Gasoline tax exemption ‘worth considering’, says Treasury Secretary
(NewsNation) – Treasury Secretary Janet Yellen said in an interview on ABC’s “This Week” on Sunday that a federal gas tax holiday “is worth considering.” as the national average for a gallon of regular gas exceeded $5 earlier this month.
While gas experts expect the national gas average to decline in the coming months, the national average continues to hover around $5. AAA reported Sunday that the national average for a gallon of regular gasoline was $4.98.
A federal gas tax exemption would provide some relief at the pump for drivers by temporarily suspending the tax, which stands at 18.4 cents a gallon. In mid-March, some state governors called for a federal gas tax break as the cost of gasoline hit record highs.
“It’s an idea that’s definitely worth considering,” Yellen said when asked if the administration was weighing it. She added that President Joe Biden wants to “do whatever he can to help consumers.” Yellen also said Biden “stands ready to work with Congress” on a solution.
Energy Secretary Jennifer Granholm said Sunday that the Biden administration is considering a federal gasoline tax exemption. 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 finances the roads”.
But a bill proposed in March has crafted a solution, proposing that the break should not affect roads and infrastructure. Instead, the money would be taken from the Treasury Department.
Yellen also expects the economy to slow in the coming months. However, she said 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 spending patterns are changing given the impact of rising food and energy prices. Yellen said household savings during the coronavirus pandemic will help support spending.
The national savings rate has fallen to around 6%, below pre-pandemic levels, after reaching 16.6% in 2020, the highest on record dating back to 1948, and 12.7% in 2021.
“I expect the economy to slow down,” Yellen said. “It has grown at a very rapid rate and the economy has recovered and we have reached 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 about economic headwinds. Biden, in an interview with The Associated Press last week, insisted that a recession is “not inevitable” and argued that the United States is “in a stronger position than any what nation in the world to overcome this inflation”.
Disagreeing with Biden and Yellen’s assessment, former Treasury Secretary Larry Summers told NBC’s “Meet the Press” that in his estimation, “the prevailing probability would be that by the end of the year next, we would see a recession in the US economy.”
The Federal Reserve on Wednesday approved its biggest interest rate hike 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 between 1.5% and 1.75%.
The monetary policy tightening has been accompanied by a downward revision to the Fed’s economic outlook, with the economy now slowing to a below-trend growth rate of 1.7% this year, with unemployment hitting 3 .7% at the end of this year and continuing to increase. at 4.1% until 2024.
Yellen said it will take “skill and luck” to bring inflation down while keeping unemployment low.
“I believe it’s possible,” she said.
The Associate Press contributed to this report.
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