Treasury Secretary Janet Yellen says Americans can expect a ‘big return’ from Biden’s $4.1 trillion spending proposal

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Treasury secretary Janet Yellen pushed for stimulus checks

  • President Biden’s spending plans can offer a “big return,” Tres. Sec. Janet Yellen said Sunday.
  • The measures should be paid for while interest rates sit at historic lows, she added.
  • If inflation rises more than expected, the government “has the tools to address it,” Yellen said.
  • See more stories on Insider’s business page.

Treasury Secretary Janet Yellen reiterated her support for President Joe Biden’s spending plans on Sunday, pitching the measures as strong investments in the country’s future.

The president on Wednesday rolled out a $1.8 trillion spending proposal that includes funding for paid family and medical leave, universal pre-K, and childcare. The measure follows the March passage of Biden’s $1.9 trillion stimulus package and joins the president’s $2.3 trillion infrastructure plan as his latest step in big-government economic policy.

Republicans and some moderate Democrats have balked at the follow-up plans cost, saying the measures would dangerously inflate the government’s debt pile. Yellen countered on NBC’s “Meet The Press,” saying it’s a better time than ever to spend on such projects.

“We’re in a good fiscal position. Interest rates are historically low… and it’s likely they’ll stay that way into the future,” the Treasury Secretary said. “I believe that we should pay for these historic investments. There will be a big return.”

That’s not to say the government shouldn’t offset the multitrillion-dollar price tag. The Biden administration rolled out a handful of tax hikes and stronger enforcement to cover the spending, but those proposals were swiftly rejected by Republicans. The GOP has criticized Biden’s public-works plan and a proposed corporate tax increase, calling it a “slush-fund” and a “Trojan horse” for Democratic priorities.

The economy is poised to rebound from the coronavirus pandemic throughout 2021 and, in turn, bring in greater tax revenues. That stronger growth justifies some spending, but the safest and most sustainable way to spend on infrastructure and care involves equitable tax increases, Yellen said.

Stricter tax compliance would also play a critical role. The country is currently estimated to lose $7 trillion through tax underpayment over the next decade. Stepping up compliance efforts and adequately funding the IRS can also boost tax collection, Yellen added.

The Treasury Secretary also rebuffed concerns of the massive spending fueling a sharp rise in inflation.

Administration officials and the Federal Reserve already anticipates the latest stimulus and economic reopening to drive a sharp but temporary bout of stronger inflation. While Biden’s latest proposals are far larger than the March stimulus, plans to spend them over eight to 10 years cuts down on the risk of rampant inflation, Yellen said.

“I don’t believe that inflation will be an issue, but if it becomes an issue, we have tools to address it,” she added. “These are historic investments that we need to make our economy productive and fair.”

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The US could return to full employment in 2022 due to stimulus boost, Yellen says

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Treasury Secretary Janet Yellen.

  • The US could reach full employment in 2022 thanks to Democrats’ stimulus plan, Sec. Yellen said.
  • The relief package can “really fuel a very strong economic recovery,” Yellen told MSNBC.
  • Yellen also dispelled concerns of the $1.9 trillion package sparking rampant inflation.
  • Visit the Business section of Insider for more stories.

One of the slowest-recovering sections of the US economy can return to pre-pandemic health as early as next year, Treasury Secretary Janet Yellen said Monday.

That would be the labor market.

While business output and retail sales have all trended higher in recent weeks, job growth continues to lag behind the overall recovery. Friday’s jobs report, while stronger than expected, still shows roughly 10 million Americans out of work. Weekly jobless claims remain at elevated levels. And the “real” unemployment rate, which measures people who have stopped looking for work, stands at around 9% after Friday.

Yellen sees the stimulus changing that, telling MSNBC that the $1.9 trillion stimulus plan moving through Congress will play a critical role in boosting demand and reinvigorating job creation.

“We expect the resources [in the bill] to really fuel a very strong economic recovery,” Yellen said. “I’m anticipating, if all goes well, that our economy will be back to full employment – where we were before the pandemic – next year.”

