WASHINGTON – Janet L. Yellen, candidate for President-elect Joseph R. Biden Jr. for Treasury secretary, on Tuesday pledged to continue policies to help workers whose livelihoods have been disrupted by the pandemic as it was warning lawmakers as the US economy painfully stretched ahead of the full rollout of coronavirus vaccines.
Ms. Yellen made her comments during her confirmation hearing before the Senate Finance Committee. Former Chairman of the Federal Reserve, she enjoys bipartisan support and should gain confirmation. But the hearing highlighted the challenges the Biden administration will face in trying to put its economic agenda in place, with Republican lawmakers early drawing the battle lines and voicing opposition to the proposed $ 1.9 trillion stimulus package. by Mr. Biden, as well as other taxes and spending plans.
With Democrats holding a slim majority in the House and tightly controlling the Senate, Mr. Biden may need the support of Republicans to push some of his priorities through Congress. But on Tuesday, those lawmakers resuscitated concerns about the growing federal budget deficit to argue against Mr. Biden’s plans and expressed their continued opposition to several of his priorities, including sending more aid to states and to local governments, increasing unemployment benefits and increasing the minimum wage.
“We envision another spending explosion,” said Republican Senator Patrick J. Toomey of Pennsylvania. “The only organizing principle I can understand, it seems, is to spend as much money as possible, seemingly for the sake of spending it.
Ms Yellen, a labor economist, said with certainty that the biggest long-term threat to the country was not the federal budget deficit, but doing too little to help workers.
“Without further action, we risk a longer and more painful recession now and long-term scars in the economy later,” she said.
She stressed the importance of ensuring that recovery efforts take into account the needs of women and minorities, who were vulnerable at the onset of the crisis and who suffered most of the economic fallout.
The hearing showed the glaring differences in shaping the policies that are about to take hold of Washington. From China and climate change to tax policy and banking regulation, the Biden administration is on the verge of a dramatic change of course from the direction President Trump has given.
Mr Biden’s $ 1.9 trillion stimulus package would provide $ 1,400 in direct payments to the public, more extensive unemployment insurance, money for states and cities, and a solid investment in health spending to deploy vaccines and testing capabilities. Although Congress passed a $ 900 billion package last month, the economy is showing signs of slowing as employers cut jobs and vaccinations fell short of government targets.
Mr Biden, who served in the Senate for 36 years, said he wanted to involve Republicans in his plan. However, it is not clear to what extent Democrats in Congress will try to work with Republicans on the legislation or whether they will try to advance their priorities using a mechanism called budget reconciliation, which only requires a simple majority. in the Senate.
And while Mr Biden has suggested he wants an initial package that focuses directly on the pandemic, some lawmakers, such as Senator Bernie Sanders of Vermont, the new Chairman of the Budget Committee, are already calling for tax increases for the rich.
Republicans pressured Ms Yellen over the tax policies she would pursue and whether the White House would try to undo Mr Trump’s tax cuts in 2017. She said any moves to raising taxes would only come after the health crisis has eased.
“Right now, the goal is to provide relief and help families keep a roof over their heads and eat food, not raise taxes,” he said. she declared.
Nonetheless, Ms Yellen made it clear that the Biden administration would look for ways to use tax policy to improve the economic lives of middle and low-income households. “I believe in a fair and progressive tax code where wealthy individuals and businesses pay their fair share,” she said. “We need to rebuild our economy so that it creates more prosperity for more workers.”
Other Republicans on the committee challenged Ms. Yellen with familiar complaints about Democrat-backed economic policies. They have warned that raising the federal minimum wage to $ 15 an hour from $ 7.25, as Mr. Biden wants to do, would hurt struggling small businesses. And they argued that another round of stimulus checks would give money to many people who didn’t need it.
“Now is not the time to enact a long list of liberal structural economic reforms,” said Senator Charles E. Grassley of Iowa, who remains the committee chairman for now.
Appearing at the hearing via videoconference, Ms Yellen, 74, calmly refuted criticism of her proposals. “Many families bear exceptional financial burdens that are not covered by unemployment benefits,” she said.
Despite backing $ 1.5 trillion in tax cuts and more government spending under Mr. Trump, Republicans have seemed increasingly belligerent about the national debt since Mr. Biden won the election. Asked how the United States could afford the policies proposed by the Democrats, Ms. Yellen argued that the proposals were financially responsible.
“Avoiding doing what we need to do now to deal with the pandemic and the economic damage it is causing would likely leave us in an economic situation and in terms of our debt situation worse than doing what is necessary” , she said.
Pressed on minimum wage, Ms Yellen pointed to research that found little evidence of the kind of large-scale job losses and other damage that corporate lobby groups have expressed deep concern over the years. . For example, when a state raised the minimum wage and a neighboring state did not, the job losses in the state with the increase were minimal, she said.
Tackling the pandemic is Ms Yellen’s top priority, but she has signaled a very different approach from the Treasury Department than that taken by the man she would replace, Steven Mnuchin.
The Treasury Secretary is the country’s chief economic diplomat, and Ms. Yellen will be tasked with restoring relations around the world after four years of Mr. Trump’s inflammatory tactics. The most critical strategic relationship is with China, she said, and she intends to force American allies to push to end China’s “illegal, unfair and abusive” practices.
The remarks indicated that Ms Yellen believed that the trade deal Mr Trump signed with China a year ago was insufficient and that his strategy of bilateral tariff bargaining had failed. But that doesn’t mean the Biden administration will take a more accommodating approach. Ms. Yellen said she would ensure that the “full range” of economic tools are deployed to tackle Chinese misconduct, and called on the Chinese government to expose “horrific human rights violations.”
The Treasury Department, headed by Ms. Yellen, would also focus on climate change and the risk that rising temperatures pose to the financial system. She said she would appoint a senior climate official in the department, create a “hub” to assess financial risks and study tax incentives for electric cars and other environmentally friendly policies.
The Trump administration has questioned the science behind the causes of climate change, and Mr. Mnuchin fought for references to climate change not to appear in joint statements at international economic summits. Despite driving an electric car, he doesn’t think the industry should be subsidized.
Senator Ron Wyden, the Democrat from Oregon who is set to become chairman of the Finance Committee, said he hoped Ms Yellen would receive a vote on the Senate floor as early as Thursday.
Eight former Treasury secretaries signed a letter on Tuesday calling for his prompt confirmation and describing his credentials as second to none. In a note to Treasury staff on her last full day of work, Mr. Mnuchin wished Ms. Yellen “great success”.