White House Eyes Gas Tax Holiday | The Fiscal Times – The Fiscal Times


While we wait for signs of progress there, here’s what else is happening.
Officials in the Biden administration are debating the merits of suspending the federal fuel tax, The Washington Post’s Tony Romm and Jeff Stein report.
A group of Democratic senators announced their support last week for a bill that would suspend the federal tax of 18.4 cents per gallon of gasoline for the remainder of 2022, and White House officials are considering backing the plan as a way to provide relief for households facing a wave of inflation that is more powerful and more persistent than expected — a serious political threat in an election year.
At a lunch meeting Tuesday, Senate Democrats discussed the proposal. Sen. Tammy Duckworth (D-IL) said the lawmakers seemed to “really like” the idea of lowering taxes on gas or other essentials. Majority Leader Chuck Schumer (D-NY) told reporters that he expects to take concrete steps soon. “We are focused on getting costs down and you’re going to see a lot of activity in March from us on that issue,” he said.
But the White House isn’t sold on the plan yet — and there are real concerns about the idea. Officials worry that the tax holiday might end up padding the profits of fuel companies more than helping consumers, and it could be difficult to reinstate the tax somewhere down the road.
The plan also faces opposition in Congress. Democratic Sen. Joe Manchin (WV) said he was concerned about the effect a tax holiday would have on funding for highway construction and repair. “People want their bridges and their roads, and we have an infrastructure bill we just passed this summer, and they want to take that all away,” he told reporters. “It just doesn’t make sense.”
And Republican Sen. John Thune (SD) described the proposal as “a desperate cry for help. I think they realize that they’re on the wrong side of the energy issue, the wrong side of the inflation issue.”
Former Treasury Secretary Larry Summers, who has been critical of Democrats’ approach to spending and inflation, said that the gas tax holiday was “short-sighted, ineffective, goofy and gimmicky.”
“It’s terrible policy at a moment we’ve labeled climate change as an existential threat,” Summers said.
The Senate faces a Friday deadline to pass a short-term extension of federal funding, and while leaders of both parties sounded optimistic that they’ll get it done and avoid a government shutdown, a number of Republicans are threatening to complicate the process, insisting that they won’t agree to ease passage of the bill unless they get a vote on an amendment to defund enforcement of President Joe Biden’s vaccine mandates.
How we got here: The House last week passed a stopgap funding bill, known as a continuing resolution, to keep agencies running for three weeks beyond the February 18 deadline, when current funding expires. Now it’s the Senate’s turn. But as first reported by Fox News, six Republicans led by Sen. Mike Lee of Utah sent a letter to colleagues Monday saying they won’t allow speedy passage of the funding bill unless the Senate also votes on an amendment to block enforcement of the mandates. The Biden administration’s mandates for health care workers and military members are in effect, but its efforts to require vaccination for other groups, including employees of large private companies, have been withdrawn or blocked by legal challenges.
Lee and other GOP senators made a similar demand before the Senate considered the previous funding stopgap in December. They got a vote on the anti-mandate amendment, which failed, 48-50, with two Republicans absent. But if Democrats agree to another amendment vote, the Senate math may be different this time because Democratic Sen. Ben Ray Luján of New Mexico is still out recovering from a stroke.
The GOP anti-mandate push follows Sen. Marsha Blackburn’s (R-TN) announcement last week that she put a hold on the spending bill over her concerns that a $30 million Health and Human Services Department harm reduction grant program would fund the purchase of crack pipes for drug users. The Biden administration has denied that claim, and independent fact checkers have determined it to be false.
Party leaders remain hopeful: Senate Majority Leader Chuck Schumer (D-NY) said Tuesday that he’s “optimistic” that appropriators will keep working toward a full-year spending deal, which he said “is a thousand times better than relying on CRs, continuing resolutions, to lurch from one short-term extension to the next.” But, he said, while those talks proceed, Republicans and Democrats should “avoid even a hint of a government shutdown” by making sure that the short-term funding extension passes this week. “No one, and certainly not my Republican colleagues, wants a Republican government shutdown, so I’m hopeful they will cooperate with us to pass this necessary CR, which every single Democrat wants to happen and will cooperate to make sure that it happens,” Schumer said.
Senate Minority Leader Mitch McConnell insisted Tuesday that a shutdown isn’t in the works. “As is often the case, we’ll process a few amendments before doing a short-term [continuing resolution],” McConnell told reporters Tuesday. “I think it’ll all be worked out. There’s no danger of a government shutdown.”
Health and Human Services Secretary Xavier Becerra told lawmakers Tuesday that his department needs at least $30 billion in order to maintain its ongoing response to the Covid-19 pandemic.
Becerra was on Capitol Hill talking to congressional appropriators who are writing a supplemental pandemic package that is expected to accompany the omnibus funding bill for fiscal year 2022. A department spokesperson told Politico that the secretary discussed with lawmakers “the need for additional resources to support securing more life-saving treatments and vaccines, sustaining testing capacity, and investing in research and development of next-generation vaccines.”
The Biden administration has warned that Covid funds are running low, which could make it hard for the federal government to respond to a new coronavirus variant, should one arise.
Although some lawmakers are expected to resist a request for additional funding, arguing that there is plenty of money left over from previous appropriations, Sen. Roy Blunt (R-MO) said that he is satisfied that most of the money has been put to use. “We asked some questions — Senator Burr and I a few weeks ago — about how the other money had been spent,” he said. “And, frankly, the categories where they’re asking for money, the money has all been spent or committed to the purposes it had been appropriated.”
We told you last week about the $119 billion federal budget surplus in January, the first monthly surplus in more than two years. Politico’s Morning Money highlighted the surplus on Monday, saying it was “another reflection of an economy that is firing on all cylinders, and improving the fiscal picture at the same time.” But the Committee for a Responsible Federal Budget, which advocates for deficit reduction, pushed back on that characterization, arguing that the January surplus isn’t quite what it seems.
“It’s good news about the deficit coming down and a monthly surplus in January,” CRFB’s Maya MacGuineas told Morning Money, “but it’s important to keep in mind that 1) much of the monthly surplus was due to timing shifts and one-time events; 2) even while the deficit is coming down—which was expected after the Covid emergency improved—the debt is still growing at a hefty clip, and is projected to grow by over $1 trillion this year; and 3) the longer-term debt is projected to grow by $13 trillion over the next decade assuming no new borrowing.”
According to CRFB, the January surplus was “largely a mirage,” totaling a more modest $14 billion once one-time revenues and timing shifts of payments due to weekends and holidays are removed from the tally. Overall debt levels will remain at historically high levels, driven by structural factors including an aging population and rising health care costs. “So we are far off from a fiscal victory,” MacGuineas said.

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