Gas tax holiday 'worth considering,' treasury secretary says
(NewsNation) — Treasury Secretary Janet Yellen said in an interview on ABC’s “This Week” Sunday that a federal gas tax holiday is “worth considering” as the national average for a regular gallon of gas surpassed $5 earlier this month.
While gas experts expect the national gas average to drop in the coming months, the national average continues to hover at around $5. AAA reported Sunday that the national average for a gallon of regular gas sat at $4.98.
A federal gas tax holiday would provide some relief at the pump for drivers by temporarily suspending the tax, which sits at 18.4 cents per gallon. Back in mid-March, some state governors called for a federal pause on the gas tax as the cost of gas hiked to record prices.
“That’s an idea that’s certainly worth considering,” Yellen said when asked if the administration is weighing it. She added that President Joe Biden wants “to do anything he possibly can to help consumers.” Yellen also said that Biden “stands ready to work with Congress” on a solution.
Energy Secretary Jennifer Granholm said Sunday that the Biden administration was considering a federal gas tax holiday. She said “it’s one of the tools,” but told CNN’s “State of the Union” that “part of the challenge with the gas tax, of course, is that it funds the roads.”
But a piece of proposed legislation back in March worked out a solution, proposing the pause would not impact roads and infrastructure. Instead, the money would be taken from the Treasury Department.
Yellen also expects the economy to slow in the next few months. However, she said that a recession — fueled by “unacceptably high” inflation and Russia’s war in Ukraine — is not inevitable.
Yellen said overall consumer spending in the United States remains strong, while noting that spending patterns are changing, given the impact of rising food and energy prices. Yellen said household savings during the coronavirus pandemic will help sustain spending.
The national saving rate has fallen to about 6%, below pre-pandemic levels, after reaching 16.6% in 2020, the highest on record dating to 1948, and 12.7% in 2021.
“I expect the economy to slow,” Yellen said. “It’s been growing at a very rapid rate and the economy has recovered and we have achieved full employment. We expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”
Yellen echoed Biden’s optimism in the face of economic headwinds. Biden in an interview with The Associated Press last week insisted that a recession is “not inevitable” and made the case that U.S. is “in a stronger position than any nation in the world to overcome this inflation.”
Disagreeing with the assessment from Biden and Yellen, former Treasury Secretary Larry Summers told NBC’s “Meet the Press” that in his estimation, “the dominant probability would be that by the end of next year we would be seeing a recession in the American economy.”
The Federal Reserve on Wednesday approved its largest interest rate increase in more than a quarter-century to stem a surge in inflation. The move raised the target federal funds rate by three-quarters of a percentage point to a range of between 1.5% and 1.75%
The tightening of monetary policy was accompanied by a downgrade to the Fed’s economic outlook, with the economy now seen slowing to a below-trend 1.7% rate of growth this year, unemployment rising to 3.7% by the end of this year and continuing to rise to 4.1% through 2024.
Yellen said it will take “skill and luck” to bring down inflation while maintaining low unemployment.
“I believe it’s possible,” she said.
The Associate Press contributed to this report.