Covid-19 is still driving the economy, Treasury Secretary Janet Yellen said Monday, and the federal government needs to spend what it takes to blunt the effects on the population while bringing the pandemic to an end.
“We need to make sure that those most affected aren't permanently scarred by this crisis," Yellen said in an interview with The New York Times.
One of the main goals is to get millions of people back to work. “Success, to me, would be if we could get back to pre-pandemic levels of unemployment, and see the re-employment of those who have lost jobs in the service sector particularly,” Yellen said.
Responding to concerns that President Joe Biden's $1.9 trillion relief package is too large and would potentially waste money on those who don’t need help, Yellen said that some Americans who are suffering can be hard to reach. “The truth is there are pockets of pain that go beyond what can be reached in those highly targeted ways,” she said, adding that the plan’s proposed direct payments of $1,400 could find the “pockets of misery that we know exist out there.”
Yellen reiterated the Biden administration’s argument that there is more risk in doing too little than in doing too much. “A key job for a Treasury Secretary is to make sure the country is on a sound fiscal course,” she said. “If you don't spend what is necessary to get the economy back on track, that has a fiscal cost as well.”
And Yellen said that low interest rates are reducing the cost of additional federal spending. “I think we have more fiscal space than we used to because of the interest rate environment, and I think we should consider using it,” she said.
Views on taxes: Yellen said Biden is interested in raising taxes on corporations and maybe on capital gains, but a wealth tax is probably off the table, in part because it would be hard to implement. “A wealth tax has been discussed but is not something President Biden” favors, Yellen said.