Yellen Urges Congress To 'Act Big' To Prop Up Pandemic-Scarred Economy | KGOU
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Yellen Urges Congress To 'Act Big' To Prop Up Pandemic-Scarred Economy

Jan 19, 2021
Originally published on January 19, 2021 4:57 pm

Janet Yellen, President-elect Joe Biden's nominee to lead the Treasury Department, made the case for aggressive economic relief, urging lawmakers to "act big" to fight the financial fallout from the coronavirus pandemic.

At her confirmation hearing Tuesday before the Senate Finance Committee, Yellen pressed lawmakers to pass the $1.9 trillion spending package that the incoming administration has proposed to keep families and businesses afloat as well as to accelerate vaccinations against COVID-19.

"Without further action, we risk a longer, more painful recession now and longer-term scarring of the economy later," Yellen said. "In the long run, I believe the benefits will far outweigh the costs."

Yellen, a labor economist who chaired the Federal Reserve from 2014 to 2018, would be the first woman to lead the Treasury Department. Her nomination has the backing of all the living former Treasury secretaries, both Democrats and Republicans.

Democrats argue that the government was too quick to withdraw support for the economy during the global financial crisis, saying it contributed to a slow recovery. But committee Republicans expressed doubts about some parts of the Biden proposal, which includes a $15 minimum wage and substantial aid to state and local governments.

"Now is not the time to enact a laundry list of liberal, structural economic reforms," said Sen. Chuck Grassley, R-Iowa, the committee's chairman.

GOP critics also expressed concern about adding to the federal debt.

Yellen agreed that fiscal responsibility is an important, long-term goal. But she argued that with interest rates at historic lows, it would be a mistake for the federal government to pinch pennies at a time when COVID-19 is killing thousands of Americans every day.

"The most important thing, in my view, that we can do today to put us on the path to fiscal sustainability is to defeat the pandemic," Yellen said.

She argued that government spending is necessary not only to provide immediate help to struggling families and small businesses but also to fund investments in infrastructure, research and worker training in an effort to promote more equitable growth over the long term.

"Well before COVID-19 infected a single American, we were living in a K-shaped economy — where wealth built upon wealth while working families fell farther and farther behind," Yellen said. "This was especially true for people of color."

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MARY LOUISE KELLY, HOST:

Treasury secretary nominee Janet Yellen used her confirmation hearing today to make the case for another round of federal pandemic relief. Yellen would be the first woman to lead the Treasury Department. She has already chaired the Federal Reserve, and her nomination has the backing of all the living former Treasury secretaries, both Democrats and Republicans. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Janet Yellen says she's mindful that the incoming administration's economic rescue proposal carries a big price tag - $1.9 trillion. But Yellen told the Senate Finance Committee failure to pass the plan would be even costlier, resulting in a longer, more painful recession that leaves many workers permanently scarred.

(SOUNDBITE OF ARCHIVED RECORDING)

JANET YELLEN: The smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs.

HORSLEY: The plan includes money to speed up delivery of COVID vaccines, expanded help for the unemployed and $1,400 relief payments for most Americans. It also includes hundreds of billions of dollars for state and local governments, which have already laid off some 1.3 million workers.

(SOUNDBITE OF ARCHIVED RECORDING)

YELLEN: With budget shortfalls, we're going to see further layoffs of essential workers, including policemen and firefighters and sanitation workers.

HORSLEY: Much of the Biden rescue package is likely to meet resistance from Senate Republicans. Iowa Senator Chuck Grassley says this is not the time for what he calls a laundry list of liberal economic reforms. Pennsylvania Senator Pat Toomey questioned the need for additional relief when he says the ink is barely dry on the $900 billion bill that Congress passed last month.

(SOUNDBITE OF ARCHIVED RECORDING)

PAT TOOMEY: The only organizing principle that I can discern is it seems to spend as much money as possible seemingly for the sake of spending it.

HORSLEY: But congressional Democrats want to avoid repeating what they see as the government's mistake during the last recession - cutting off aid too quickly. Oregon Senator Ron Wyden and blasted what he calls snooze button relief, temporary stopgap measures that have to be renewed again and again. Wyden notes the emergency unemployment benefits passed last month are set to expire in the middle of March even though it's doubtful millions of recipients will be back to work by then.

(SOUNDBITE OF ARCHIVED RECORDING)

RON WYDEN: There are groceries in my refrigerator that are going to last longer than Mitch McConnell's unemployment agenda.

HORSLEY: The Biden proposal would extend jobless benefits at least through September and longer if conditions warrant. The incoming administration is also pushing for long-term investments in infrastructure and worker training and for a $15 minimum wage. While low-income workers have been hit hardest by the pandemic, Yellen says their problems didn't just start last year.

(SOUNDBITE OF ARCHIVED RECORDING)

YELLEN: Well before COVID-19 infected a single American, we were living in a K-shaped economy, one where wealth built upon wealth while working families fell farther and farther behind.

HORSLEY: Much of that agenda will face headwinds in a closely divided Congress, but Yellen's confirmation is on a fast track. The Finance Committee asked her to respond to senators' written questions by tomorrow.

Scott Horsley, NPR News, Washington.

(SOUNDBITE OF HANNAH PEEL'S "ARCHID ORANGE DWARF") Transcript provided by NPR, Copyright NPR.