Senate Democrats approved the new relief package on Saturday, and the House is expected to vote on the last version before President Joe Biden signs it on Tuesday. Biden is overwhelmingly likely to be able to sign it into law before expanded unemployment benefits expire on March 14.

To be sure, “full employment” is different from the “maximum employment” target sought by the Federal Reserve. The central bank has indicated it won’t rein in its ultra-easy monetary policy until wage growth improves and the unemployment rates for minorities and low-income groups fall.

Yellen also dispelled concerns that inflation would run rampant as new stimulus hits households. Direct payments and the unemployment-insurance supplement included in the measure are likely to lift consumer spending and, in turn, lead businesses to raise prices. Republicans have argued the relief plan will lead the economy to overheat, but the Treasury Secretary isn’t concerned.

“I really don’t think that is going to happen,” Yellen said.”We had a 3.5% unemployment rate before the pandemic and there was no sign of inflation increasing.”

The comments come as Treasury yields hover at their highest levels since February 2020. Expectations for strong growth and higher inflation have led investors to dump government bonds and shift cash to sectors best positioned to thrive through the economic recovery.

The rapid leap in Treasury yields jostled markets and caught the Fed’s attention. Central bank officials have so far only made soft comments regarding the sell-off, but some on Wall Street are preparing for the Fed to further clarify its inflation expectations when policymakers meet on March 17.

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US economy faces ‘tough months ahead’ before staging a strong recovery, Treasury Secretary Yellen says

Janet Yellen
  • There’s an “urgent need” for stimulus as the US faces “tough months,” Treasury Sec. Yellen said.
  • New economic aid can serve as a bridge before herd immunity is achieved, she added.
  • The department is looking into the GameStop-trading saga and could take action, Yellen said. 
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The US economy will struggle for at least a few more months before falling COVID-19 cases and stimulus can drive a full recovery, Treasury Secretary Janet Yellen said Thursday.

In her first television interview since being confirmed last week, Yellen emphasized the importance of using stimulus to bridge the final months of the virus-induced slump.

The Treasury secretary has spent much of her first days in office pushing for President Joe Biden’s $1.9 trillion relief package. Democrats have taken steps to pass the measure without Republican support. But even with additional fiscal relief, the economy is a ways away from marked improvement, Yellen said on Good Morning America.

“This is really an urgent need, and we need to act big,” she added. “We’ve got some tough months ahead before we get control of the pandemic.”

Read more: A top-ranked manager at a firm that handles $50 billion in wealth told us 4 ways investors can smartly play day-trading favorites like GameStop without risking it all

Gauges of labor-market health, retail sales, and consumer confidence all ticked lower through the winter as soaring virus cases and new economic restrictions curbed activity. Some indicators have since shown signs of steady improvement, partially buoyed by the $900 billion stimulus package passed in December.

Most recently, filings for unemployment benefits fell for a third-straight week after hovering above 900,000. Claims totaled an unadjusted 779,000 for the week that ended Saturday, landing below the consensus estimate of 830,000. The trend is encouraging but still leaves claims well above their pre-pandemic levels.

The path of the pandemic also shows a light at the end of the tunnel. The US reported 116,960 new coronavirus cases on Wednesday, according to The COVID Tracking Project. That’s the lowest reading since early November. Hospitalizations have also fallen over recent weeks, suggesting the country is finally getting a hold over the virus’s spread.

Yellen also addressed market volatility seen throughout January spurred by retail investors in forums like Reddit’s r/wallstreetbets. The crowd of casual investors took the stock market by storm by bidding up highly shorted stocks and driving unprecedented rallies in names like GameStop and AMC. Accusations of market manipulation on the online forums have since drawn interest from regulators and Congress.

The Treasury secretary said she would meet with the Federal Reserve, Commodities Futures Trading Commission, and the Securities and Exchange Commission to discuss the trend and potential wrongdoing.

Officials are looking closely at the events but need to “understand deeply what happened” before taking any action, Yellen said.

“We really need to make sure that our financial markets are functioning properly, efficiently, and that investors are protected,” she said.

Read more: Bank of America says Italian banks are poised to gain as much as 30% as ‘Super Mario’ Draghi takes over as prime minister – and pinpoints which stocks you need to own now

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