President Joe Biden on Wednesday called for a three-month holiday on the federal tax on gasoline sales, citing the record high price at th...
President Joe Biden on Wednesday called for a three-month holiday on the federal tax on gasoline sales, citing the record high price at the pump.
The cost of the gas tax suspension over the 90-day period would be $10 billion to the Highway Trust Fund, which is used to maintain the nation’s roads and bridges.
The savings to the American public would be 18.4 cents per gallon, or about $5 per tank for an SUV (with a 25-gallon tank) or about $2.60 per tank for a car (with a 14-gallon tank). The tax on diesel is 24.4 cents per gallon.
According to AAA, the national average price of gasoline per gallon was $4.96 as of Wednesday. To fill an SUV, drivers are looking at about $124, and about $70 for a car.
So, the savings to individual drivers that Biden is proposing are not nothing, but they’re not that much either, unless motorists go through many tanks of gas per week.
But the cost to the Highway Trust Fund would be substantial.
The Heritage Foundation tweeted Wednesday, “Spending from the Highway Trust Fund consistently exceeds revenues, and Congress made these deficits worse with the 2021 infrastructure package.”
Joseph Kile, a policy analyst with the Congressional Budget Office, reported to the Senate last year that the outlays for the Highway Trust Fund for fiscal year 2022 were to total $43 billion and outlays exceeded revenues by $13 billion.
To cover the shortfall, Congress has voted to transfer money from the Treasury’s general fund to the Highway Trust Fund. In fiscal year 2021, lawmakers transferred $14 billion to the trust fund.
All this to say, Biden’s proposed $10 billion tax holiday represents close to one-quarter of the total receipts for the year.
In remarks from the White House, the president sought to reassure Americans that the shortfall is OK.
“What I’m proposing is suspending the federal gas tax without affecting the Highway Trust Fund,” he said.
“And here’s how we do that: With the tax revenues up this year and our deficit down over $1.6 trillion this year alone, we’ll still be able to fix our highways and bring down prices of gas. We can do both at the same time,” Biden said.
He’s right, revenues are way up. The CBO projects them to come in a $4.8 trillion, up from $3.3 trillion in 2017, prior to the passage of the Tax Cuts and Jobs Act.
Thank you, Donald Trump and congressional Republicans! The tax cuts worked as advertised, increasing economic growth, job creation and, ultimately, federal revenues.
Now, if the federal government was going to have a surplus this year, the president might have a point. But the CBO projects FY 2022 deficit will be $1 trillion, i.e., likely still above the pre-pandemic 2019 deficit, which came at $984 billion.
So the Treasury is not drowning in cash, it’s drowning in debt.
Only in Biden world or leftwing la la land does this mean the country is in good fiscal shape to tack on another $10 billion spending.
The only reason the deficit is down $1.6 trillion this year is the Democrats first ran it up in 2021 by passing the $1.9 trillion American Rescue Plan in March of that year — without a single Republican vote.
Thankfully, Biden was unsuccessful in pushing through his even more expensive Build Back Better program last fall.
Suspending the gas tax is a gimmick, whose costs far exceed its benefits.
If Biden really wants to bring down the price of gasoline, he can restore former President Donald Trump’s pro-U.S. energy development policies and watch the supply go sharply up and the price come sharply down.
No comments