California Governor Gavin Newsom has a plan to ameliorate soaring gas prices where residents are paying more per gallon than any other state in the country: a giveaway to the rich.
On Wednesday, the governor’s office unveiled a plan to give $400 per registered vehicle to every Californian, regardless of income, with a cap of $800 per individual but not per household.
“We are taking immediate action to put money directly into the pockets of Californians who face higher gas prices as a direct result of Putin’s invasion of Ukraine,” Newsom said in a statement. press in a regurgitation of White House talking points to blame record pump prices on Russian aggression.
The $9 billion in direct payments are expected to benefit high-income California people with multiple cars. Even owners of electric vehicles would receive payments.
Californians who do not own vehicles would be excluded from checks. Just $2 billion in the proposal is earmarked for three months of free public transportation thanks to taxpayers, supplemented by a partial diesel sales tax exemption and the suspension of inflationary adjustments to fuel excise taxes.
“This package is also focused on protecting people from gas price volatility and promoting clean transport,” Newsom added. The proposal also promotes electric cars by supposedly accelerating electric vehicle infrastructure projects.
Earlier this month, gasoline prices hit new highs with a national average of $4.33 a gallon, according to travel agency AAA’s gasoline tracker. The national average as of Thursday stood at $4.33, still more than 20 cents above the previous record set in 2008 when prices hit $4.11. California residents face the highest prices of any state, at an average of $5.88 per gallon. Some regions have seen prices eclipse $6.
Those without a vehicle are still affected by the rapidly rising cost of gasoline, which presents inflationary ripple effects throughout the economy with higher prices for manufacturing and transporting basic goods. .
As Newsom plans to give gas cards to the state’s wealthy, Democrats in the state Legislature have crafted an alternative proposal to distribute targeted aid to those most affected by rising gas prices. energy. Democratic House Speaker Anthony Rendon and Pro Temp Senate Speaker Toni Atkins want to send $200 cash payments to every California taxpayer and dependent, with check eligibility capped at household incomes of 250,000 $.
“I appreciate Governor Newsom’s work in developing another option to provide relief to Californians facing the rising cost of fuel and consumer goods,” Atkins told the Los Angeles Times. “The Senate is ensuring that state money goes to those who really need help, and we look forward to working with Governor Newsom, Speaker Rendon, and our legislative colleagues.”
While offering short-term relief, neither plan addresses the underlying problem of high gas prices, a direct result of Democrats cutting national energy production, starting with the White House. Instead, as with schooling, state subsidies are likely to drive up prices in the long run. The phenomenon is known as the “subsidy paradox”.
States are forced to increase US energy production with limited options compared to the federal government, which reserves jurisdiction over about a third of the nation’s land. Gas prices began their immediate ascent after President Biden’s orders to cancel national energy projects and suspend new oil and gas leases on federal lands, killing opportunities and incentives for producers to maintain operations in the wake of growing demand. The Biden administration has sent mixed signals to the oil and gas industry with demands for increased liquefied natural gas (LNG) exports while refusing to approve more investment.
One of the policy levers pulled by governors is to suspend gasoline taxes using state surpluses from excessive Covid relief to absorb the shortfall. The governors of Connecticut, Maryland and Georgia have already signed gas tax holidays for this spring, while lawmakers in Michigan and Florida are considering similar measures.
Billions of remaining Covid stimulus dollars could be reallocated to states that also want to suspend the tax but need the funds to do so.
Tristan Justice is the Western correspondent for The Federalist. He has also written for The Washington Examiner and The Daily Signal. His work has also been featured in Real Clear Politics and Fox News. Tristan is a graduate of George Washington University where he majored in political science and minored in journalism. Follow him on Twitter at @JusticeTristan or contact him at [email protected]