What Janet Yellen wants to do for the US economy
To recover, we must return to the American dream: a society in which everyone can realize their potential and expect something better for their children". It's the goal that Janet Yellen tweeted and promises to work for, the first woman in the Treasury Department in US history, nominated by President Joe Biden. Yellen, 74, was also the first woman to head the Federal Reserve (2014-2018), chosen by Barack Obama, and previously an economic advisor to the first Clinton government. Increases in the minimum wage, social security programs, expansion of family and medical leave, extraordinary economic subsidies for small and medium-sized enterprises, are just some of the immediate agenda items that the economist shares with the president.
We face great challenges as a country right now. To recover, we must restore the American dream — a society where each person can rise to their potential and dream even bigger for their children.
As Treasury Secretary, I will work every day towards rebuilding that dream for all.
- Janet Yellen (@JanetYellen) November 30, 2020
The Berkeley professor, an economist believed to be of Keynesian orientation, has already urged Congress to "act big" and to approve Biden's $ 1,900 billion economic aid and stimulus plan, just installed. Not having a strictly political experience, the Republicans are waiting for her in Washington, where they will presumably point the finger at a public debt that is estimated to exceed 100% of GDP. The Congressional Budget Office, the analytical body of Congress, estimates it at 98% at the end of 2020, forecasting an increase to 104% in 2021, and 107% in 2023 (the highest rate in the country's history). Already when he was at the top of the central bank, Yellen was challenged for the emphasis placed on employment problems, compared to the attempt to control inflation.
Biden's plan
The program presented from the president is made up of 415 billion dollars to accelerate the response to the virus and the distribution of vaccines, another thousand would be provided in the form of direct support to families and the last 440 to small businesses and communities most affected by the pandemic. In particular, a $ 1,400 individual check would be recognized, in addition to the $ 600 one already decided by Congress in December. The unemployment benefit is expected to increase from $ 300 to $ 400 per week, with an extension until September (11 million unemployed in the United States). And that's not all: according to Reuters, a subsequent aid package will postpone moratoriums and mortgages until September. The president-elect appealed for an increase in the minimum wage to $ 15 per hour.Yellen's answers
Sending a hundred-page document, the new head of the Treasury on the other hand his responded to questions from the Senate Finance Committee on various issues, starting with the tax department, assuring that he wants to work with lawmakers to protect families earning up to $ 400,000 a year from any reversals on Trump's tax cut in 2017. On the fiscal issue, he then proposed to increase the corporate tax (a tax similar to IRES) from 21% to 28%, which Trump had lowered making it “flat”. Instead, he avoided the question of abolishing the ceiling for deductions from state and local taxes, which critics say would assist the rich, without doing anything for the poor.In relations with the Fed, Yellen it will not open up any battle to reactivate several lending tools deactivated by its predecessor. In addition, she assures that she does not want to pressure the central bank's intentions to buy bonds: "I deeply understand the importance of your autonomy," she said. On exchange rates, the US will not aim for a weak dollar, as Trump advocated to boost exports, but will work against countries' attempts to gain trade gains by manipulating currency values with bad practices.
Cryptocurrencies
If “they can be used to finance terrorism, money laundering and illegal activities”, electronic coins may also have the potential to “improve the efficiency of the financial system. We must look carefully at how to encourage their legitimate use. If confirmed, I will work with the Fed and other federal banking regulators on a regulatory framework for this and other fintech innovations. " So writes Yellen, who in the past had been critical of cryptocurrencies defining them as a "concern". Bitcoin has lost around -17% in the last week and around -3% in the last 24 hours (Coinmarketcap data).Foreign relations
There will be no an immediate removal of tariffs from China, in addition, the administration will monitor Beijing's adherence to the trade treaty signed in phase one of the Trump era. Moreover, Yellen asked that the aid from the International Monetary Fund and the World Bank for the Covid emergency do not end up repaying the Chinese loans. He warned the United States that it will be necessary to compete with the Dragon economy with initiatives that stand out from the Belt and road and collaborate with allies to counter its "abusive" economic practices.The Treasury, under the leadership Yellen, will carry out a "careful review" of the sanctions that with the Trump administration have affected economic activities and subjects, sometimes even individual oil tankers, connected to Iran, North Korea, China, Venezuela and Russia, often unilaterally. Iran will have to return to compliance with the nuclear pact reached under Obama's leadership.
