Janet Yellen faces Senate to sell $1.9 trillion stimulus package

Darnell Taylor
January 20, 2021

Responding to questions from the Senate Finance Committee at her confirmation hearing, Yellen said China has been "undercutting American companies" with a series of policies, including illegal subsidies, dumping of products, theft of intellectual property and barriers to United States goods.

In her opening remarks, Yellen also emphasized inequities within the US economy that existed long before they were exacerbated by the pandemic.

"Now is not the time to enact a laundry list of liberal structural economic reforms", Republican Senator Chuck Grassley said in his opening remarks.

In her first confrontation to the US Senate as a Biden group member, Janet Yellen played well despite prepared speech was already out.

Yellen, who specialized as a labor economist early in her career, said that the recession has "disproportionately hit the service sector and the workers who are employed in that sector - and it's been particularly brutal in its impact on minorities and women".

Mr. Biden's proposal includes about $1 trillion in direct aid for individuals, more than $400 billion for coronavirus-related efforts like vaccine distribution and testing, and $350 billion for cash-strapped states and localities - the last of which is another red line for many Republicans. "In the long run, I believe the benefits will far outweigh the costs".

The former Federal Reserve chair urged listeners there to act swiftly and strongly on additional COVID-19 aid, saying "The smartest thing we can do is act big".

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She raised eyebrows of some senators and Wall Street when she said that Treasury would consider the possibility of taxing unrealized capital gains - through a "mark-to-market" mechanism - as well as other approaches to boost revenues.

She's anticipated to win the affirmation as Treasury secretary simply within the Senate. "The dollar policy was traditionally always about letting the markets decide and keeping official views out of it, except in rare circumstances".

"China is undercutting American companies by dumping products, erecting trade barriers and giving illegal subsidies to corporations", as well as "stealing intellectual property" and engaging in such unfair practices as "forced technology transfers", the former Federal Reserve chair said, echoing the outgoing Trump administration's complaints against Beijing.

Additionally, a noncommittal comment by Yellen convinced Treasury traders there's a chance the US will expand maturities in the world's biggest bond market beyond 30 years. But then there is the longer-term project.

And OPEC's secretary general said he was cautiously optimistic the oil market would recover this year from the slump in demand brought about by the coronavirus pandemic. "I think a 50-year bond is still a long shot", said Subadra Rajappa, head of US rates strategy at Societe Generale. Not only did he serve two terms as vice president under Barack Obama, he spent 36 years in Congress. Yellen has agreed to recuse herself from Treasury matters involving certain firms that have compensated her for her talks. Though she sometimes sparred with Republicans in her previous role leading the Fed, her hearing Tuesday was cordial, and several Republicans said they looked forward to working with her, a sign she faces little GOP resistance to her nomination.

Bloomberg was used in compiling this report.

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