Democrats know they have a major problem on their hands, with inflation at 7.9% and probably going higher before there’s any relief. Consumers are fighting mad about $4 gas and the rising cost of food, rent, home heating and cars. Many forecasters think inflation will doom Democrats in the November midterm elections, flipping one or both houses of Congress back to Republican control.
President Biden’s strategy for combating inflation involves a mix of empathy, blame and pitchmanship. He acknowledges inflation and the pain it causes ordinary families, while blaming Russian president Vladimir Putin for igniting a war that sent oil prices soaring. He also cites disruptions from the COVID pandemic that have distorted demand and left some goods scarce. Biden’s solutions, conveniently, are the same legislative proposals he touted before inflation was a problem, which Congress has been unable to pass.
Democratic Gov. Jared Polis of Colorado has a different idea: Do pragmatic things to lower whatever costs possible, and spend less effort trying to explain the origin of inflation.
“We should show empathy with the struggles Americans are facing, and say, let’s do everything we can to cut fees,” Polis told Yahoo Finance during a March 16 interview. “It means reducing fees where we can.”
Colorado, for instance, cut the cost of an annual state park pass from $84 to $29, starting in 2023. Polis says Washington could do the same for national park entrance fees, typically $10 to $15 per person and more for a vehicle or annual pass. Washington could lower or waive the fee for obtaining or renewing a passport, typically $130. Like some members of Congress, Polis also favors suspending the federal gas tax, which adds 18.4 cents to the cost of every gallon.
“The biggest issue right now is how we can save people money,” Polis says. “Let’s provide that relief to people.”
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If Washington were to go this route, there are several excise taxes and fees the government could suspend. In addition to fuel, the federal government levies excise taxes on airline tickets, tobacco, alcohol and some health care goods and services. There are federal user fees in many industries, including banking, trade, agriculture and many others. Those fees typically finance things like inspections and safety enforcement and are enforced at the producer level. States and cities levy their own smorgasbord of fees, for car registrations, occupational licenses and many other things.
The downsides
There are arguments against this type of relief. Many budget experts oppose a gas-tax holiday, for instance, because it would starve the highway trust fund, which is already short of money. It can be tricky getting the savings directly to consumers, since businesses want to hold onto price hikes even if their own fees and costs drop. Suspending travel-related fees might disproportionately benefit wealthier Americans more likely to fly. It can also be politically tricky to reimpose fees and taxes once they’ve been suspended.
Congress would have to approve any changes to tax law, and that’s a hard sell. A variety of senators and representatives support legislation to suspend the gas tax, but the prospects for passage seem poor. Some Democrats would rather impose a windfall tax on oil companies, leaving Dems split on the issue. Meanwhile, Republicans who might normally support any tax cut are reluctant to help Democrats out of their bind on inflation. Industry groups that might also support a tax cut worry how a shortfall in transportation funding would affect federal projects.
But the broader point, politically, may be proposing simple, tangible ideas voters can relate to, instead of rebranding old legislative ideas as inflation-fighters or asking voters to contemplate inflation’s precise origin.
“Dissecting something like inflation, I don’t think it’s productive to talk about,” Polis says. “Rather than talking about what’s causing it, let’s do what we can to reduce prices and save people money right now.”
His Washington colleagues might want to listen. Polis is up for reelection himself in November, and unlike many endangered Democrats in Congress, he’s favored to win another term.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips.
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