U.S. Treasury Secretary Janet Yellen is urging Congress to pass new measures to help ease the ongoing price surge, as pressure mounts on the Biden administration to do more to stem the highest inflation in 40 years.
Lawmakers on the Senate Finance Committee questioned Yellen on Tuesday about the state of the economy, which has bounced back quickly from the depths of the Covid-19-induced collapse, but now the cost of nearly all goods and services is soaring.
“Congress can do a lot to alleviate some of the most important and heavy costs families face,” Yellen said, pointing to specific proposals to lower prescription drug prices, improve affordable housing and strengthen investment in renewable energy.
“In the process, we will expand the supply side of the economy,” she said.Investments in education and training, child care and aged care will bring in a larger workforce, help reduce inflation and lead to “strong, sustainable growth,” she said. [and] Steady growth”.
Yellen’s testimony came days after she admitted last year that she was “wrong” about the threat posed by rising inflation, after previously attributing price pressures to supply chain bottlenecks and other coronavirus-related disruptions “for the time being.” Sex” forces, as are many private forecasters and the Fed.
She has also been embroiled in controversy after an excerpt from a new biography claimed she initially wanted to cut last year’s 1.9-ton stimulus package by a third for fear it would push up prices. Yellen has since disputed those claims.
The Treasury secretary on Tuesday defended the Biden administration’s actions, but acknowledged that inflation is currently at “unacceptable” levels and that “an appropriate budget stance is needed to complement the Fed’s monetary policy actions.”
The Fed has raised interest rates by 0.75 percentage points since March from near zero in two years and is preparing to raise rates by at least two 0.75 percentage points at its next upcoming policy meeting. One week and late July. Market participants expect the Fed to eventually raise the federal funds rate to about 2.8% by the end of the year.
When asked by Republican Sen. Steve Daines of Montana about the role of the Biden administration in triggering high inflation, Yellen countered. “We’re seeing high inflation in almost all developed countries in the world, and their fiscal policies are very different,” she said. “So most of the inflation we experience cannot possibly reflect [stimulus package]. ”
She added: “There are various risks to consider when designing policy. Inflation is certainly one of them, but the overwhelming risk is that Americans will be scarred by a severe and prolonged recession.”
Yellen said Tuesday that any new legislation must be paid for or structured in a way that reduces the deficit.
“Asking high-income taxpayers and businesses to pay their fair share is the right way to finance these investments,” she said, adding that addressing the estimated $600 billion in annual tax owed but unpaid shortfall is “in ensuring that The financial responsibility aspect is absolutely important.”
“It will generate substantial revenue in an efficient and fair manner,” she said. “This will help reduce the deficit and help ease price pressures by partially funding the urgent fiscal priorities we have discussed.”