Janet Yellen, U.S. president-elect Joe Biden’s choice as Treasury secretary, said Tuesday the incoming administration would focus on winning quick passage of its US$1.9-trillion pandemic relief plan, rejecting Republican arguments the measure is too big given the size of U.S. budget deficits.
“More must be done,” Ms. Yellen told the Senate finance committee during her confirmation hearing. “Without further action, we risk a longer, more painful recession now – and long-term scarring of the economy later.”
Democrats voiced support for the Biden proposal while Republicans questioned spending nearly US$2-trillion more on top of nearly US$3-trillion that Congress passed in various packages last year.
Republicans questioned elements of the Biden proposal such as providing an additional US$1,400 stimulus cheque to individuals earning less than US$75,000. They also objected to the inclusion of such long-term Democratic goals as boosting the minimum wage to US$15 an hour.
Republican Senator Tim Scott said the push for a higher minimum wage comes at a time when thousands of small businesses such as restaurants have gone out of business and that it would lead to more job losses.
Ms. Yellen said, however, that the increase in the minimum wage would help millions of front-line American workers who are risking their lives to keep their communities functioning and often working two jobs to put food on the table. “They are struggling to get by and raising the minimum wage would help these workers,” she said.
Despite policy differences, Ms. Yellen, who would be the first woman to be Treasury secretary after being the first woman to be chair of the Federal Reserve, is expected to win quick Senate confirmation.
Democratic Senator Ron Wyden, who will become chairman when Democrats take over the Senate, said it was his hope Ms. Yellen could be confirmed by the full Senate as soon as Thursday.
Mr. Biden last week unveiled a US$1.9-trillion relief plan that would provide more aid to American families and businesses and more support for vaccine production and distribution, as well as providing support for states and localities to avoid layoffs of teachers and first responders.
Many Republicans raised the soaring budget deficits as a reason to be cautious in passing further relief. Last year, the budget deficit climbed to a record US$3.1-trillion.
Ms. Yellen said she and Mr. Biden were aware of the country’s rising debt burden, but felt fighting the pandemic-recession was more important currently.
“Right now, with interest rates at historic lows, the smartest thing we can do is act big,” she said. “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.”
Ms. Yellen was nominated to be chair of the Fed by former president Barack Obama and she stepped down in February, 2018, after President Donald Trump decided not to nominate her for a second four-year term. Since leaving the Fed, Ms. Yellen has been a distinguished researcher at the Brookings Institution, a Washington think-tank.
In the financial disclosure forms filed with the committee, Ms. Yellen listed more than US$7-million in speaking fees she has received from a number of top Wall Street firms such as Goldman Sachs and Citigroup since leaving the Fed. She has agreed to recuse herself from Treasury matters involving certain firms that have compensated her for her talks.
Ms. Yellen’s Treasury nomination was supported in a letter from eight previous Treasury secretaries serving both Republican and Democratic administrations.
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