of the total consumer price, meaning that lifting the tax would lead to price changes that few would notice.
With the national average for regular gas rising to over $5 a gallon in June, drivers might like a break wherever they can get it. But as many have noted (including many of the president’s fellow Democrats in Congress), a gas tax holiday isn’t the relief Biden suggests it is.
While the proposed “holiday” would have a negligible effect on prices at the pump, it would blow a multi-billion-dollar hole in the federal Highway Trust Fund, which underwrites infrastructure projects across the country.
In turn, that would lead to a tricky choice. Either the federal government would need to reduce infrastructure spending to compensate for the shortage in the trust fund, or Congress would need to authorize a deficit-funded bailout.
Given the political dynamics involved, Congress would probably use the national credit card to refill the fund despite the already ruinous state of our nation’s finances. Thus, what drivers might avoid in gas taxes over the summer would become another obligation we’ll be paying for over the course of decades—with interest.
The charade gets worse, though. Temporarily lifting the gas tax doesn’t even address the root problems that are driving up prices. While the administration seeks to place the blame for tight energy markets entirely on Russia’s unconscionable invasion of Ukraine, that is only part of the picture.
North America holds vast energy resources that could increase global energy supplies at this crucial time. Unfortunately, the administration has repeatedly chosen to undermine and micromanage energy usage and development as part of its radical climate agenda.
Actively working to force Americans off conventional fuels through the back door of regulations can have only one impact on the direction of prices: up. For all the obvious problems with the tax “holiday,” that President Biden still resorts to it shows the lengths to which he will go to avoid having to pause (let alone undo) his regulatory agenda.
In moments of candor, administration officials have admitted that high gas prices are part of the process and should spur the public towards electric vehicles and renewable energy. Millions have seen these statements for what they are—a complete failure to understand what is practical for the vast majority of American families. They also show how distorted the president’s agenda really is, trying to make “green” appear more affordable by making conventional fuel less affordable.
Since the administration shows no sign of embracing any of the potential approaches to removing policy-imposed barriers to domestic energy production and distribution, and since the gas tax “holiday” would only shift taxpayer burdens to a later date, the “holiday” should be understood as a transparent and politically-motivated gimmick.
Legislators and the Biden administration need to have a serious discussion about policy reforms that actually could move the needle. To reduce pain-at-the-pump, they have a wide variety of options:
- Reduce federal fuel taxes in a responsible manner by significantly adjusting the federal government’s wasteful and dysfunctional role in surface transportation infrastructure. Eliminating burdensome regulations and pork-filled slush funds while empowering non-federal actors would do far more to encourage infrastructure development than the current approach of throwing around endless amounts of taxpayer cash.
- Reform laws such as the Renewable Fuel Standard, Outer Continental Shelf Lands Act and National Environmental Policy Act—all of which make energy development needlessly difficult for no commensurate environmental benefit—and eliminate protectionist laws such as the Jones Act that drive up prices for the benefit of crony capitalists.
- Withdraw, rescind or legislatively block the litany of anti-energy development regulations and orders made by the Biden administration to push its radical climate agenda.
While an increase in domestic energy development would not happen overnight, a concerted course correction from Washington would send a powerful signal to global markets and change expectations about supply, reducing upward price pressures.
That type of leadership, not short-term gimmicks, is what hard-working families need during these challenging times.
This piece originally appeared in The Hill on 06/24/2022