WASHINGTON—During her Senate confirmation hearing on Jan. 19, Treasury Secretary nominee Janet Yellen championed President Joe Biden’s economic policies and urged lawmakers to provide further fiscal support to avert “a longer, more painful recession.”
“Over the next few months, we are going to need more aid,” Yellen said in her opening remarks.
“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 served as chair of the Federal Reserve from 2014 to 2018; if confirmed, she will be the first woman to serve as Treasury secretary.
“Economists don’t always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now—and long-term scarring of the economy later,” Yellen said during the hearing.
Biden has presented a $1.9 trillion stimulus proposal that provided a general outline of the next administration’s economic priorities. Republican senators have raised concerns about the nation’s mounting debt, which is now more than $21.6 trillion. And Biden has committed to policies that could add trillions more in the year ahead.
“What we’re seeing is that even though the amount of debt relative to the economy is going up, the interest burden hasn’t,” Yellen said, in response to concerns about the debt burden.
She noted, however, that in the longer run, the country should “put the federal budget on a path that is sustainable.”
Yellen said it’s not the right time to raise taxes when the pandemic is still depressing the economy. She agreed, however, with Biden’s proposal to repeal parts of the 2017 tax cuts. She said she believes in a “fair and progressive tax code where wealthy individuals and corporations pay their fair share.”
President Donald Trump’s tax reform reduced the corporate tax rate to 21 percent from 35 percent, to boost the competitiveness of U.S. corporations and to prevent them from shifting profits to low-tax jurisdictions.
Yellen defended increasing tax rates for corporates, but she also raised alarms about competition among countries to reduce corporate tax rates.
She said she would work with the Organization for Economic Co-operation and Development “to try to stop what has been a destructive global race to the bottom on corporate taxation” to assure U.S. competitiveness.
Yellen also defended raising the federal minimum wage to help American workers. She claimed that job losses would be very minimal from boosting the minimum wage.
During the hearing, the former Fed chair also commented on China, describing it as “the most important strategic competitor” to the United States.
China is guilty of “horrendous human rights abuses,” she said.
“We need to take on China’s abusive, unfair, and illegal practices. China’s undercutting American companies by dumping products, erecting trade barriers, and giving illegal subsidies to corporations. It’s been stealing intellectual property and engaging in practices that give it an unfair technological advantage, including forced technology transfers. And these practices, including China’s low labor and environmental standards, are practices that we’re prepared to use the full array of tools to address,” she said, adding that the United States should also work with like-minded nations to address these challenges.
Yellen will be a key official in advising Biden whether to roll back Trump’s recent order that bans investments in Chinese military companies.
Yellen is expected to receive confirmation easily in the Senate. Democrats and some Republicans believe that she is the best person for the job.
“The good news is Chair Yellen knows that going small on economic relief would be a big mistake. Chair Yellen is exactly the right person to lead the Treasury Department,” Senate Finance Committee member Ron Wyden (D-Ore.) said during the hearing.
Yellen came under criticism recently after her financial disclosure forms revealed that she made millions of dollars giving speeches to Wall Street banks, raising concerns that these fees create conflicts of interest. She has received more than $7.2 million in speaking fees from investment banks and large corporations in the past two years.
“I don’t believe I have any conflict of interest,” Yellen said at the hearing.