Washington Treasury Secretary Janet Yellen denies that she tried to reduce the size of the $1.9 trillion rescue package that Democrats approved in early 2021, defending legislation that now limits high inflation. The cause of this is the center of debate.
Ms Yellen’s statement came after Bloomberg News reported on Saturday that an upcoming biography about Ms Yellen said she had sought to reduce the amount of spending in law. In the book, titled “sympathetic economics,According to excerpts from a pre-publication version of the book seen by The Wall Street Journal, author Owen Ullman writes that Ms Yellen expressed concern that the $1.9 trillion package could fuel inflation, preferring instead a $1.3 trillion bill. Is.
His concern about inflation is “why he sought success to roll back a $1.9 trillion relief plan in early 2021 before Congress passed the mammoth program,” Ullman writes in excerpts.
The publisher, PublicAffairs, a division of Hachette Book Group, said Mr Ullman would not comment beyond excerpts.
In her statement, Ms Yellen said she never tried to reduce spending in the bill, called the American Rescue Plan, or ARP.
“I have never urged the adoption of a smaller US rescue plan package, and I believe that ARP will play a central role in driving strong growth throughout 2021 and, subsequently, the real GDP of the United States. Growth recovered rapidly relative to other advanced economies and our labor market from historical experience,” she said.
According to excerpts seen by the Journal, Ms Yellen became comfortable with the size of the bill as she adopted the calculation that providing too much financial support to the economy would be better than offering too little.
Inflation, which is running above 8% at a four-decade high, has become a central political and economic challenge for the Biden administration ahead of the November midterm election. Republicans argue that spending on the $1.9 trillion bill is a primary driver of inflation, blaming Democrats for rising prices in the economy. Meanwhile, Democrats stress the role that supply-chain disruptions and high energy and fuel prices caused by the war in Ukraine have played a role in driving up costs.
The White House launched an effort last week to try to reform Americans’ views about the economy, which has rapidly recovered from a brief recession caused by Covid-19. Senior White House advisers have expressed frustration with their messaging about inflation in recent weeks, according to people familiar with the matter. Some officials have said they should publicly acknowledge that the administration’s incentives contributed to higher prices, while arguing that such moves were worthwhile, although others have resisted making such concessions.
In past public statements, Ms Yellen has said that broad fiscal support during the pandemic helped fuel demand, leading to tight supply as well as inflation. It had recently said that its expectations that inflation would end quickly in 2021 were wrong.
“High inflation is now the Administration’s top economic priority. We are committed to addressing this by respecting the independence of the Federal Reserve and giving them room to act.” He said the administration wants to reduce supply-chain issues and is urging Congress to pass legislation to reduce the cost of prescription drugs.