Janet Yellen faces lawmakers as Biden officials grapple with inflation

WASHINGTON—Treasury Secretary Janet Yellen will face lawmakers this week as she and the Biden administration face intense scrutiny over high inflation and how they solved it.

Ms. Yellen will appear before the Senate Finance Committee on Tuesday and the House Ways and Means Committee on Wednesday to discuss the administration’s annual budget request. With inflation above 8% on an annual basis, the highest rate in four decades, she is also expected to face questions about rising prices, which the Biden administration says is her top economic priority.

Rising prices for gasoline, groceries and other goods have become a source of frustration within the White House, as many Americans report a poor view of the economy despite low unemployment. and the rapid recovery from the brief 2020 recession. Biden administration officials, including Ms. Yellen, this month launched an extensive publicity effort in an attempt to improve Americans’ sentiment and demonstrate their commitment to fight against inflation.

Amid a record US hiring streak, economists are watching for signs of a possible tide reversal. Anna Hirtenstein du – examines how rising interest rates in the face of high inflation, market sell-offs, and recession risks are challenging the growth of America’s labor force. Photo: Olivier Douliery/-

Rising prices are already dominating the landscape in the upcoming midterm elections, when Democrats risk losing their tight control of Congress.

Ms Yellen said in a TV appearance last week that she was wrong in 2021 when she said inflation would decline rapidly, an admission that has fueled Republican criticism of the economy’s handling by the Democrats.

Republicans have for more than a year blamed the $1.9 trillion Covid-19 bailout passed in March 2021 for triggering inflation, a characterization Democrats have repeatedly disputed.

Ms Yellen defended the legislation on Saturday, saying it has played a central role in spurring strong growth and supporting economic recovery. She made the statement after extracts from an upcoming biography on Ms Yellen said she had concerns about the size of the legislation and the impact the spending could have on prices.

Ms Yellen denied trying to cut the amount of spending in the $1.9 trillion bill, called the American Rescue Plan, or ARP.

“I think ARP has been pivotal in driving strong growth through 2021 and going forward, with U.S. real GDP growth outpacing other advanced economies and our labor market sagging. recovering faster compared to historical experience,” she said.

Democrats pointed to the role that disruptions to supply chains and energy sources by the Covid-19 pandemic and Russia’s invasion of Ukraine have played in driving up prices.

Ms Yellen said the bailout has played an important role in supporting the economy’s recovery and fueling demand, which in turn contributes to inflation.

Lawmakers will likely push her further in her view of the relief package and the extent of her role in causing high inflation.

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“Just over a year ago, Democrats dumped $2 trillion in liberal waste into our economy. Their own experts told them not to,” Senate Minority Leader Mitch McConnell (R., Ky.) said Monday. “It was reported a few days ago that even Secretary Yellen, the President’s own Treasury Secretary, knew the spending spree was reckless and wanted it to be smaller. »

His testimony comes as several of his legislative priorities are largely stalled in Congress. Lawmakers have not approved renewed funding for the Internal Revenue Service as the Biden administration seeks to increase the amount of taxes owed the government collects. Ms. Yellen is also calling for approval of a new global minimum tax, as well as legislation that would more tightly regulate stablecoins, a type of digital asset whose value is often pegged to the dollar.

Write to Andrew Duehren at [email protected]

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