Biden Transition News, Secretary of the Treasury, January 19, 2021

CABINET HEARING: Janet Yellen, Secretary of the Treasury

January 19, 2021

Senate Committee on Finance

The general tone of the hearing for Dr. Janet Yellen as President-elect Biden’s nominee for Treasury Secretary was collegial. On a bipartisan basis, she answered the Senators’ questions in a very cordial and informative manner. Both the majority and the minority came together during the meeting and agreed to vote on Dr. Yellen’s confirmation on Wednesday with the goal to have a full Senate vote for her confirmation on Thursday, January 21.

 

ISSUES RAISED

  • Raising Taxes – Multiple Senators asked Dr. Yellen on her stance on raising taxes, particularly during the pandemic, as proposed by President-elect Biden. Dr. Yellen’s answer to all of these questions noted that the current focus is on providing relief to households and businesses that need it most. Dr. Yellen emphasized that President-elect Biden did not want to repeal all the 2017 tax cuts, especially those that benefited the competitiveness of U.S. companies. 
  • Economic Recovery – Several Senators asked about the continuation of financial support from the government to combat the pandemic. Dr. Yellen said that the most important thing that the Treasury Department and the incoming administration can do right now is continuing to financially support the economy, including local and state governments. Dr. Yellen added that under-supporting the economy could leave scars that last for years. Dr. Yellen said she will be focused on day one on providing support to America’s workers and small businesses. She said she will move as quickly and efficiently as possible to put into effect the relief that was recently approved by Congress. She will then work for a second package that she believes is needed. Dr. Yellen added she will work to ensure that there are good jobs with good wages in the U.S. economy.
  • National Debt and Deficit Spending – Several Senators asked about her position on the national debt and deficit spending. Dr. Yellen said it is essential that the federal budget is put on a path that is sustainable, but the most important thing the U.S. can do today is to defeat the pandemic and then to make long term plans to get the economy to grow. Dr. Yellen added that while the debt-to-GDP ratio has increased, the interest burden of the debt is no higher than it was before the financial crisis of 2008, adding this is an important metric when considering if there is too much debt that has been taken on.
  • Climate Change – Sen. Sheldon Whitehouse (D-RI) asked who the Treasury Department’s key person on climate change will be. Dr. Yellen said that she would appoint someone at a high level that will cover these issues. She added that climate change must be taken very seriously and is an existential threat.
  • China – Sen. Ben Sasse (R-NE) asked if Dr. Yellen regards China as an existential threat to the U.S. Dr. Yellen said she views China as the biggest U.S. global competitor and that the U.S. needs to target illegal activities being conducted by the Chinese Communist Party. Sen. Sasse asked about the technological dependence on China and if there should be decoupling of the next four years. Dr. Yellen said first and foremost, the U.S. economy needs to ensure that it can compete with China’s economy and the U.S. needs to aggressively counter unfair and illegal practices. Sen. Sasse and Dr. Yellen also had an exchange regarding China’s actions against the Uyghur population. Sen. Sasse labeled China’s actions as a genocide, while Dr. Yellen said that she thought the Chinese government was “guilty of horrendous human rights abuses” but did not specifically use the term genocide. Sen. Wyden (D-OR) asked about China and what Dr. Yellen believed she could do in the near term to ensure that America gets a fair shake against China. Dr. Yellen said the U.S. should address China’s abusive, unfair, and illegal practices, including undercutting American companies by dumping products, erecting trade barriers, giving illegal subsidies to corporations, and stealing intellectual property.
  • Sanctions – Dr. Yellen committed to Sen. Maria Cantwell (D-WA) to conduct a full review of U.S. sanctions policy to ensure that the U.S. is acting in the most strategic and effective way possible. She noted that sanctions are a “critically important tool” to address issues like cyber security threats, following a discussion on the hacking of critical infrastructure in December. Sen. Ben Cardin (D-MD) pushed for the use of Global Magnitsky sanctions to combat corruption, and Dr. Yellen agreed that sanctions are an effective tool to address corruption issues. Dr. Yellen thanked the Committee for working to pass a law that will enable the incoming administration to identify beneficial owner of corporations, which Dr. Yellen argued will make a “big difference in our ability to address terrorist financing and improve the effectiveness of sanctions.” Dr. Yellen pledged to work with Sen. Mike Crapo (R-ID) on beneficial ownership rules as well as anti-money laundering provisions.

 

TAKEAWAY

As expected, Yellen echoed many of the incoming administration’s core themes and policy priorities. She stayed on message regarding the need for immediate economic relief in the wake of the COVID-induced recession. Yellen noted that her “core focus” would be the needs of workers and getting the economy back to full strength. Similarly, Yellen underscored the incoming administration’s prioritization of combatting climate change by promising to create a climate team within Treasury. This team would focus on risks to the financial system posed by climate change, as well as potential tax incentives to help confront the issue, and would represent the first such effort by Treasury to take a holistic view of climate change. 

 

WHAT’S NEXT? 

Incoming Finance Committee Chairman Ron Wyden (D-OR) indicated that Yellen may be confirmed by the full Senate as soon as Thursday, or the first full day of the Democrats’ majority in the Senate. Yellen is likely to be confirmed on a large, bipartisan vote.