Democrats renew push to pause gas tax, punish energy giants to lower prices


Party lawmakers also are eyeing new ways to combat price gouging.

Samuel Corum
Speaker of the House Nancy Pelosi and Senate Majority Leader Chuck Schumer. Samuel Corum

WASHINGTON – Top congressional Democrats are exploring new proposals to suspend the gas tax and penalize giant energy corporations, hoping to lower prices as part of a broader effort to blunt the financial and political fallout from soaring inflation.

The legislative push reflects a growing sense of urgency among party lawmakers, who returned to Washington this week after hearing from voters who have seen the costs of housing, groceries and other goods spike at their highest rate in roughly four decades.

Democrats specifically have expressed renewed interest in pausing the roughly 18-cent per-gallon federal gasoline tax, which Rep. Hakeem Jeffries, D-N.Y., described at a news conference early Wednesday as “part of the discussion” around a more “comprehensive” solution to rising prices.

Party lawmakers also are eyeing new ways to combat price gouging, believing that oil-and-gas conglomerates have manipulated markets to pad their bottom lines. Companies including BP, Shell and ExxonMobil have posted massive profits in the past two quarters, dazzling investors yet infuriating government officials, who say drivers are being squeezed.

Senate Majority Leader Chuck Schumer, D-N.Y., has asked his caucus in recent days to craft proposals that ratchet up federal enforcement targeting the energy sector, according to Democratic aides, who spoke on the condition of anonymity to describe their deliberations. A wide array of Democrats, including Sens. Maria Cantwell (Wash.), Ron Wyden (Ore.), Elizabeth Warren (Mass.) and Tammy Baldwin (Wis.), are now finalizing measures that would impose steep fines for abuse, crack down on corporate consolidation or set up new taxes on oil and gas companies’ profit windfalls, the sources said.

Some in the party even are pushing to adopt the bills before Memorial Day weekend, a travel-heavy holiday that marks the beginning of summer. But they face an uphill battle, particularly in the Senate, where Republicans have exhibited little appetite for teaming up with Democrats and taking aim at the energy industry.

Democrats still hope they can ultimately mount an effective and swift policy response to an economic quandary that looms over this fall’s midterm elections. Gasoline on Wednesday averaged about $4.13 per gallon nationally, according to AAA, a marked departure from the roughly $2.89 average one year ago.

Even if this legislative push fails, though, Democratic leaders sense a political opportunity: They say they can demonstrate their commitment to tackling inflation while portraying Republicans – if they try to block the forthcoming bills – as obstructing Congress from addressing Americans’ urgent financial needs.

“We understand inflation is a very serious problem and concern for the American people,” House Majority Leader Steny Hoyer, D-Md., said during a news conference Wednesday.

The root causes of the country’s recent burst in inflation are varied and complicated, stemming from an ever-changing coronavirus pandemic, a major disruption to global supply chains and a shortage of foreign oil made worse by Russia’s invasion of Ukraine. No matter the cause, President Joe Biden personally has pledged to make the fight against inflation his “top priority” in a critical election year.

But GOP lawmakers have insisted that Democrats are most to blame, arguing their profligate spending has overheated an economy that is likely to post poor numbers when the U.S. releases the latest quarterly growth data on Thursday morning.

“I don’t think the American people want gimmicks,” said Rep. Kevin Brady of Texas, the top Republican on the tax-focused House Ways and Means Committee. Brady instead called for a more permissive drilling policy, which he described as “a signal from this administration” that might result in more oil and gas and fewer price increases on the horizon.

Privately, House Democrats discussed their options to combat inflation at a caucus-wide meeting Wednesday morning. They focused on early legislative efforts targeting the rising costs of food, fertilizer and gasoline, according to a senior Democratic aide, who spoke on the condition of anonymity to describe the gathering.

In the Senate, meanwhile, Democrats held an initial hearing this week on two proposals that seek to combat rising meat and poultry prices. And both parties continued their work on a series of bills that aim to lower the cost of insulin. A measure capping patients’ out-of-pocket payments at $35 cleared the House earlier this month, though bipartisan negotiations are still underway in the Senate.

