Newly installed Secretary of the Treasury Janet Yellen said on Thursday that signs of improvement in the United States economy are not a reason to shrink the Biden administrations $1.9 trillion relief plan because they believe the economy is still in a “deep hole” and many are still hurting.
In an interview Secretary Yellen said that in addition to the $1,400 stimulus checks that are currently in the relief plan and expanded benefits for the unemployed, the Biden administration is looking to unveil an infrastructure program later in the year that will be aimed at boosting economic growth. She said that, “We are digging out of a deep hole…last year was the worst year for economic growth since World War II.”Arguments being made by Republicans that the package proposed by Biden is too big, following almost $4 trillion in government spending approved last year, are being rejected by the new Treasury Secretary.
Yellen said that with the stimulus passed last year there are still nine million more people out of work and four million who have dropped out of the labor force since last year. She also noted that the Congressional Budget Office has projected that, without the Biden administrations plan, it would take until 2024 for the economy to get back to full employment. With this new package that goal could be achieved by next year. Yellen said that, “The costs of doing too little is much higher than the price of doing something big,” and “I really think the benefits will far outweigh the costs in the long run.”
Secretary Yellen has also cut concerns that the larger government spending with soaring budget deficits would trigger unwanted inflation. The Federal Reserve, which Yellen led from 2014 to 2018, had the tools to deal with such issues. The larger threat is that “scarring” would leave people out of the labor market for longer which could make it harder to get back into the labor market. This can lead to a permanent damage to a person’s life.
Yellen has said that parts of the administration’s infrastructure proposal will be paid for with tax increases on wealthy corporations and high income individuals which is a position that Republicans are adverse to. When asked how much the “Build Back Better” plan would cost, Secretary Yellen said that the plan is still in development and there is no cost estimate by the administration at this time.