Janet Yellen: Biden’s COVID-19 relief plan could restore full employment by next year

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Martin Crutsinger and Alan Fram, Associated Press
Published 4:35 p.m. ET Feb. 7, 2021 | Updated 4:49 p.m. ET Feb. 7, 2021

Janet Yellen has become the first woman secretary of the Treasury in U.S. history after she received the oath of office from Kamala Harris, the first female vice president in U.S. history. (Jan. 26)

AP Domestic

WASHINGTON — Treasury Secretary Janet Yellen said Sunday the country was still in a “deep hole” with millions of lost jobs but that President Joe Biden’s $1.9 trillion relief plan could generate enough growth to restore full employment by next year.

Republican senators argued that Biden’s proposal was too expensive, and they cited criticism from Larry Summers, a treasury secretary under President Bill Clinton, that passage of the measure could run the risk of triggering runaway inflation. Summers also contended that Biden’s plan would make less money available for other initiatives such as improving the nation’s infrastructure.

Yellen, a former Federal Reserve chair who is the first woman to lead the Treasury Department, said the central bank had the tools to handle any potential inflationary threat. She said the urgent need now was to deal with the problems raised by the pandemic-induced recession: as joblessness, lost small businesses and reopening schools.

“We face a huge economic challenge here and tremendous suffering in the country. We have got to address that,” Yellen said. “That’s the biggest risk.”

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Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Janet Yellen became the first woman to head the U.S. Treasury Department on Jan. 25, 2021. She is the first person to head the Treasury, Federal Reserve and the White House Council of Economic Advisers.
Seen here, Yellen speaks during an event to name President-elect Joe Biden’s economic team on Dec. 1, 2020 in Wilmington, Del. Alex Wong, Getty ImagesFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Janet Yellen, President-elect Joe Biden’s nominee for Secretary of the Treasury, participates remotely in a Senate Finance Committee hearing on Jan. 19, 2021 in Washington, DC. Pool photo by Anna MoneymakerFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Secretary of the Treasury nominee Janet Yellen speaks during an event to name President-elect Joe BidenÕs economic team at the Queen Theater on Dec. 1, 2020 in Wilmington, Del. Alex Wong, Getty ImagesFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Federal Reserve Chair Janet Yellen appears on Capitol Hill in Washington, Feb. 15, 2017, before the House Financial Services Committee for the Fed’s semi-annual Monetary Policy Report to Congress. J. Scott Applewhite, APFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Federal Reserve chair Janet Yellen, left, former Federal Reserve chairs Ben Bernanke, center, and Paul Volcker, right, appear together, April 7, 2016, in New York. Kathy Willens, APFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

The Washington news conference of Federal Reserve Chair Janet Yellen is reflected in a specialist’s screen on the floor of the New York Stock Exchange on March 16, 2016. Richard Drew, APFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

President Barack Obama speaks as Chair of the Federal Reserve Janet Yellen (L) and Director of the Consumer Financial Protection Bureau Richard Cordray listen during a meeting with financial regulators at the Roosevelt Room of the White House March 7, 2016 in Washington, DC. Alex Wong, Getty ImagesFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Federal Reserve Board Chairwoman Janet Yellen answers questions at a news conference following a Federal Open Market Committee meeting Sept. 17, 2015 in Washington, DC. Win McNamee, Getty ImagesFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Treasury Secretary Jacob Lew, right, smiles as he talks with Federal Reserve Chair Janet Yellen during the open session of the Financial Stability Oversight Council, Jan. 21, 2015, at the Treasury Department in Washington. Pablo Martinez Monsivais, APFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Thao Le-Nguyen poses for a selfie with Federal Reserve Chairman Janet Yellen, right, at the office of CONNECT, a coalition of local organizations that provides employment services in Chelsea, Mass, Oct. 16, 2014. Michael Dwyer, APFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Federal Reserve Bank Chairwoman Janet Yellen testifies to the Joint Economic Committee during a hearing entitled ‘The Economic Outlook,’ on Capitol Hill, May 7, 2014 in Washington, DC. Drew Angerer, Getty ImagesFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

Federal Reserve vice-chair Janet Yellen attends a ceremony marking the centennial of the founding of the Federal Reserve in Washington on Dec. 16, 2013. NICHOLAS KAMM, AFP/Getty ImagesFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

President Barack Obama claps during a press conference to nominate Janet Yellen to head the Federal Reserve at the White House on Oct. 9, 2013 in Washington, DC. Win McNamee, Getty ImagesFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

