Janet Yellen will set out the case for President-elect Joe Biden’s proposed $ 1.9 trillion aid package during her hearing as Secretary of the Treasury on Tuesday, arguing that “the smartest thing we can do is do big.”
In prepared remarks obtained by the The Washington City Times prior to her appearance before the Senate Finance Committee, Ms. Yellen said the US risked a “longer, more painful recession” and “long-term scarring” if more inject government spending. in economics.
The former Federal Reserve Chairman also argued that concerns about widening the US budget deficit should be pushed into the background during this period.
“Neither the President-elect nor I are proposing this aid package without appreciation for the country’s indebtedness,” said Ms. Yellen. But right now, with interest rates hitting historic lows, the smartest thing we can do is act big. In the long run, I think the benefits far outweigh the costs, especially if we want to help people who have been struggling for a long time. “
Ms. Yellen’s comments will bolster Mr. Biden’s push for $ 1.9 trillion in emergency measures, which he outlined last week and wants Congress to be urgently passed after his inauguration on Wednesday.
Mr. Biden’s plan includes aid to states, direct checks to individuals, an extension of unemployment benefits, an increase in the tax credit for children, and funding for the coronavirus response. The package would add to the fiscal stimulus already provided by outgoing President Donald Trump during the pandemic, including about $ 3 trillion in aid at the start of the coronavirus crisis, and another $ 900 billion during the transition period.
In her comments to the Senate Panel, Ms. Yellen will also say that her goal will be to rebalance the U.S. economy as it recovers from the pandemic, in an effort to address some of the country’s deep-seated racial and income disparities. .
“People are concerned about a K-shaped recovery, but long before Covid-19 infected a single American, we lived in a K-shaped economy, one where wealth (was) built on wealth while working families fell further and further behind. This is especially true for people of color, ”said Ms Yellen.
“We need to rebuild our economy so that it creates more wealth for more people and allows American workers to compete in an increasingly competitive global economy,” she added.
While the $ 1.9 trillion emergency package is the immediate priority, Mr. Biden’s team is also preparing a second multi-billion dollar recovery plan that would put public money into infrastructure, green energy, health and education, funded at least in part by higher taxes for the rich and businesses.
Several senior Republicans have already criticized aspects of Mr Biden’s tax plan, but others have continued their fire, suggesting there could be an opening for compromise.
In her prepared testimony, the former Fed chairman went back to the economic struggles she had seen as a child at the port of Brooklyn and pledged to pursue the government’s goals “in a twofold way.
She also made a light-hearted suggestion that had prepared her private life for the whim of her confirmation. She joked that her husband George Akerlof and son Robert Akerlof “weren’t just great people; they are also wonderful – and opinionated – economists, ”so she was“ used to debating these issues at home. ” “I would welcome it to the Senate.”