Democrat to Biden: Don’t suspend gas tax

Rep. Earl Blumenauer (D-Ore.) asked President Biden to oppose a suspension of the federal gas tax in a letter Thursday, warning of “severe unintended consequences” for infrastructure. 

Biden is coming under pressure from other Democrats to embrace a gas tax holiday, and The Hill reported this week that the idea is gaining steam.

But Blumenauer cited a market analysis by the Transportation Investment Advocacy Center indicating that over the past decade, only about 18 percent of state gas tax cuts have been passed down to consumers, with the bulk of the changes in revenue returning to oil and gas companies themselves. 

“While there is undoubtedly a need to provide American consumers relief from spiking costs, there is no guarantee a gas tax suspension would reduce prices at the pump or stem the broader inflation affecting the global economy, and it may only increase oil companies’ bottom lines,” Blumenauer wrote. 

In the meantime, he argued, a suspension of the federal tax would create a “massive hole” in the infrastructure and transportation budget, in particular the Highway Trust Fund, which has already operated under a deficit for years. Suspending the federal gas tax through the end of the fiscal year would cost the fund a further $20 billion, according to budget modeling from the University of Pennsylvania’s Wharton School of Business.  

Moreover, Blumenauer wrote, the provisions of the bipartisan infrastructure bill Biden signed into law at the end of 2021 assume federal gas tax revenues remain the same.  

“Delaying, or cancelling outright, the projects this legislation makes possible will waste a once-in-a-lifetime opportunity to rebuild and renew America, and leave future generations holding the bag for long overdue repairs and improvements,” Blumenauer wrote.

Biden cannot unilaterally declare a holiday, which would require congressional approval, but could push lawmakers on the subject. 

A number of states have responded to record gas prices with moratoriums on state gas taxes, including Connecticut, Florida, Georgia, Maryland and New York. Similar proposals have been discussed but not yet implemented in Alaska, Illinois, Minnesota and Virginia. Several Democratic governors have asked Biden to consider a federal gas tax holiday, and the president’s economic team has reportedly held talks on the matter over the past week.