Janet Yellen, US president-elect Joe Biden’s nominee for treasury secretary, told lawmakers on Tuesday that “the smartest thing we can do is act big” on the next coronavirus relief package, adding that the benefits outweigh the costs of a higher debt burden.
In testimony at her virtual confirmation hearing, Yellen said her task as treasury chief would be twofold: first to help Americans endure the final months of the coronavirus pandemic, and second to rebuild the US economy “so that it creates more prosperity for more people and ensures that American workers can compete in an increasingly competitive global economy”.
Yellen observed that economists and others have noted that the recovery from the early stages of the Covid-19 pandemic has been “K-shaped” – with the well-off bouncing back sharply while the less advantaged have slid further into financial difficulties. “This is especially true of people of color,” said Yellen.
But Yellen noted that the K-shaped economy long predated the pandemic and said it was the treasury’s role to try to address these inequalities.
Yellen’s testimony was a marked contrast to the Trump administration’s fiscal priorities. She called climate change “an existential threat” and argued international cooperation was needed to end the “destructive, global race to the bottom on corporate taxation.”
Biden, who will be sworn into office on Wednesday, outlined a $1.9tn stimulus package proposal last week, saying bold investment was needed to jump-start the economy and accelerate the distribution of vaccines to bring the virus under control.
“Neither the president-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big,” Yellen, a former Federal Reserve chair, said in prepared remarks to the Senate finance committee.
“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,” she said in the statement, which was obtained by Reuters.
The proposed aid package includes $415bn to bolster the US response to the virus and the distribution of Covid-19 vaccines, some $1tn in direct relief to households, and roughly $440bn for small businesses and communities particularly hard hit by the pandemic.
Many Americans would receive stimulus payments of $1,400, which would be on top of the $600 checks approved in a pandemic relief bill passed by Congress last month. Supplemental unemployment insurance would also increase to $400 a week from the current $300 a week, and it would be extended to September.
Yellen received an endorsement from all living former treasury secretaries, from George Shultz to Jack Lew, who urged senators in a letter to swiftly confirm Yellen’s nomination so she can quickly tackle “daunting challenges” in the economy.
“Addressing these pressing issues will require thoughtful engagement by the Department of the Treasury. Any gap in its leadership would risk setting back recovery efforts,” the former secretaries wrote.
Source: US Politics - theguardian.com
