Biden Just Proposed a Gas Tax Holiday. Will It Work?

When President Biden on Wednesday proposed a three-month suspension of federal taxes on gasoline and diesel, many Republicans rolled their eyes. And many Democrats wondered what had taken him so long.

Variations on the concept have bounced from state to state for nearly a year now, with governors leading the way. Ron DeSantis proposed canceling Florida’s gas tax back in November. Gavin Newsom has floated the novel idea of passing out debit cards to Californians to offset rising prices. In March, Brian Kemp, in perhaps the most nakedly political move of all, suspended Georgia’s gas tax through May 31 — just days after his primary.

Four Democratic senators facing tough re-election bids — Catherine Cortez Masto of Nevada, Maggie Hassan of New Hampshire, Mark Kelly of Arizona and Raphael Warnock of Georgia — called in February for suspending the federal gas tax. At the time, their political aides were eager to portray Republicans as the bad guys.

That might be precisely what Biden is hoping to accomplish now: goading Mitch McConnell, ever the useful foil in the Senate, into rejecting his idea so that the White House can blame Republicans for opposing economic relief for ordinary Americans who are short on cash.

According to my colleagues Zolan Kanno-Youngs and Lydia DePillis, Biden used his speech on Wednesday to ask Congress to grant Americans “just a little bit of breathing room” by lifting the federal taxes — about 18 cents per gallon of gasoline and 24 cents per gallon of diesel — through the end of September, shortly before the fall midterm elections.

“I fully understand that the gas tax holiday alone is not going to fix the problem,” the president said. “But it will provide families some immediate relief.”

McConnell quickly dismissed the president’s call for suspending the tax as “silly,” noting that many Senate Democrats were skeptical of the idea. But privately, several Republican strategists said they worried that McConnell was misreading the moment.

Puzzling over a long wait

Policy wonks tend to be critical of politically motivated tax-relief gimmicks, arguing that they create the wrong kind of incentives.

Climate experts say that the government ought to be discouraging the use of fossil fuels, not subsidizing them. Prices are supposed to send a signal to the marketplace, economists add, and messing around with them can create unpredictable distortions. Also, roads and highways are often funded and maintained through gas taxes, so the necessary revenue has to come from somewhere else. There’s no such thing as a free off-ramp.

But the politics are another matter. What’s most puzzling to many Democratic and Republican strategists is why the White House waited so long to try this particular gambit. One Republican operative said it didn’t exactly require Nostradamus to figure out.

Glenn Youngkin discussed the gas tax during a campaign event last year at the Flat Rock Country Store in McKenney, Va.Credit…Anna Moneymaker/Getty Images

A Virginia case study

The lessons of not taking surging gas and grocery prices as a dire threat to Democrats’ political fortunes ought to have been driven home after last year’s marquee election: the Virginia governor’s race.

In July, when Glenn Youngkin, a former private equity executive and Republican candidate in the contest, complained on Twitter that the gas tax in Virginia had gone up by 136 percent in recent years, Democrats in the state mocked his comments as “dishonest, false, cynical, misleading, irresponsible and stupid on pretty much every level.”

Youngkin, who bested Terry McAuliffe in the general election for governor that fall, added that the tax “makes it more expensive for Virginians to go to work, run errands and visit loved ones.”

Youngkin later floated a three-month suspension of Virginia’s gas tax of 26 cents per gallon, though he’s still wrangling with the State Senate, which is controlled by Democrats, over the proposed move.

And he held events at gas stations all over the state, highlighting prices that now seem quaintly low, in hindsight.

McAuliffe derided Youngkin’s various proposed tax cuts, which added up to $3.2 billion, as “crazy.”

But it turns out that tax cuts make for pretty good politics at a time when gasoline prices are even higher than they were back then. A year ago, the average price of a gallon of gasoline in the U.S. was $3.07, according to AAA. Today, it’s $4.96.

Democrats in Virginia now face an awkward dilemma: Do they stand by their opposition to suspending the gas tax in their own state? Or do they reverse course and embrace Biden’s stance on freezing the federal gas tax? It’s a difficult needle to thread.

Youngkin’s former ad maker, Will Ritter of the firm Poolhouse Strategies, expressed Democrats’ conundrum in the new argot of political campaigns: a two-panel meme of the rapper Drake, shared on Twitter.

In the top panel, with the Canadian rapper raising his hand dismissively: “Youngkin suggests a gas tax suspension.”

In the lower panel, showing Drake with a big grin: “Biden suggests a gas tax suspension.”

The Tom Leonard effect

But the most politically effective move, Youngkin’s advisers say, was his proposal to eliminate the state’s 2.5 percent grocery tax.

The idea emerged from the campaign’s early skull sessions, as the top strategists were seeking to define the major themes of the race. They knew that if they focused on local issues and avoided the national themes that the McAuliffe campaign was eager to discuss, they would have a shot at overcoming Democrats’ baseline advantage of roughly 10 percentage points in the state.

To their surprise, internal polling found that Virginia voters were most responsive to messages about a hypothetical proposal to repeal the grocery tax, an issue barely on the national radar.

It was a Eureka moment.

Youngkin’s team found a sympathetic grocery store owner, Tom Leonard, and secured his permission to film an ad in his wood-paneled store in Henrico County, in the suburbs northwest of Richmond.

It turned out to be the perfect backdrop for the down-home message Youngkin, whose net worth has been estimated at nearly $400 million, hoped to project.

Motion graphics superimposed on the scene showed prices on signs, written in Leonard’s folksy font and instantly recognizable to locals, flipping downward — thanks, presumably, to the would-be governor’s intervention.

Youngkin has used the store as a sound stage time and again, returning there for the ceremonial signing of his state budget this week, when he hammered Democrats for holding up his tax-cutting agenda.

In late October, when Barack Obama visited Virginia Commonwealth University in Richmond to try to lift McAuliffe’s candidacy, Youngkin held a rally of his own in a field near Tom Leonard’s store, drawing a large crowd.

That’s when Youngkin’s advisers knew for certain, they said, that the race was most likely theirs.

“You can’t run ads telling me you’re a regular ol’ hoops-playing, dishwashing, fleece-wearing guy, but quietly cultivate support from those who seek to tear down our democracy,” Obama told the audience in Richmond, referring to Donald Trump and other figures that Youngkin kept at arm’s length throughout the campaign.

As it turns out, Youngkin could do exactly that — and he did.

What to read

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Is there anything you think we’re missing? Anything you want to see more of? We’d love to hear from you. Email us at [email protected].

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