President Biden wants a gas tax holiday. Some economists say that's a bad idea
LEILA FADEL, HOST:
We all know it's costing a lot to fill up at the gas station - nearly $100 for me the other day. People are upset about it, and President Biden is getting a lot of the blame. So today he's planning to announce that he wants Congress to lift a federal gas tax to give people a break this summer. But economists say this might help oil companies more than drivers. Here with more is NPR White House correspondent Franco Ordoñez. Good morning, Franco.
FRANCO ORDOÑEZ, BYLINE: Good morning, Leila.
FADEL: So, Franco, what's the president planning to say today?
ORDOÑEZ: You know, this afternoon he's going to say he wants to see a three-month tax holiday until the end of September. This is a tax that is 18 cents a gallon on gas and 24 cents on diesel. And just to be clear, this is something that Congress would need to do, but he's making it clear that he'd support it.
ORDOÑEZ: Biden is also calling on states to take similar measures with state taxes on gas. And he wants big companies to boost the supply of gasoline and for retailers to pass all of those savings on to the consumers.
FADEL: So what would this mean for all of us at the gas pump?
ORDOÑEZ: You know, we'll see what's actually approved. But the economists I speak with are not optimistic. Some are actually pretty blunt that this is a bad idea. Jason Furman, who served as a top economic adviser to former President Barack Obama - he told me the main reason this is a bad idea is that oil companies will pocket most of the money, and American drivers probably won't get much of the benefit - probably just pennies in savings.
JASON FURMAN: It would be very unlikely that gas prices would fall by more than a dime because of this change, and oil company profits would go up by billions of dollars.
ORDOÑEZ: And I also talked to Carola Binder. She teaches economics at Haverford College in Pennsylvania. She said it could hurt the economy by providing a stimulus at - right at the same time when the government is trying to get a handle on out-of-control spending.
CAROLA BINDER: By making gas cheaper, that allows people to buy more of it. It's giving them a tax cut, and that gives them more to spend elsewhere, so that - it's going to lead to more inflationary pressures elsewhere.
ORDOÑEZ: Now, senior administration officials held a call with reporters last night, and they were pressed about whether there was any way to force oil companies and retailers to pass the savings along to consumers. Well, they said the president was calling on companies to pass those savings along but that it is really ultimately up to CEOs to think of their customers and not just their shareholders.
FADEL: OK, so the Biden administration must know the pitfalls of this move. Why are they doing it?
ORDOÑEZ: You know, Biden is in a very tough situation. Republicans are blaming him for high gas prices and out-of-control inflation. Polls show Americans are very dissatisfied with how Biden is handling the economy. So there is a real demand for him to do something. And, of course, there are midterm elections coming up in November. And look, the administration acknowledges that this tax holiday won't fix all the problems, but they do say that it will provide families a little help, especially during the summer driving season, while they work on a more lasting solution.
FADEL: White House correspondent Franco Ordoñez. Thank you.
ORDOÑEZ: Thanks, Leila. Transcript provided by NPR, Copyright NPR.