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Why the gas tax totally upends politics as usual

A proposed federal gas tax holiday has Democrats wanting a tax cut — and the GOP helping fight climate change?

Here’s a weird thing that’s happening in Washington: The White House and Senate Democrats are looking to provide a tax cut for millions of Americans, but Republicans are standing in their way. In doing so, the GOP is acting as an accidental champion of the environment ... sort of.

That standoff between the two parties is the latest manifestation of the way the federal gas tax manages to upend the normal politics of climate change in America. Despite being terrible for the fate of the planet, the changing climate is, at our federal level, a partisan issue. You can usually guess politicians’ stances by the letters next to their names — except, that is, when it comes to the gas tax.

At present, the U.S. charges petroleum producers 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel. After states add their own taxes on top of that, the average driver pays around 39 cents per gallon on top of the federal tax, according to the American Petroleum Institute. The federal tax helps maintain federal highways, but even though the cost of everything else has gone up in the last 29 years, it hasn’t been raised since 1993.

You may assume that support for the gas tax would be simple to map out: that the GOP would want it lower because it’s a tax, and the GOP professes to hate taxes, while Democrats would want it higher because a hike theoretically lowers demand for gas and provides a disincentive for putting more carbon into the air. And it’s a tax charged directly to oil companies — though they pass the cost on to consumers.

But in this case, Democrats worried about the latest surge in prices ahead of the midterms are pushing a holiday for the federal gas tax until January. The Gas Prices Relief Act is the brainchild of Sens. Mark Kelly, D-Ariz., and Maggie Hassan, D-N.H., both of whom are likely to be in close races this fall. Their argument: Americans need all the help they can get as inflation raises the cost of living and the tensions between Russia and Ukraine spike oil prices. The White House hasn’t officially signed off on their legislation, but it’s at least mulling it.

While those who support the pause are mostly moderates or from purple states, the idea has the backing of progressives. “The gas tax is fundamentally regressive,” Adam Green, a co-founder of the Progressive Change Campaign Committee, told NBC News. “It hurts the poorest people the most.”

Republicans, though, dismiss the idea entirely. Senate Minority Whip John Thune, R-S.D., told reporters that the plan is “an attempt to provide some political cover for Democrats who are running for re-election this year and don’t want to have to defend the administration or their party’s position on energy.”

What’s wilder, Republicans actually wanted to raise the gas tax to pay for the bipartisan infrastructure bill Congress passed in November. President Joe Biden’s team wrote that off as a nonstarter, and the hike didn’t make it into the final bill. Senate Minority Leader Mitch McConnell, R-Ky., knew that raising prices at the pump would go over terribly with most voters. The White House and Senate Democrats, meanwhile, realized that yielding to the GOP’s proposal would break Biden’s pledge not to raise taxes on Americans making less than $400,000 a year.

While the topic is a political hot potato, the debate over the federal gas tax focuses more on optics than policy effects. In this way, the GOP isn't entirely wrong about the proposed tax holiday that Kelly and Hassan are pushing. That pause might not actually even translate into savings for most drivers, critics warn, especially given the surge in road trips in the spring and the summer. It would also result in a $20 billion reduction in revenue, the Committee for a Responsible Federal Budget estimates.

As of Wednesday, it looked like the proposed gas tax holiday won’t pass the Senate any time soon. Senate Majority Leader Chuck Schumer, D-N.Y., suggested that “eight or nine” members of the Democratic caucus have signed on to the proposal. “It doesn’t make sense to me, just doesn’t make sense,” Sen. Joe Manchin, D-W.Va., the chairman of the Energy Committee, told NBC News. “We’ve got a busted trust fund now. We’ve got to fix things.”

Meanwhile, on the flip side, would increasing the gas tax even help prevent climate change? A National Bureau of Economic Research working paper from 2009 estimated that a 10 cent-per-gallon increase in the gas tax “would reduce carbon emissions from vehicles in the United States by about 1.5 percent.” That isn’t a lot — but it’s still better than nothing.

If anything, though, it may be time to phase out the gas tax entirely, some analysts argue, and instead replace it with an economywide carbon tax. Doing so would be more responsive to the ongoing shift away from gas-powered vehicles toward electric-powered cars. Unlike the gasoline tax, a carbon tax could also be used to fund climate change legislation, but it would also more likely lead us back to the familiar political divide that we’ve all come to know and lament.