Federal gas tax holiday could have limited implications for inflation

President Biden’s call on Congress to suspend the collection of the federal gas tax for three months will provide drivers short-term relief amidst soaring prices, but Virginia Tech political science expert Karen Hult says there could be some pushback from some legislators.

Quoting Hult

“Many see such a temporary suspension of the gas tax as a way of curbing inflation, reducing the risk of recession, and providing drivers short-term relief amidst soaring gasoline prices. However, the brief suspension does little to address the problems underlying the price hikes: growing demand, insufficient U.S. refinery capacity, and the war in Ukraine,” says Hult.

Hult notes that some Senate Democrats in contested states have been calling for such a holiday for several months, as such has been reported since at least February.

“Many House Democrats seem likely to join them, particularly those running for newly redistricted seats and facing the headwinds of a poor economy and an unpopular president. At the same time, other Democrats may be concerned both that the holiday is inconsistent with moving toward cleaner energy and that money from the Highway Trust Fund also supports mass transit projects,” says Hult.

“Meanwhile, at least some Republicans may be reluctant to support a President whom Republican voters oppose,” says Hult. “Many others may be concerned about possible effects on inflation after the holiday ends.”

“Some Republicans have joined others who view such steps as empty symbolism, with few concrete benefits. Congressional Republicans also might be expected to argue the call is driven by Democratic fears of losing the House and Senate in the November midterm elections.”

Hult says another challenge will be responding to the President’s call that Congress offset the loss of funds to the Highway Trust Fund (approximately $10 billion). To be deficit neutral that would mean cutting or postponing funding elsewhere; otherwise, it would involve additional short-term spending.

About Hult

Virginia Tech political science professor Karen Hult teaches political science at Virginia Tech and its Center for Public Administration & Policy, with expertise in the U.S. Presidency, U.S. state politics, policy, and governance, and organizational and institutional theory. See her bio.

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