Now, as gas prices approach nearly the same highs of 2022 amid the Iran War, President Donald Trump is floating an identical proposal. Only this time, there may be more interest on Capitol Hill.
The debate reflects how sharply the politics of affordability have shifted as the extended closure of the Strait of Hormuz, a shipping corridor central to the world’s oil supply, disrupts global markets. The Labor Department reported on Tuesday that inflation climbed faster than at any point in the last three years in April as fuel and food prices surged. As gasoline prices hover around $4.50 a gallon nationally, Republicans who once derided gas-tax holidays as fiscally irresponsible are now softening their criticism.
“They’re late to the party, but better late than never,” Blumenthal tells TIME. “The President’s support hopefully will give it some momentum in the Republican caucus.”
The debate comes as both Democrats and Republicans are trying to frame themselves ahead of the midterms as the party of affordability. Even some small relief at the pump could give Trump the chance to claim credit for acting aggressively to lower prices —potentially blunting a key Democratic argument against him.
But there’s a reason the federal gas tax has not been suspended since it was created in 1932. The actual savings for consumers could be modest while the financial cost to the federal government could be substantial.
Limited savings
Research from the Bipartisan Policy Center estimated earlier this year that a suspension would likely lower prices by between 10 and 16 cents a gallon. For a driver filling a 16-gallon tank, that could translate into savings of roughly $2 to $3 per visit to the pump.
Kelly argued that even limited relief matters for families struggling with costs amplified by the war. He pointed to gas in Phoenix costing $4.80 a gallon and described hearing from constituents unable to afford long drives for medical care. “How many people like that are there across the country right now that just can’t afford to get anywhere?” he says.
Hawley told reporters Monday that he had not spoken directly with Trump about his bill, and Trump has not indicated if he supports that timeline. Blumenthal says his proposal of a gas tax holiday might need to be extended until past Oct. 1 as talks to reopen the Strait have yielded little progress.
The Committee for a Responsible Federal Budget, a nonpartisan organization, estimated that a one-month federal gas-tax holiday would cost roughly $3.5 billion in lost revenue, while a six-month suspension would cost about $21 billion and accelerate the projected insolvency of the Highway Trust Fund. CRFB warned that any consumer savings would likely be partially offset by higher pre-tax gasoline prices and broader inflationary effects.
“It reflects desperation in their party,” Blumenthal says. “Trump’s failure to do it before now is part of the disastrous miscalculation he made in getting into this war and failing to heed the obvious eventuality that the Strait would be gone.”
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