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White House economic adviser defends Biden's gas tax holiday


Did you know that every time you buy a gallon of gas, you pay an $0.18 tax to the federal government? Twenty-four cents if you're buying a gallon of diesel. The tax pays for highways and public transportation. But with gas prices sky high, President Biden is calling on Congress to suspend it temporarily for three months through the end of September.


PRESIDENT JOE BIDEN: I fully understand that a gas tax holiday alone is not going to fix the problem, but it will provide families some immediate relief, just a little bit of breathing room as we continue working to bring down prices for the long haul.

KELLY: The White House calls this proposal the federal gas tax holiday. And here to discuss it from the White House is Cecilia Rouse, chair of the White House Council of Economic Advisers. Hey there. Welcome.


KELLY: So cheaper gas would, of course, be welcome news to consumers. But as you know, a lot of folks are calling this a gimmick. And so in the time we have, I want to put some of the objections to you and let you respond. One being raised is that you can't actually force this tax cut to be passed on to consumers and that oil companies would actually be the bigger beneficiaries. Would they?

ROUSE: So the literature suggests that that is really unclear. And President Biden is calling on oil companies and refineries to take their record profits and invest them in additional production for the refiners and gas, you know, people who sell the retail gas sellers to pass it on to consumers. So he can't force it, but he's calling everybody to put their effort to this basic war footing understanding, that these are really unusual and historic economic times.

KELLY: How much money per gallon would this actually save people?

ROUSE: Well, if you add up - you know, this is part of a tool kit. And if you were to take the president is calling on the federal gas tax holiday, he's calling on states to also relieve their state gas taxes. He's calling on oil producers and refiners to pass the savings on to consumers. You know, all in, it has the potential to reduce prices by about a dollar. But fundamentally, as part of a bigger package where the president is also trying to increase oil supply with historic releases from the Strategic Petroleum Reserve, welcoming OPEC's decision to increase production, increase access to biofuels, so this is an all hands on deck. It's part of a portfolio that he believes is important for bringing relief to consumers.

KELLY: So just to be clear, that number you just threw out, that this could save people a dollar a gallon on gas, it would have to - it would require all of those things to happen - the federal gas tax holiday, a state gas tax holiday, refineries increasing supply, all of that.

ROUSE: The president is recognizing that these are historic economic times. And what we know, for example, in Maryland, when they had a gas tax holiday just this past spring, that most of that relief was passed on to consumers. So what he is suggesting is that we do the same thing with the federal gas tax holiday.

KELLY: The people who are skeptical here are not cranks. To cite one, Jason Furman, your predecessor as chair of the Council of Economic Advisers, he did the job under President Obama. He tweeted - and I quote - that "it would be very unlikely that gas prices would fall by more than a dime because of this change." What is he missing here?

ROUSE: You know, look, the president has said this is not a complete solution. He recognizes that this is going to make a difference at the edges and - which is why this is part of a larger portfolio, which includes calling on states to put in gas tax holidays on their state taxes. It involves asking oil producers to be producing even more oil than they've been doing over the past year. It involves increasing supply with releases from our Strategic Petroleum Reserves and welcoming OPEC's increase. So he's looking for ways to increase oil supply. This is a way to help provide a little bit of breathing room for consumers.

KELLY: Do you think it's a good idea? I get you're a member of the White House. You're talking to me from the White House. It's your job to be behind this. But as an economist, does it make sense to you?

ROUSE: As an economist, what I recognize is that these are tough times, that when consumers are facing this kind of inflation, that that's not healthy for our economy. We know that the primary responsibility for dealing with inflation is the Federal Reserve, and - but that this is really painful for many consumers. And so this is part of a plan, is part of a portfolio, to both increase supply while trying to help households as well.

KELLY: That is White House economic adviser Cecilia Rouse. Thanks so much for your time today.

ROUSE: You're very welcome. Transcript provided by NPR, Copyright NPR.

Mary Louise Kelly is a co-host of All Things Considered, NPR's award-winning afternoon newsmagazine.
Michael Levitt
Michael Levitt is a news assistant for All Things Considered who is based in Atlanta, Georgia. He graduated from UCLA with a B.A. in Political Science. Before coming to NPR, Levitt worked in the solar energy industry and for the National Endowment for Democracy in Washington, D.C. He has also travelled extensively in the Middle East and speaks Arabic.