But the immediate focus has been the sharp spike in energy prices, which has become top of mind for Democratic leaders working to retain their narrow majorities in the House and Senate this November.

“I think you’ll see us take a number of steps to address gas prices. I think the biggest consensus right now that we’re hearing from voters is the need to hold Big Oil companies accountable,” said Rep. Sean Patrick Maloney, D-N.Y., the chief of the Democratic Congressional Campaign Committee. “You’ll see action in that regard.”

In a sign of the stakes, House Speaker Nancy Pelosi, D-Calif., huddled Tuesday with Schumer to discuss potential measures to lower fuel costs. Speaking on the chamber floor a day later, Schumer swatted at the oil and gas industry for raking in $205 billion in profits last year “even while Americans pay more.”

Some Democrats have focused their attention on pausing the federal gasoline tax, an idea that has been championed by Sens. Mark Kelly, D-Ariz., and Maggie Hassan, D-N.H., both facing tough reelection fights this year. The duo unveiled a bill in February that would suspend the tax into January.

The idea initially drew some interest at the White House, which said at the time that all options were on the table in response to rising energy costs. Asked about it Wednesday, White House press secretary Jen Psaki told reporters that Biden is “open to a range of options, including a federal gas tax holiday.”

Yet some prominent Democrats remain unconvinced of its effectiveness. Pelosi publicly has expressed skepticism, arguing that there is no guarantee energy companies won’t try to pocket the savings by raising prices once the gas tax is paused. The House speaker echoed that concern during Democrats’ caucus meeting Wednesday, according to a senior party aide.

“We want to provide people relief at the gas pump. We don’t want to provide a windfall for the oil companies,” said Rep. Jim McGovern, D-Mass., after the meeting.

Republicans have aired their own objections, since the federal gasoline tax funds the government’s key program for financing road, bridge and highway construction. A holiday would essentially “short” that critical infrastructure program, all the while market pressures mean the “cost doesn’t come down” for consumers, said Sen. Kevin Cramer, R-S.D.

Asked about alternative solutions, Cramer said the “price itself will [fall] eventually because it will shrink demand.”

Other Democrats have trained their scrutiny on price gouging, arguing that the cost of a gallon of gas should be lower, especially since Biden has released millions of barrels of oil from the country’s reserves in recent months.

In the House, a quartet of members last week unveiled a bill to help the Federal Trade Commission investigate price gouging in the gas marketplace while reporting to Congress on potential long-term legislative fixes. In the Senate, some Democrats are readying proposals for release as soon as this week.

One forthcoming bill from Cantwell, who chairs the Senate Commerce Committee, aims to give the FTC new authority to monitor the markets for crude oil, gasoline, home heating oil and related products, with massive penalties on those who manipulate those markets to inflate prices.

Another from Warren and Baldwin would take aim at price gouging more broadly – prohibiting excessive increases after natural disasters, public health crises, national security incidents or other major economic shocks. The bill also proposes new resources for the federal government to crack down on monopolies, according to a Senate aide, who requested anonymity to describe a measure that has not yet been formally introduced.

And Wyden, who oversees the tax-focused Senate Finance Committee, is finalizing legislation that would impose a windfall profits tax on the oil industry while limiting stock buybacks, according to a spokeswoman.

The FTC already has promised to act aggressively to probe potential price gouging and other anti-competitive conduct. Agency Chairwoman Lina Khan wrote the White House last August to outline her agenda – including efforts to “deter unlawful mergers” and “investigate abuses” that may give national chains unfair advantages over gas station franchises. Biden later called on the FTC to investigate “anti-consumer” behavior in the energy sector.

But congressional Democrats still believe they must further enhance the agency’s effectiveness – including by voting to confirm Alvaro Bedoya as a fifth commissioner at the FTC. The agency is deadlocked at two Democrats and two Republicans.

The Senate intended to vote on Bedoya’s nomination this week until a coronavirus outbreak befell Democratic lawmakers and Vice President Kamala Harris, their tiebreaking vote in the chamber, leaving the party no choice but to delay it. Schumer promised Wednesday that “health issues will not deter us” from holding the vote soon.

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