US Treasury Secretary Janet Yellen has insisted that a large stimulus package is still necessary to get the country’s economy back to full strength, despite reports suggesting that economic growth is off to a faster start than anticipated in 2021.
Last week, the Atlanta Federal Reserve predicted a Gross Domestic Product (GDP) growth of 9.5% in the first quarter with the pandemic receding. Recent data has also shown an increase in retail sales which has largely been attributed to the late-2020 stimulus checks from Congress, as well as steady gains in real estate and manufacturing.
In an exclusive interview sighted by The Vaultz News, the US Treasury Secretary said the $1.9 trillion relief package proposed by President Biden is still needed to help America get back to full employment in a year and further boost growth.
“We think it’s very important to have a big package [that] addresses the pain this has caused – 15 million Americans behind on their rent, 24 million adults and 12 million children who don’t have enough to eat, small businesses failing.
“I think the price of doing too little is much higher than the price of doing something big. We think that the benefits will far outweigh the costs in the longer run.”
Janet Yellen
Also, in spite of the reported economic growth, the unemployment rate is still high with 10 million workers still out of jobs. The US labour department indicates that millions of the unemployed people are victims of business closures instituted by governments in response to the pandemic
In addressing this, Yellen said that she feels President Biden’s $1,400 stimulus checks should be directed to these displaced workers especially.
“You know, there’s so much pain in this economy. I think these checks really will provide relief and they’ll help jump-start our economy, giving people money to spend when we can get out again and go back to our former lives. So you know, there’re a lot of families that are operating on the margin. And I think these checks will really help them.”
When quizzed about inflation, Yellen said she’s not worried that all of the government spending could cause inflation down the road.
“Inflation has been very low for over a decade, and you know it’s a risk, but it’s a risk that the Federal Reserve and others have tools to address. The greater risk is of scarring the people, having this pandemic take a permanent lifelong toll on their lives and livelihoods.”
The Treasury Secretary was also asked about the Congressional Budget Office’s projection that there will be a $2.3 trillion budget deficit in fiscal 2021, not including the $1.9T relief package. Yellen acknowledged that there “probably” would be “tax increases to pay for at least part of it that would probably phase in slowly over time.”
She added that parts of the administration’s infrastructure proposal would be paid for with tax increases on wealthy corporations and high-income individuals in a “Build Back Better” plan, something Republicans object to. Asked how much this plan would cost, Yellen said the plan was still being developed and the administration did not have a cost estimate yet.
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