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Plan to suspend federal gas tax attracts bipartisan criticism amid record inflation

The federal tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel is a primary source of funding for federal infrastructure projects

Published: June 22, 2022 12:47pm

Updated: June 22, 2022 11:12pm

President Joe Biden's proposal to suspend the federal gas tax for 90 days has been denounced as fiscally irresponsible, especially with inflation at a record high.

The federal gas tax of 18.4 cents per gallon, and 24.4 cents per gallon for diesel, is a primary source of funding for federal infrastructure projects. The federal gas tax is charged on top of state gas taxes.

Congress passed a $1 trillion infrastructure bill that Biden signed in November. In August 2021, the Congressional Budget Office had found that the bipartisan infrastructure bill would add $400 billion to the nation's deficit.

"A gas-tax holiday would modestly reduce prices at the pump but exacerbate overall inflationary pressures and increase demand for an energy source already short in supply," Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), said in a statement Tuesday.

Inflation is currently at a 40-year high.

Referencing Biden's expected plan to forgive $10,000 of student debt for current borrowers as well as a gas-tax holiday, MacGuineas said these policies "could cost the federal government $250 billion or more over a decade at a time when debt is already headed toward record levels." The total national debt has surpassed $30 trillion. 

MacGuineas described the Biden policies related to student debt and the gas tax as "gimmicks that shift costs onto taxpayers and consumers."

Some members of Biden's own party are warning him not to follow through with a gas-tax holiday. 

“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,” Oregon Democratic Rep. Earl Blumenauer said.

Democratic Delaware Sen. Tom Carper described a federal gas-tax holiday as a "short-sighted and inefficient way to provide relief."

The CRFB warned last month that student-loan cancellation as well as pausing loan interest payments is "regressive and inflationary."

Arkansas Republican Sen. Tom Cotton said that "this is a rare occasion that I agree with Barack Obama: Joe Biden's gas-tax 'holiday' is a gimmick that won't work." Obama opposed a gas-tax holiday while he was in office. 

"It's meant to cover up the fact that Dem policies have restricted supply & raised costs," Cotton wrote on Twitter. 

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