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Yellen to enter firing line on Biden aid plan as recovery fades

Saleha Mohsin and Christopher Condon, Bloomberg News on

Published in Business News

WASHINGTON — Treasury Secretary nominee Janet Yellen on Tuesday steps into a new role following more than a quarter-century in government: salesperson for economic policy after years of defending Federal Reserve thinking and actions.

The Senate Finance Committee’s hearing Tuesday is likely to feature topics from foreign-exchange policy to taxes, but it will also serve as the first congressional forum where lawmakers will vet President-elect Joe Biden’s $1.9 trillion COVID-19 relief plan.

Yellen, 74, will need to sell a package that includes a minimum wage hike and substantial expansion in family and medical leave — social safety net programs that have already triggered Republican opposition. Democratic lawmakers, who will soon have majority control of the chamber, are set to press for their own priorities.

For Yellen, a former economics professor who will become the first woman to run the Treasury if confirmed, it’s a marked difference from previous service as Fed chair and vice chair, and running the Federal Reserve Bank of San Francisco. She also headed President Bill Clinton’s Council of Economic Advisers, which she ran more as an economic think-tank for the administration rather than a group that set policy.

This time she comes to Congress as a political appointee in an environment charged by the possible impeachment trial of Donald Trump and the repercussions of this month’s violence at the Capitol.

“We don’t know what kind of salesperson she’s going to be in a political context — she’s never had to do that before,” said Tony Fratto, who worked at the Treasury and White House during the George W. Bush administration. She will need to “figure out the best way to win support for the administration’s policies,” he said.

 

The stakes of getting stimulus through Congress, where Democrats have control with the vice president’s tiebreaker in a 50-50 partisan split, are high. There are still nearly 11 million unemployed Americans in an economy that continues to be battered by the pandemic. Declines in payrolls and retail sales in December left the nation limping into the new year. More than 17 million people say they have little to no confidence in their ability to pay rent next month.

Yellen is planning to participate virtually in the hearing. Here are some of the other key issues she can be expected to address:

— Deficit financing

Biden has made the case that historically low interest rates mean deficit spending to invest in the economy makes sense and would even reduce the national debt in time. But Yellen will almost certainly get asked what the safe limit is now that debt is on the verge of surpassing 100% of GDP.

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