Pelosi declines to endorse gas tax holiday

Speaker Nancy Pelosi (D-Calif.) said Wednesday that Democratic leaders will gauge the party’s support for President Biden’s proposed gas tax holiday but stopped short of endorsing the idea, suggesting a rare break between the Speaker and her White House ally on an issue that’s threatening Democrats’ prospects at the polls in November.  

“We will see where the consensus lies on a path forward for the President’s proposal in the House and the Senate, building on the strong bills to lower prices at the pump already passed by House Democrats including the Consumer Fuel Price Gouging Prevention Act and the Lower Food and Fuel Costs Act,“ Pelosi said in a statement. 

The statement represents a tepid response from a Democratic leader who’s typically effusive in praising the president’s agenda, economic and otherwise. And it reflects the concerns of a number of Democrats on Capitol Hill that suspending the federal gas tax simply won’t show up as significant savings at the pump. 

“The challenge on the gas tax is: Is the savings really going to flow to the consumer? Or is it going to be pocketed by the oil companies?” said Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee. “Those are legitimate questions.”

Pelosi’s legislative references were to a pair of bills designed to reduce prices gas prices, one by curbing price gouging and the other by promoting homegrown biofuels. Both have passed through the House in recent weeks, though they have little chance of moving through the Senate.

Democratic leaders had pursued those proposals in lieu of a gas tax holiday, which Pelosi had rejected outright in March. At the time, she said there was simply no guarantee that the savings would be passed along to consumers. 

“The pro is very showbiz. ‘OK, let’s just do something, there it is.’ But it is not necessarily landing in the pocket of the consumer,” Pelosi said at the time.

That same concern is surfacing this week among other leading Democrats, who have long been leery that a suspension of the federal gas tax — which has stood at 18 cents per gallon for decades — would translate into lower prices at the pump.

“We’ve got to figure out, again, just who gets the money. If all of a sudden it’s a tiny savings for the consumer and big savings for the oil companies, it doesn’t accomplish the goal,” said Neal. “So I think what we’re doing is: We want to see what the administration’s idea is, and then we’ll figure out how to react from there.”

In promoting a gas tax holiday on Wednesday, Biden said it would help struggling families through the bustling summer travel season. He not only urged Congress to suspend the federal tax, but also called on states to suspend their own fuel taxes, which average 26 cents per gallon, according to the American Petroleum Institute.  

Anticipating the pushback, Biden pressed the nation’s oil companies to pass the savings on to drivers.

“There’s no time now for profiteering,” he said.

Whether that message resonates on Capitol Hill remains to be seen. 

House Majority Leader Steny Hoyer (Md.) is another Democrat skeptical that a gas tax holiday would be effective, largely out of concern that the savings would be absorbed by retailers and wholesalers but not passed on to consumers. Hoyer reiterated those concerns Wednesday, though he’s also not ruling out supporting Biden’s proposal before taking a closer look at it. 

“What I’m not sure of is that, in fact, that will have the effect, the intended effect, in terms of the retail price — whether in fact it will save consumers money,” he said. 

Hoyer also amplified the reservations of Rep. Peter DeFazio (D-Ore.), chairman of the House Transportation and Infrastructure Committee, who has warned that eliminating the gas tax even temporarily will haunt Congress and the country by depleting the Highway Trust Fund that underwrites roads, bridges and other crucial infrastructure.

“I tend to be sympathetic to his thoughts,” Hoyer said of DeFazio. “But I also think that trying to get the prices down for consumers at the pump is an important objective.”

Biden sought to alleviate those anxieties as well, emphasizing that deficit spending has plummeted as the country emerges from the COVID-19 slowdown and federal revenues have rebounded simultaneously. 

“We’ll still be able to fix our highways and bring down prices of gas,” he said. “We can do both at the same time.”

Could the tax holiday pass through the House?

“I don’t know whether we have the votes,” Hoyer said. “We haven’t counted.”