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Yellen Tells Lawmakers to 'Act Big' on Virus Relief

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Janet Yellen (Photo: Andrew Harrer/Bloomberg) Janet Yellen (Photo: Andrew Harrer/Bloomberg) 

Janet Yellen, President-Elect Joe Biden’s pick for Treasury secretary, said at her Senate  confirmation hearing Tuesday that more federal aid is needed for distribution of the coronavirus vaccine, unemployment insurance, small businesses assistance and for Americans at risk of going hungry or losing their homes.

”More must be done,” said Yellen, in her prepared remarks. “Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later. …  With interest rates at historic lows, the smartest thing we can do is act big in the long run … The benefits will far outweigh the costs.”

Yellen said she would work with the Biden administration on a second economic relief package “to get through these dark times.”  Biden has proposed a $1.9 trillion relief package that targets the priorities Yellen laid out. 

Republicans have criticized the size and breadth of the plan because of the growing national debt and provisions like a $15-an-hour minimum wage, and they did so at the Senate Finance Committee confirmation hearing.

“Now is not the time to enact a laundry list of structural economic reforms,” said Committee Chairman Chuck Grassley, R-Iowa. 

In her remarks and responses to questions from members of the Senate Finance Committee, the former Fed chair acknowledged the country’s growing debt burden but noted that despite the increase in government debt and in the debt-to-GDP ratio, the cost to service that debt is no higher now than it was before the financial crisis of 2008.

“We have to make sure primary deficits are sufficiently small and on a sustainable path. But now the challenge is to get America back to work and defeat the pandemic,” said Yellen, who would be the first female Treasury secretary if confirmed. She noted the importance of investing in infrastructure and workers and research and development — “the things that make our economy grow faster and be more competitive.”

Asked about tax hikes, which Biden had proposed during his presidential campaign but has not included in his economic relief plan, Yellen said Biden doesn’t plan to reverse the entire 2017 tax cut package that was passed under the Trump administration but could consider reversing positions that benefit big corporations and the wealthy once the pandemic ends.

Yellen said she “believes in market-determined exchange rates” and the U.S. will not seek a weaker dollar to gain commercial advantage and will work to oppose attempts. 

She said the Biden administration is prepared to challenge China’s “abusive “ trade and economic practices, which include dumping products, she said. “China is undercutting American companies by dumping products, erecting trade barriers, providing illegal subsidies and stealing intellectual property.

After the hearing, Ron Wyden, D-Ore., ranking member of the committee and its incoming chairman, said he wants the Senate to vote Thursday on Yellen’s confirmation. “As we continue to deal with the worst economic crisis in a century, it’s critically important that she be leading the Treasury Department as soon as possible,” Wyden said in a statement.