Treasury Secretary Janet Yellen on Sunday defended the Biden administration’s pandemic relief plan, warning that the “most important risk is that we leave workers and communities scarred by the endemic economic toll that it’s taken.”
“We have 10 million Americans who are unemployed, another 4 million who’ve dropped out of the labor force, particularly women who have child care responsibilities,” Yellen said on CNN’s “State of the Union.” “We need to reopen our schools, make sure that children aren’t falling behind” and provide help to struggling small businesses, she added.
The former Fed chair’s remarks occurred after she was asked to respond to a Washington Post op-ed by former Treasury secretary and White House official Larry Summers, which asserted that President Joe Biden’s stimulus plan may be too large and could lead to inflation. Summers’ assertions have been praised by many Republicans and some Democrats, who see the Biden package as bloated.
“My predecessor has indicated that there’s a chance that this will cause inflation to rise. And that’s also a risk that we have to consider,” Yellen said of Summers. “I’ve spent many years studying inflation and worrying about inflation. And I can tell you we have the tools to deal with that risk if it materializes, but we face huge economic challenge here and tremendous suffering in the country.”
Yellen said Biden’s $1.9 trillion American Rescue Plan was “up to the job” of addressing the nation’s myriad pandemic-induced challenges.
She cited a recent Congressional Budget Office analysis indicating it could take until 2025 for the unemployment rate to reach pre-pandemic levels without additional support.
“We would have a long, slow recovery like we had after the financial crisis, but this package is going to really speed recovery and analysis by Moody’s and economists at the Brookings Institution show that very clearly we will get people back to work much sooner with this package,” Yellen said.
She added: “There’s absolutely no reason why we should suffer through a long, slow recovery.”
Shortly after she spoke, Sen. Pat Toomey (R-Pa.) sided with Summers.
“What you hear is these broad generalities about, well, people are suffering, so let’s spend another $2 trillion,” he told host Jake Tapper. “It’s not the right solution. Larry Summers is a liberal Democrat who’s a Keynesian, in favor of big government spending, and he has said, this is way too much.”
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