President Clinton meets with reporters in the Rose Garden of the White House, Feb. 10, 1998, to talk about the economy. Joining the president, from left are, Jeff Frankel, a member of the Council of Economic Advisers; Vice President Al Gore; Rebecca Blank, a nominee to the Council of Economic Advisers; Janet Yellen, chair, Council of Economic Advisers; Dan Tarullo, assistant to the president, International Economic Policy; and Labor Secretary Alexis Herman. RUTH FREMSON, Associated PressFullscreen

Janet Yellen: Biden's COVID-19 relief plan could restore full employment by next year

April 1997 USA TODAY portrait of Janet Yellen, Chair of the President’s Council of Economic Advisors. MATT MENDELSOHN, USA TODAYFullscreen

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Dems, Biden COVID relief plan to boost child tax credit

The House and Senate this past week approved the legislation necessary to pass Biden’s package through a process known as reconciliation, which only requires 51 votes in the Senate. The Senate is split 50-50, with Vice President Kamala Harris the tiebreaking vote.

House Speaker Nancy Pelosi, D-Calif., has said she said she hopes to approve the specific budget details of the Biden proposal over the next two weeks, aiming to get the measure through Congress before current unemployment benefits run out in mid-March.

House Democrats plan to propose boosting the child tax credit, now at a maximum of $2,000, to as much as $3,600 per child annually, according to information obtained Sunday by The Associated Press. The proposal will be part of the COVID-19 relief bill they are writing that is expected to largely follow Biden’s plan.

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The House Ways and Means Committee has jurisdiction over about half of Biden’s $1.9 trillion proposal, including support for workers, the jobless and people’s health care costs. The committee’s Democrats were expected to release their full plan Monday.

The child tax credit increase is expected to help about 20 million lower-earning people. The Democrats’ bill will follow Biden’s proposal to increase the child credit to up to $3,600 for each child under age 6 and as much as $3,000 for those up to 17.

Under the House Democrats’ plan, those amounts would begin to phase out for individual parents earning $75,000 yearly and couples making $150,000. All families would receive the full amount, even if they owe no federal income taxes, and payments to families would be made monthly.

“This money is going to be the difference in a roof over someone’s head or food on their table,” the committee chairman, Rep. Richard Neal, D-Mass., said in a written statement. The child tax credit proposal is supported by the White House and Senate Democrats, according to House Democratic aide who was not authorized to publicly discuss private deliberations and spoke on condition of anonymity.

The child tax credit details were first reported by The Washington Post.

But at $1.9 trillion, is Biden’s COVID stimulus plan too big? 

Republicans cited the warnings raised by Summers that the $1.9 trillion plan was too large and that Biden was violating his campaign promise to work with Republicans once elected.

“Larry Summers is a liberal Democrat … in favor of big government spending and he has said, this is way too much,” said Sen. Pat Toomey, R-Pa.

Biden and his team have argued that a big economic package is needed to avoid the mistakes made in 2009 when the Obama administration was unable to get increased support through Congress, resulting in a long, slow recovery after the 2008 financial crisis.

The government reported Friday that the economy only created 49,000 jobs in January after having lost jobs in December. Yellen said the recent jobs reports raised fears that the job market is stalling with 10 million people still unemployed and 4 million who have dropped out of the labor market.

“We’re in a deep hole with respect to the job market and a long way to dig out,” Yellen said.

Could take until 2025 to return to 4% unemployment, Yellen says

Citing a report from the Congressional Budget Office, Yellen said the unemployment rate could remain elevated for years to come and it could take until 2025 to get unemployment back to 4%. The jobless rate stood at a half-century low of 3.9% a year ago before the pandemic hit.

She said if Biden’s relief package is approved, the country could get back to full employment by next year.

“There’s absolutely no reason why we should suffer through a long, slow recovery,” Yellen said.

Janet Yellen first female Treasury chief: She could be a calming influence in a divided Washington

The Biden package has been criticized for setting the cutoff for $1,400 direct payments too high, allowing wealthier Americans to collect the payments. Yellen said the administration was willing to negotiate with lawmakers but did not specify what that threshold should be.

Biden said in a CBS interview Friday that he believed his push to raise the federal minimum wage to $15 per hour from $7.25 probably would have to be removed in order to meet Senate rules on budget reconciliation.

But Sen. Bernie Sanders, chairman of the Senate Budget Committee, said on CNN’s “State of the Union” that committee lawyers were trying to build the case that a wage increase would not violate those rules.

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