Janet Yellen, former chair of both the Federal Reserve and the Council of Economic Advisors, told Congress on Tuesday that if she is confirmed as the next U.S. Treasury Secretary, she will work to rebuild the economy from its "sharpest downturn in history," through increased stimulus spending.
Speaking before the Senate Finance Committee, Yellen supported President Joe Biden's $1.9 trillion economic stimulus package to aid American families and businesses amid the worst of the nation's coronavirus outbreak, as well as accelerate the government's vaccination efforts.
"Neither the [President], nor I, propose this relief package without an appreciation for the country's debt burden," Yellen stated, acknowledging the trillions of debt the nation has accumulated since the beginning of the pandemic. "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."
Yellen noted that during her tenure at the Fed, she had become accustomed to the central bank's dual mandate--to promote stable prices and maximize employment. She views her potential role as Treasury Secretary with a dual mission as well: first to help Americans through the rest of the pandemic, and second to keep Americans safe as they eventually return to work.
"We have to rebuild our economy so that it creates more prosperity for more people and ensures that American workers can compete in an increasingly competitive global economy."
Yellen's economic philosophy is dovish, meaning she is likely to promote monetary policies that involve low-interest rates to encourage economic growth through increased demand for consumer borrowing and heightened consumer spending. During her time as Fed Chair, she stressed remaining nonpartisan, which is an effort she is likely to carry into the role of Treasury Secretary.
Under the role of Treasury Secretary, Yellen will also have to handle a range of other economic issues from the Biden administration's tax policy to foreign relations.
In terms of the new administration's tax policies, Yellen made it clear that Biden intends to increase tax rates on wealthier Americans as well as corporations, stating that it's important that they "pay their fair share."
Biden has proposed raising the income tax rate from 37% to 39.6% for those making over $400,000 annually; raising corporate taxes from 21% to 28%, and a 15% minimum book tax; and taxing long-term capital gains and qualified dividend at the in income tax rate of 39.6% on income above $1 million.
However, Yellen does not want increased corporate taxes to harm the competitiveness of American businesses. Rather, she plans to to work with other nations to globally tackle corporate taxes in an equitable way.
For foreign policies, Yellen viewed global economic relationships--especially between the U.S. and China--as something she wanted to correct to be more fair for everyone involved.
"I believe we should try to address unfair trade practices," Yellen stated. "And the best way to do this is to work with our allies rather than unilaterally."
Incoming Senate Finance Committee Chairman Ron Wyden stated that a full confirmation vote could happen as soon as the end of this week. Yellen only needs a simple Senate majority to be confirmed.