Yellen Argues CBO Data Should Push for More Stimulus

The United States Secretary of the Treasury, Janet Yellen, said on Tuesday that economic growth estimated by the Congressional Budget Office (CBO) are showing the strong need for passing the coronavirus rescue package proposed by President Joe Biden, Reuters reported.

“Last year, the economy shrunk more than any other since the end of World War II. With the growth that the CBO projects, it will be years before the country reaches full employment again.”

On Monday, the CBO issued its updated forecasts expecting the American gross domestic product (GDP) to grow by 4.6% in 2021.

“CBO currently projects a stronger economy than it did in July 2020, in large part because the downturn was not as severe as expected and because the first stage of the recovery took place sooner and was stronger than expected.”

The projected growth rate would be the biggest for the U.S. economy since 1999.

It would follow the 3.5% contraction of 2020, which was the worst since 1946.

However, the CBO report noted that the full recovery in the job market to pre-pandemic levels are not expected before 2024.

It is expected that the unemployment rate will average 5.7% this year.

The call by Yellen comes as the projections are built on the assumption of no extra stimulus, which might lead some to argue that the economic recovery is already taking place without the extra stimulus and government debt.

Nonetheless, the new Treasury Secretary has repeatedly asked legislators to pass the relief bill to help American families and businesses cope with the hardships resulting from the pandemic.

Biden recently laid out a new government stimulus plan worth $1.9 trillion to help the economy face the impact of the Coronavirus pandemic, under the title “The American Rescue Plan.”

The plan will grant a monthly payment of $2,000 per household by adding another $1,400 to the recently approved $600 payment.

It is worth noting that the $2,000 paycheck was supposedly supported by the former president, however, the majority of Republicans opposed raising stimulus spending.

The new plan will increase unemployment benefits to $400 per week until the end of September.

The plan also raises the federal minimum wage to $15 per hour, which has been called for by many Democrats for a long time, especially during the recent Presidential race.

The plan also allocates $350 billion in aid for state and local governments, as well as $170 billion to support educational institutions.

The pandemic also dominates a large portion of the rescue plan, with $50 billion directed to testing and $20 billion allocated to establishing a vaccination program.

Moreover, the rescue plan prolongs the eviction and foreclosure moratoriums until the end of September.

Leaders of the Democratic Party have pointed that they might move unilaterally with passing the bill without the support of any Republicans.