WASHINGTON–Incoming Treasury Secretary Janet Yellen told the Senate it’s “critically important” that Congress act now to pass more economic relief to help the country recover from the coronavirus pandemic, while also fielding questions over the growing federal deficit and plans by President-Elect Joe Biden to raise taxes.
Yellen’s comments came during her confirmation hearing before the Senate Finance Committee during which she said Biden’s proposed $1.9-trillion stimulus plan would help -- not hurt -- the nation’s national debt. She also disputed statements by Sen. Tim Scott (R-SC) that the plan’s provisions to raise the minimum wage to $15 an hour would cost jobs.
“The most important thing in my view we can do today to put us on a path to fiscal sustainability is to defeat the pandemic; to provide relief to American people; and then make long-term investments that will help the economy grow,” Yellen said. Insufficient federal spending, she said, “would likely lead us in a worst place fiscally and with respect to our debt situation.”
Yellen, 74, has previously served on President Bill Clinton’s Council of Economic Advisers in the late 1990s, and was chair of the Federal Reserve from 2014-18 when the country was recovering from the Great Recession. The first woman to chair the Fed, Yellen will also become the first female treasury secretary if confirmed by the Senate.
Republican Pushback
Yellen’s proposals received pushback from Senate Republicans, with Sen. Patrick Toomey (R-PA) telling her “the ink is barely dry” on the $900 billion relief package President Trump signed in December.
Republicans further noted the government is also already committed approximately $4 trillion to pandemic relief legislation as a result of pieces of legislation passed in 2020.
“Neither the President-elect, nor I, propose this relief package without an appreciation for the country’s debt burden,” said Yellen. “But right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.”
Finance Committee Chairman Charles E. Grassley (R-IA) called the plan a “laundry list of liberal structural economic reforms, while Toomey added, “I look forward to working with you, but I have to admit that the contours of the stimulus bill as proposed by the Biden administration are going to make that difficult.”
Tax Increases Coming?
In addition, Sen. Mike Crapo (R-ID), who will become the top Republican on the Finance committee, had questions about Biden’s plan to raise taxes.
Yellen responded by saying the new president will not take any such steps while the pandemic is under way “and really depressing the economy,” but said that in the future Biden intends to try to repeal parts of the 2017 tax law that helped the highest-income Americans and large corporations.