Janet Yellen, former chair of the Federal Reserve Board under Barack Obama, has been confirmed as the new Treasury Secretary serving the Biden administration. Known to be a fiscal Dove and a Keynesian economist, her preference is to support low-interest rates and low unemployment while encouraging government regulation to aid in a stable economy.
Yellen spent a good part of her career as an academic professor and lecturer at Harvard, The London School of Economics, and U.C. Berkeley. She transitioned from her role as a professor to serving within government, first as the President of the Federal Reserve Bank of San Francisco and eventually becoming the Federal Reserve Chair from 2014 to 2017.
After leaving her position at the federal reserve, Yellen became a Distinguished Fellow in Residence at the Brookings Institute and earned speaking fees from major Wall Street banks.
During last week’s Senate Finance Committee hearings for her confirmation, Yellen was asked questions regarding the 2017 Tax Cuts and Reforms due to expire in 2026. Many middle-class citizens benefited from the tax cut under the former administration, but she will face an increase when they expire. Biden had pledged no tax increases to households making less than $400,000 per year, and Yellen has expressed her desire to work with Congress to ensure no increase will occur for this group.
Besides, Yellen supports a federal minimum wage increase to $15 per hour. The Congressional Budget Office believes this “move could cost upwards of 3.7 million workers a job.” Still, in Yellen’s opinion, this increase will fuel the economy by stimulating spending by the workers benefiting from the increase. She stated: “Raising the minimum wage will lift tens of millions of Americans out of poverty while expanding access to opportunity for countless small businesses nationwide.”
To combat climate change, Biden supports a carbon tax on fossil fuel producers such as coal, natural gas, and oil. In a Feb. 2019 podcast with the Brookings Institute, Dollars, and Sense, Yellen described implementing a $40 tax per ton on fossil fuel suppliers with an increase of tax faster than inflation until emission goals are met. The revenue would be distributed to households to offset increases in higher energy costs.
Yellen had had experience working with China’s central bank during the 2015 devaluation that surprised global markets when the Chinese Yuan was devalued against the U.S. dollar. The devaluation was thought to be a form of currency manipulation to boost exports after the U.S. dollar rose in value, pulling up the Chinese currency. China responded that the devaluation was in preparation to move to a market-based economy.
In response to the Senate Finance Committee’s question on competing with foreign countries, including China, and bringing offshore jobs back to the U.S., Yellen responded: “The Biden administration will engage in a whole-of-government approach to China that uses our available tools in a manner that is designed to achieve our economic, national security, and foreign policy goals. U.S. efforts to maintain its technological and innovation edge, including insensitive ‘dual-use’ technologies, must focus on reshoring critical supply chains.”
Also, Yellen stated: “The Biden Administration will be willing to make use of the full array of tools to hold China accountable. Our approach to date has focused on a unilateral approach — and, as a result, could have been more effective. Going forward, we should strive to meet this important challenge by building a united front of U.S. allies and partners, including through multilateral institutions, to confront China’s abusive behaviors.”