Janet Yellen, President-elect Joe Biden's nominee for Treasury Secretary, called for "big" action on the COVID-19 pandemic and economic crisis at her Senate confirmation hearing Tuesday. The Senate held confirmation hearings on Tuesday for Yellen and more key members of Mr. Biden's Cabinet.
"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 argued.
Asked what would provide the biggest "bang for the buck" in economic relief, Yellen replied, "Relief that we provide to those who are in the greatest need and to small businesses have the best chance of providing both relief to those who've been so badly affected by the pandemic and creating a great deal of spending per dollar spent." She said this would "create jobs throughout the economy."
Her call to action came just days after Mr. Biden laid out an FDR-style vision for getting the coronavirus under control and tackling the economic crisis that has put millions of people out of work since early last year.
"Over the next few months, we are going to need more aid to distribute the vaccine; to reopen schools; to help states keep firefighters and teachers on the job," Yellen told Congress. "We'll need more funding to make sure unemployment insurance checks still go out; and to help families who are at risk of going hungry or losing the roof over their heads."
Mr. Biden's $1.9 trillion American Rescue Plan includes provisions such as extending enhanced unemployment benefits through September and increasing those benefits from the current $300 a week to $400 a week, sending direct relief to families in the form of $1,400 checks, the national vaccine distribution plan and a series of other relief measures. Yellen acknowledged the $1.9 trillion price tag on Tuesday.
"Neither the President-elect, nor I, propose this relief package without an appreciation for the country's debt burden," Yellen said. "But right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time."
GOP Senator Rob Portman of Ohio asked Yellen about the treasury secretary's role in being the voice of "fiscal sanity" in the administration. She told him that in the short term, she feels "we can afford what it takes to get the economy back on its feet, to get us through the pandemic," and she pointed to research in other countries suggesting that often, "spending money to address a weak economy ends up creating a lower debt burden in the long run than failing to provide that support."
Yellen said "we have to make sure ultimately the deficits that we run, if we do that, are consistent with fiscal sustainability," but she noted that "the world has changed." Yellen predicted that interest rates would remain low for a long time, though she also said that higher interest rates are a risk that must be taken into consideration "in crafting a sustainable and responsible policy."
Yellen, who previously served as Federal Reserve Chair from 2014 to 2018, stated that she believes the Treasury Secretary has a dual mission: Helping Americans get through the pandemic and back to work and also rebuilding the economy so American workers can compete globally.
Yellen was one of five Biden nominees to testify before Senate committees on Tuesday. Secretary of State-designate Tony Blinken, Defense Secretary-designate retired General Lloyd Austin, Department of Homeland Security Secretary-designate Alejandro Mayorkas and Director of National Intelligence nominee Avril Haines also appeared before Senate lawmakers.
If confirmed, Yellen will be the first woman to serve as Treasury Secretary in the department's more than 230-year history. She previously was also the first woman to serve as Federal Reserve chair.
Adam Brewster contributed to this report.
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