US Treasury Secretary Yellen said the United States could return to full employment in 2022 if it issues a strong enough stimulus package for the coronavirus, but would otherwise risk a slower recovery in employment and the economy.
“I’m afraid the job market will stagnate,” Yellen said on CBS’s “Face the Nation” in one of two interviews she gave Sunday morning.
Yellen said that low-wage workers, minorities and women are the most challenging segments and can face “permanent” damage without a prolonged slowdown. “We are in a deep hole in the job market and we have a long way to go,” he said.
In an interview with “State of the Union” on CNN, Yellen stated that without adequate support, the recovery of the US job market could continue until 2025.
Recognizing that President Biden’s $ 1.9 trillion incentive plan is not specifically aimed at creating jobs, Yellen said “the spending it will generate will create demand for workers.”
Last week, former Treasury Secretary Larry Summers wrote in a Washington Post publication that the Biden bailout could be huge and carry “enormous risks,” including inflation.
By not spending enough to emerge from the coronavirus pandemic in force, Yellen dismissed the concerns, saying they were small compared to the ‘wounds’ facing the economy.
If inflation becomes a problem, he said, “I can tell you that we have the tools to deal with this risk,” citing his own academic work and experience at the Fed, where he held various positions for more than 16 years, including presidency.
“As Treasury minister, I have to worry about all the risks to the economy,” Yellen said.
Biden’s plan did not receive much support from Republicans with whom he promised to work together.
Republican Senator Pat Toomey told CNN on Sunday: “Now that you’ve heard the generalizations that people are suffering from, let’s spend another $ 2 trillion. This is not the correct solution ”, suggested a more specific approach.
While Yellen has brought intellectual weight to Biden’s presentation of incentives to Congress after decades of working in an independent Fed, Toomey does not see him as a nonpartisan player. “He is no longer the chairman of the independent Fed. “Now he is the minister of the Treasury, that is to say, his duty is to be the greatest animator of any economic policy that President Biden wants.”
One point of disagreement between Republicans and Democrats is the direct payments of $ 1,400 that Biden promised. According to Yellen, Biden is discussing with Congress how best to target these payments to the families who need the money most and are most likely to inject it directly into the economy.
He said the incentive “should go to people who need money and live in low-income households. We need a proper analysis. “
While there are some restrictions on the types of policies they can implement, Congress last week lifted a major hurdle to allow Democrats to pass their financial aid package without Republican votes.
Democrats in the White House and Congress also continue to discuss the possibility of a bipartisan deal with some moderate Republicans. For Biden, who started the presidency with the message of unity between the two parties, the goal is to provide Republican support for the incentive package.
Last week, 10 Republicans, which is the number all 50 Senate Democrats must attend to pass a bill, proposed a $ 618 billion incentive plan, but Democrats said it was completely insufficient.
Even if Democrats decide on a single compromise bill, it will be difficult to negotiate due to the razor’s edge balance in the Senate. Passage of the bill will require the 50 Senate Democrats and the vote of Vice President Harris, who broke the tie.
At least one Democrat, West Virginia Sen. Joe Manchin, was skeptical about some elements of the Biden plan. Like Toomey, he wants the incentive payments to be more specific and also says he doesn’t support raising the minimum wage to $ 15 an hour.
Democrats must pass the new stimulus package before their expanded unemployment benefits run out on March 14.
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