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Senate Democrats want to fight inflation, but there are limits to what they can do

Sen. Mark Kelly, D-Ariz., is part of a group of Democrats up for reelection in 2022 pushing for eliminating the gas tax for the rest of the year to address higher prices at the pump.
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Sen. Mark Kelly, D-Ariz., is part of a group of Democrats up for reelection in 2022 pushing for eliminating the gas tax for the rest of the year to address higher prices at the pump.

Rising inflation is having an impact everywhere, from the gas station to the grocery store, and now on Capitol Hill.

Senate Democrats are scrambling to provide some relief to people struggling with the highest rates of inflation in roughly 40 years, aware that the skyrocketing prices on consumer goods like gas could hurt their political fortunes. But there is a limit to what they can do.

Arizona Democratic Sen. Mark Kelly is a top tier target for Republicans in the upcoming midterms. He's part of a group of swing state lawmakers pushing a gas tax holiday to help with inflation.

"The idea here is to suspend the federal gas tax, which is 18 cents a gallon for the rest of the year. It would affect consumers across the country. It's a pretty obvious thing to do," Kelly said last week.

Sen. Raphael Warnock, D-Ga., blames energy companies for the uptick in prices. He's also sponsoring the bill and says he's recently talked to the White House about steps they can take.

"We are seeing oil and gas companies experience record profits. People are paying record prices. This is artificial cost increases," Warnock told reporters on Capitol Hill recently.

Another Democrat in a top tier race — Sen. Catherine Cortez Masto, D-Nev. — says inflation is "hitting us all hard in Nevada."

"It's not just Democrats. Republicans have to come to the table," she said.

"Republicans have to come with solutions as well," she added. "I think we as Congress we should be working together to address and lower costs for families and individuals."

Senate Majority Leader Chuck Schumer says his caucus is considering several proposals to address higher costs and has vowed the chamber would vote on a package, or potentially a series of bills in March. White House press secretary Jen Psaki has repeatedly declined to specifically endorse a gas tax holiday, but has said all options are on the table as the president consults with Congress.

But Warnock and Cortez Masto, along with fellow Democrat Sen. Maggie Hassan of New Hampshire, are pushing for a vote on the tax holiday. They say it's Congress' job to respond to voters.

Gas tax holiday could pad oil company profits instead of lowering prices

Energy costs could soon rise even more, as Russia's aggression toward Ukraine pushes up the price of oil. President Biden has warned that sanctions imposed on Russia may lead to energy supply disruptions, which in turn could feed inflation.

But suspending the gas tax may not end up helping, as there's no guarantee that oil companies would pass on any savings to consumers, said Jason Furman, an economist who served as President Barack Obama's top economic adviser.

He told NPR a gas tax holiday would be "at least in part, a gift to the oil companies."

The tax pays for needed infrastructure projects like highways and bridges, and Furman noted it would be reinstated eventually. Even if the holiday did temporarily lower what drivers pay at the pump, the price per gallon would still go back up.

There aren't many policy levers for lawmakers to pull to rein in inflation, so "you reach for the one you have, even if it just doesn't work very well and has very bad side effects," Furman said.

But the reality is that the Federal Reserve, not Congress, is the institution with the capability to counter inflation pressures.

"It is hard for a member of Congress to explain that there's not a lot that they can do about it, and that it's a combination of time and the Federal Reserve that are going to bring inflation down," he said.

Democrats split on gas tax, push other plans to cut costs

Senate Democrats themselves are divided on the gas tax. Finance Committee Chairman Ron Wyden calls it regressive and is pushing another idea — closing tax loopholes for oil companies to write off their expenses.

But he says the effort to address inflation is about a basic question for those in Congress: "Whose side are you on? Are you on the side of working people, seniors and others who get hit disproportionately by inflation, or are you just for business as usual?"

Democrats are considering other things, like getting rid of anticompetitive practices at meat companies and requiring pharmaceutical companies to negotiate prices of some prescription drugs.

For Sen. Joe Manchin, D-W.Va., inflation worries are a key reason he opposes the broader domestic spending bill, dubbed the "Build Back Better" agenda, pushed by Biden and virtually all of his Democratic colleagues. He's also not a fan of cutting the gas tax. As inflation has worsened in recent months Manchin has called for more fiscal restraint and has also pushed deficit reduction as part of any spending legislation.

"The only way you can reduce inflation is to basically get your financial house in order," Manchin told reporters on Capitol Hill last week.

But Manchin says there's wide public support for targeting drug prices, calling it a "no brainer." Echoing his mantra about the need for both parties to work together Manchin says now that the chamber is moving beyond a singular focus on passing a partisan spending bill.

Sen. Chris Van Hollen, D-Md., who is also on the ballot in November, agreed the effort to zero in on drug prices could be one issue that gets enough GOP support to get around a possible Republican filibuster.

"It would be great to have Republicans join us to give Medicare the power to negotiate price reductions in drug prices," he said.

One Republican running for reelection this cycle, Indiana Sen. Todd Young, says concerns about wages are what he hears about the most at home. He's open to some of the ideas floated by Democrats, but thinks the latest ones are about scoring political points.

"Many I think are political gimmicks designed to curry favor at a time when most Americans frankly don't think Democrats are sufficiently focused on cost of living issues," Young said.

Biden is expected to outline his own proposals to combat inflation in Tuesday's State of the Union address. He's also limited in what he can do. Biden has already launched efforts to unsnarl supply chain issues caused by backlogs in specific ports and he could take steps to alleviate worker shortages and get goods to markets.

Even if Democrats can get something through the Senate it could take weeks or more likely months for consumers to feel any relief. Members of both political parties recognize how voters view inflation next fall could decide who controls Congress.

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