In her final days as Treasury Secretary, Janet Yellen offered a nuanced perspective on the Biden administration’s economic policies.
Speaking to “Money Movers,” Yellen acknowledged that the $1.9 trillion COVID-19 relief package signed into law by President Joe Biden might have contributed “a little bit” to inflation.
However, she emphasized that the primary drivers of the rising prices were supply chain disruptions caused by the pandemic.
“There were simply huge supply chain problems,” Yellen stated, citing shortages of essential goods that pushed prices upward.
While inflation has been a point of contention for critics, Yellen maintained that the relief spending was necessary to address the urgent economic and public health crises Biden inherited.
Yellen urged Americans to recall the dire situation at the time: a raging pandemic, thousands of lives lost each month, and a high unemployment rate. “It was really important to spend the money to alleviate that suffering,” she asserted.
Despite inflation concerns, Yellen pointed to the administration’s commitment to deficit reduction.
Critics have highlighted the $1.8 trillion U.S. deficit from the last fiscal year, but Yellen attributed this largely to rising interest rates, which have increased the cost of servicing existing debt. She also noted that discretionary spending remains at historically low levels.
Yellen defends Biden’s $1.9 trillion relief bill, urging focus on pandemic-driven challenges.
On the topic of fiscal responsibility, Yellen expressed skepticism about the feasibility of massive spending cuts, such as those proposed by President-elect Donald Trump’s advisory group co-led by Elon Musk.
“It’s hard to see how the math on that works,” she said, citing the popularity of mandatory programs like Social Security and Medicare and the growing calls for increased defense spending.
As Yellen prepares to step down, she voiced confidence in her successor, Scott Bessent, whose market expertise she described as an asset for managing the nation’s financial security.
Furthermore, Yellen plans to take a well-deserved vacation before returning to the Brookings Institution for reflection and writing.
Yellen’s legacy as Treasury Secretary highlights the complexity of navigating economic policy amid unprecedented challenges. Her reflections serve as a reminder of the balance between immediate relief efforts and long-term fiscal considerations.
