U.S. Treasury Secretary Janet Yellen refuted reports that she sought to reduce the amount of spending in President Biden’s COVID-19 spending package, despite a book claiming she thought “too much government money was flowing into the economy.”
Yellen responded Saturday to excerpts of a biography that stated she wanted a smaller package than the nearly $2 trillion American Rescue Plan (ARP), which Biden signed into law in March 2021, pushing the government’s total pandemic relief to nearly $6 trillion.
“I never urged adoption of a smaller American Rescue Plan package, and I believe that ARP played a central role in driving strong growth throughout 2021 and afterwards, with the United States real GDP growth outpacing other advanced economies and our labor market recovering faster relative to historical experience,” Yellen said in a statement Saturday.
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A forthcoming biography of Yellen states that she thought the ARP represented too large and too rapid of an infusion of government dollars into the economy.
“Privately, Yellen agreed with [former Treasury Secretary Lawrence] Summers that too much government money was flowing into the economy too quickly,” wrote Owen Ullmann, a long-time Washington journalist and author of “Empathy Economics,” due out Sept. 27. The book excerpt was first reported by Bloomberg.
Biden assumed office while “the nation was facing acute economic challenges,” and there were high risks that “a downturn that could match the Great Depression,” Yellen said Saturday.
The money provided in the ARP allowed the country to better “weather shocks to our economy like Russia’s war in Ukraine and successive waves of COVID-19,” Yellen said.
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According to Ullmann’s book, who according to publisher PublicAffairs had “unfiltered access” to the Treasury secretary, Yellen’s concern about inflation “is why she had sought without success to scale back the $1.9 trillion relief plan by a third early in 2021 before Congress passed the enormous program. Yellen “would have preferred something closer to $1.3 trillion, according to colleagues,” Ullmann wrote.
The Treasury Department, responding to Bloomberg’s report, stated that Yellen never urged a smaller package, Bloomberg reported.
“High inflation is now the Administration’s top economic priority,” Yellen said Saturday. “We are committed to addressing it by respecting the independence of the Federal Reserve and giving them the space to act. We are also using policy tools we have to address supply side bottlenecks and urging Congress to act to lower some of the high costs facing Americans, in areas such as prescription drugs. We also support reducing the deficit to ease inflationary pressures.”
On Tuesday, Yellen admitted she was wrong about the severe inflation, particularly on gas and food prices.
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“I think I was wrong then about the path that inflation would take,” Yellen said during a CNN interview. “As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn’t at the time fully understand.”
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