As the Democratic party administration in Washington struggles to find effective ways to fight high inflation, some economists are calling for lawmakers deliver new assistance for Americans dealing with high gasoline prices.
“If I were Dem leadership in the House, I’d bring forward a bill to give $50B gas price relief to low-income households and defy Republicans to vote against it,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a tweet on Tuesday.
Wouldn’t such spending add to inflation? Shepherdson pushed back after a critic suggested exactly that, with the economist saying it would not because a $50 billion outlay amounts to just 0.2% of U.S. GDP.
The average retail price for gasoline in the U.S. has soared to a record well above $4 a gallon, as Russian President Vladimir Putin’s war on Ukraine helps push energy prices
higher and comes on top of a global inflationary surge.
Opinion: The price of gasoline isn’t really at a record high. In fact, the inflation-adjusted cost of driving a mile was higher for most of the past century
Also read: Oil prices pull back from nearly 14-year highs
Stuart Hoffman, a senior economic adviser at PNC, said Shepherdson’s proposal is a “great idea,” adding that Congress should look at gasoline vouchers for the Americans who qualified for stimulus checks through March 2020’s relief package.
Providing $2 or $3 per gallon of gas for those families could work out to $200 or $300 a month per family, assuming they typically pump 100 gallons each month into their cars, Hoffman said in a post on Twitter.
“Total cost of $100B for up to 6 months. Worth every penny to protect our freedom and our economy,” the PNC expert said, referring to gas vouchers. A PNC spokesman declined to make Hoffman available for an interview on Wednesday.
There’s a real chance for legislation that provides such vouchers given how gas prices have surged, said Greg Valliere, chief U.S. policy strategist at AGF Investments, in a note on Wednesday.
“There will be fierce resistance from the anti-fossil fuel activists, and the enormity of deficits is starting to sink in. But this is an election year, and consumers have been stunned by gasoline prices — a perfect storm, in our opinion, for rebates or vouchers,” Valliere wrote.
The AGF strategist noted that it’s possible for the voucher program to get set up so that unused vouchers “could be redeemed for cash at face value by the U.S. Treasury,” which would “incentivize eligible families to reduce their usage of gasoline.”
Republicans have made it clear that high prices will continue to be a key line of attack against the president and his fellow Democrats as November’s midterm elections approach.
“I know oil is an international market, but the main reason Americans are paying so much is bad domestic policies,” said House Minority Leader Kevin McCarthy, the California Republican, as he spoke Wednesday at a press conference. “These aren’t Putin prices. They’re President Biden’s prices.”
Now read: What can Biden and Congress do to fight inflation? ‘Simply not much of anything’
And: Republicans may win not just House but also Senate in midterm elections — here are 2022’s Senate races to watch
This report was first published on March 9, 2022.