Treasury Secretary Janet Yellen again defended the massive scope of President Biden’s $1.9 trillion American Rescue Plan, which has drawn criticism from some economists who believe it is too large.
Treasury Secretary Janet Yellen speaks during a virtual roundtable event with participants from … [+]
Congressional Democrats used a special legislative process to pass the rescue bill over the objections of Republicans, many of whom said federal spending on such a massive scale is wasteful and irresponsible given the ballooning federal deficit and the fact that the economy is already showing signs of improvement.
In an interview with NBC News’ Today show that aired on Friday, Yellen said she believes “this package is the right size,” adding she doesn’t think the administration has “overshot the mark” on what the American economy can handle.
It’s not the first time she’s advocated for big spending in spite of concerns that Biden’s flagship rescue plan has the potential to overheat the economy, trigger dangerous inflation and push government debt to unsustainable levels.
“This is a package that addresses the pandemic and helps people get to the other side intact,” Yellen said. “We don’t want to have people be scarred by long spells of unemployment, being out of the labor market because children can’t go to school. We want to get the economy back operating in a normal way.”
“I am all for doing everything necessary to help the direct and indirect victims of the pandemic,” Larry Summers, an economist who served in the Clinton and Obama administrations, wrote in the Washington Post last month. “But I do not think the case has been made that this requires the proposed level of total stimulus.”
Yellen said $1,400 stimulus payments will start hitting bank accounts this weekend, echoing Thursday comments from the White House.
President Biden signed the $1.9 trillion American Rescue Plan into law on Thursday afternoon. The package includes $1,400 payments for eligible Americans, $300 weekly unemployment benefits, a major expansion of the Child Tax Credit, rental assistance, funding for vaccination distribution and aid for state and local governments. Democrats are celebrating the new bill as one of the most consequential federal anti-poverty efforts in history.
$5.4 trillion. That’s how much stimulus spending has been authorized by the U.S. government over the course of six rescue packages, including the CARES Act and the American Rescue Plan.
Yellen added that while no new taxes were proposed to pay for the American Rescue Plan (the package was financed with government debt), the administration will consider them to pay for “longer-run priorities and longer-term investments.” Biden is expected to turn his attention next to a $2+ trillion infrastructure spending bill that experts expect will be financed in part with tax hikes.
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I’m a breaking news reporter for Forbes focusing on economic policy and capital markets. I completed my master’s degree in business and economic reporting at New York