Janet Yellen, President-elect Joe Biden's nominee to lead the Treasury Department, made the case for the quick passage of a sweeping $1.9 trillion coronavirus relief bill proposed by the incoming administration, urging lawmakers to "act big" to combat the economic fallout from the coronavirus pandemic.
“More must be done,” Yellen told the Senate Finance Committee during her confirmation hearing on Tuesday. “Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later. In the long run, I believe the benefits will far outweigh the costs."
Democrats on the committee largely voiced support for the $1.9 trillion proposal, which includes $20 billion to accelerate vaccine distribution, a $15-an-hour minimum wage increase, an extension of supplemental unemployment benefits through the end of September, a one-time $1,400 stimulus check and a temporary expansion of the Earned Income Tax Credit and Child Tax Credit.
But deficit-weary Republicans raised concerns about certain elements in the relief package, including the third round of direct cash payments to Americans earning less than $75,000 and the push to raise the federal minimum wage to $15 per hour. Last year, the gap between what the government spent and what it collected climbed to a record $3.1 trillion.
"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.
But Yellen — who acknowledged the U.S. eventually needs to reduce its debt and move closer to long-term fiscal sustainability — argued that with record low-interest rates, the federal government needs to address the pandemic-induced downturn before it can curtail spending.
“Right now, with interest rates at historic lows, the smartest thing we can do is act big,” she said. “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.”
Yellen, a battle-tested economist who led the Federal Reserve from 2014 to 2018, would be the first woman to lead the Treasury Department since the institution was established in 1789. She is expected to win quick Senate confirmation, with Sen. Ron Wyden, D-Ore., saying he hoped she could be confirmed by the full Senate as soon as Thursday.
This history-making Treasury nomination of Yellen was supported in a letter from eight previous Treasury secretaries, who served both Republican and Democratic presidents.
Former President Barack Obama nominated Yellen to lead the U.S. central bank in 2014. She stepped down four years later, in 2018, when President Trump decided not to nominate her for a second four-year term, instead tapping Jerome Powell for the role.
Yellen's financial disclosure forms reveal that she listed more than $7 million in speaking fees from several top Wall Street firms, including Goldman Sachs, Bank of America, Google and Salesforce since she left the Fed. She has agreed to recuse herself from Treasury matters involving certain financial institutions.