By Alfonso Fernandez
Washington, Jan 19 (efe-epa).- President-elect Joe Biden’s nominee to head the United States Department of the Treasury urged Congress on Tuesday to help mitigate the coronavirus-triggered economic crisis by passing a new round of fiscal stimulus.
In remarks during her virtual confirmation hearing, Janet Yellen told members of the Senate Finance Committee that another huge spending package is needed to get the economy on track and avert further serious consequences down the road.
“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,” she said. “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.”
Biden has unveiled an ambitious, $1.9 trillion Covid-19 relief bill that includes a third round of direct payments to most Americans in the amount of $1,400 per adult and a weekly unemployment insurance supplement of $400 a week through September.
The bill calls for the federal minimum wage to be more than doubled to $15 an hour and for $350 billion in emergency funding to be provided to struggling state and local governments.
It remains to be seen, however, whether the bill will win approval by both houses of Congress.
Democrats hold a clear majority in the House of Representatives, but in the upper house there will be 50 senators caucusing with the Democratic Party and 50 with the Republican Party, with incoming Vice President Kamala Harris potentially casting the tie-breaking vote.
Many Republicans oppose another massive stimulus package, and even those GOP members who have expressed a willingness to work with Yellen and the Biden administration are critical of the spending plan.
“The ink is barely dry on the second-largest stimulus package in American history, nearly a trillion dollars, after nearly $3 trillion (last year), and we’re looking at another spending blowout,” Pat Toomey of Pennsylvania said.
Yellen, for her part, acknowledged that a new stimulus package of this magnitude would significantly increase the national debt but said the circumstances call for bold action.
“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.”
If confirmed as expected before the end of the week, Yellen would become the first female treasury secretary in US history and also the first person to have served as head of the Treasury Department; the Federal Reserve, which she chaired from 2014 to 2018; and the White House Council of Economic Advisers.
During the hearing, Yellen also took a much tougher line against China than she did while heading up the US central bank.
She slammed the “abusive, unfair and illegal practices” in the areas of trade and technology transfers by the Asian giant, saying that Beijing is “clearly our most important strategic competitor.”
“China is undercutting American companies by dumping products, erecting trade barriers and giving illegal subsidies to corporations. It’s been stealing intellectual property and engaging in practices that give it an unfair technological advantage,” Yellen said.
She added that the Biden administration will use a “full array” of tools to remedy the situation.
While those lines could have been uttered by outgoing President Donald Trump, Yellen said a new strategy will be adopted.
According to the respected economist, the US can best achieve its goals by working with its allies as opposed to taking a unilateral approach.
Lastly, Yellen said she opposed any attempt to manipulate currency to gain a competitive advantage.