Bloomberg
(Bloomberg) -- Janet Yellen encountered early Republican resistance to President-elect Joe Biden’s $1.9 trillion Covid-19 relief plan in her confirmation hearing to become Treasury secretary Tuesday, as she sought backing for what she described as vital support for the economy.“It would be a false economy to stint” on Covid-19 relief, Yellen told the Senate Finance Committee. She highlighted that, with government bond yields historically low, U.S. debt-interest payments as a share of the economy are lower today than before the 2008 financial crisis.Yellen said that help for the unemployed and small businesses would provide the “biggest bang for the buck,” and urged lawmakers to “act big” in efforts to rescue an economy battered by the coronavirus.Republicans are already balking at Biden’s vast stimulus plan, unveiled last week, over its size and components including longstanding Democratic goals such as raising the minimum wage to $15 an hour and expanding family and medical leave.“Now is not the time to enact a laundry list of liberal structural economic reforms,” Republican Senator Chuck Grassley said in his opening remarks. He noted that Congress just approved a $900 billion pandemic relief bill in December. He pointed to criticism that Biden’s proposal isn’t well targeted, and said, “It is important to focus efforts on pandemic relief.”Senator John Thune, the No. 2 Republican in the chamber, asked Yellen “when is it too much” with regard to running up debt to finance increased government spending.Yellen said that “it’s essential we put the federal budget on a path that’s sustainable” over time, but that the situation will be worse if investments aren’t made now to support economic growth.“There is an advantage to funding the debt especially when interest rates are very low by issuing long-term debt,” Yellen also said. Asked about whether she’d endorse a debut 50-year bond, she said she would look at “what the market would be like for bonds of that maturity.”Among other topics Yellen addressed in the hearing:While not specifically endorsing the “strong dollar” policy established in the 1990s, she said the U.S. “does not seek a weaker currency to gain competitive advantage”Analysis of states that boosted the minimum wage shows that job losses are “minimal, if anything”The Biden administration is prepared to take on China’s “abusive” trade and economic practices, she said. “China is undercutting American companies by dumping products, erecting trade barriers and giving illegal subsidies to corporations”Related: Yellen Says She Won’t Seek Weaker Dollar, Wants Market-Set RatesSenator Ron Wyden, the Oregon Democrat who will chair the panel when his party assumes control later this week, said his top priority is “avoiding the mistake the Congress made in the last recession -- taking a foot off the gas pedal before a recovery took hold.”Wyden also said that he wants to see Yellen’s confirmation proceed “as soon as possible,” given the state of an economy beset by the pandemic. Grassley, the outgoing chairman of the panel, told reporters he expected the confirmation would be “within” the timeline of outgoing Treasury Secretary Steven Mnuchin’s. Mnuchin was sworn in Feb. 14.Most GOP lawmakers who publicly commented on Biden’s November announcement to appoint her as Treasury secretary were supportive. Yellen built relationships with lawmakers on both sides of the aisle when she served as Federal Reserve chair for four years, to February 2018.“Yellen brings immediate credibility and as we know, credibility is everything in these top jobs,” said Tim Adams, who served as a Treasury undersecretary during the George W. Bush administration and now heads the Institute of International Finance.Yellen told the panel that she’ll be working with the Biden team on a second anticipated economic package “to get through these dark times.”Yellen, who specialized as a labor economist early in her career, said that the recession has “disproportionately hit the service sector and the workers who are employed in that sector -- and it’s been particularly brutal in its impact on minorities and women.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
