By Kate Davidson
WASHINGTON -- Janet Yellen made the case for another sweeping
economic aid package at her hearing to be the next U.S. Treasury
secretary Tuesday, pushing back against Republican skepticism of
the need for more deficit spending to bolster the recovery.
Ms. Yellen, a former Federal Reserve chairwoman, said the
incoming Biden administration's top priority is to relieve
suffering caused by the coronavirus pandemic, including providing
aid for families, businesses and communities hardest hit by the
downturn as well as spending to bring the virus under control.
"We need to make sure that people aren't going hungry in
America, that they can put food on the table, that they're not
losing their homes and ending up out on the street because of
evictions," Ms. Yellen said. "We really need to address those forms
of suffering, and I think we shouldnt compromise on it."
If she is confirmed by the Senate as expected, Ms. Yellen will
become the administration's top economic-policy spokesperson
responsible for selling President-elect Joe Biden's $1.9 trillion
proposal, which includes another round of stimulus payments,
extended jobless benefits, grants for small businesses and a
nationwide vaccination program. After that, Ms. Yellen said,
long-term investments will be needed in areas such as
infrastructure and workforce training to help make the U.S. economy
more competitive and productive.
Delayed or inadequate support, she warned, could lead to a
more-protracted economic recovery and cause long-term economic
damage in the form of permanent job losses and business closures
that could weigh on growth for years to come.
"It's really critically important to provide this relief now,"
she told lawmakers on the Senate Finance Committee, which will vote
on her nomination.
Stocks rose Tuesday as Ms. Yellen's testimony spurred
expectations for additional stimulus spending, with the Dow Jones
Industrial Average gaining 116.26 points, or 0.4%, to 30930.52.
Ms. Yellen was one of several nominees for top posts in the new
administration who testified at Senate confirmation hearings on the
eve of Mr. Biden's inauguration. The others were Antony Blinken for
secretary of state, Gen. Lloyd Austin for defense, and Avril Haines
for director of national intelligence.
Like the other nominees, Ms. Yellen sounded a hawkish note on
China, calling it "our most important strategic competitor" and
promising to address its "abusive, unfair and illegal practices,"
including undercutting American companies by dumping products,
erecting trade barriers and stealing intellectual property.
"These policies, including China's low labor and environmental
standards, are practices that we're prepared to use the full array
of tools to address," she said.
Ms. Yellen affirmed the U.S.'s commitment to market-determined
exchange rates, and she made clear the U.S. doesn't seek a weaker
dollar for competitive advantage, repeating comments The Wall
Street Journal reported Monday. She added that efforts by foreign
countries to manipulate their currencies are unacceptable. China
has been accused by successive administrations of keeping its
currency artificially weak.
Some Republicans on the committee balked at Ms. Yellen's call
for further spending on top of the trillions of dollars Congress
authorized last year, including a $908 billion package enacted in
December. And they questioned her about the limits and risks of
additional government borrowing and the wisdom of tax increases
while the economy remains weak.
"The only organizing principle that I can discern is it seems to
spend as much money as possible, seemingly for the sake of spending
it," Sen. Pat Toomey (R., Pa.) said of the latest plan.
GOP senators also objected to what outgoing Finance Committee
Chairman Chuck Grassley of Iowa called a "laundry list of liberal
structural economic reforms" in Mr. Biden's relief package. Such
measures include a $15 minimum wage, as well as aid to state and
local governments -- a sticking point in recent talks in
Congress.
Ms. Yellen acknowledged the government's mounting debt load,
which stands at $21.6 trillion -- or roughly 100% of a year's
economic output. But she urged lawmakers to put those concerns
aside for now. Interest rates are at historic lows and expected to
remain there for some time, making borrowing more affordable, she
said.
"To avoid doing what we need to do now to address the pandemic
and the economic damage that it's causing would likely leave us in
a worse place fiscally," she said, "than taking the steps that are
necessary and doing that through deficit finance."
She assured senators that the Biden team doesn't immediately
plan to pursue tax increases but would consider them as part of a
later package that focuses on long-term investments. Asked whether
she would support a repeal of the cap on state and local tax
deductions, a provision Democrats sought to include in earlier
economic aid packages, Ms. Yellen said it is important to study the
effect of the cap before making a decision.
The Senate confirmation hearing is Ms. Yellen's fifth during her
three decades at the forefront of economic policy-making. If
confirmed, she will be the first woman to serve as Treasury
secretary and the first person to have led the Fed, the Treasury
and the White House Council of Economic Advisers.
Ron Wyden (D., Ore.), who will become Finance Committee chairman
when Democrats take control of the Senate, said he hoped Ms.
Yellen's nomination would reach the Senate floor for a confirmation
vote by Thursday. Though she sometimes sparred with Republicans in
her previous role leading the Fed, her hearing Tuesday was cordial,
and several Republicans said they looked forward to working with
her, a sign she faces little GOP resistance to her nomination.
Ms. Yellen will take the reins of an economic recovery that is
faltering amid a monthslong surge in virus cases and deaths, which
have topped 400,000 since the pandemic began. After seven months of
job gains, U.S. employers shed 140,000 jobs in December, while
retail sales fell for the third straight month.
As Treasury secretary, Ms. Yellen would chair the Financial
Stability Oversight Council, the panel of regulators charged with
monitoring risks in the financial system. She said she intends to
appoint a senior-level official to focus on assessing the financial
stability risks and tax policy incentives around climate change.
"Climate change is an existential threat," she said.
Write to Kate Davidson at kate.davidson@wsj.com
(END) Dow Jones Newswires
January 19, 2021 17:38 ET (22:38 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.