Yellen Defends Biden’s Massive Spending Plans, Again!

The United States Treasury Secretary, Janet Yellen, remains the strongest defender of the current economic policies by the Biden administration, even among cabinet members.

Given her credibility as former Chair of the Federal Reserve, and the first female to hold this post, she is repeatedly voicing her support for the plans to increase public expenditure, considering it fiscally responsible.

Yellen is trying to gather support for Biden’s spending plans, especially among the opposing Republicans, as evident by the recent Op-Ed she wrote for YAHOO Finance on Tuesday, describing the mega infrastructure plan and the massive budget with increased spending on social protection as the most important economic project in recent history.

The Treasury Secretary believes that the $550 billion infrastructure bill and the $3.5 trillion budget resolution that were both passed by the U.S. Senate could solve many problems, after “America has underinvested in the public goods that are the foundation of our economic growth: infrastructure, education, childcare.”

She pointed that spending on these three fields declined by about 25% in 2019, compared with its level in the 1970s.

Yellen said that the infrastructure bill would help the largest modernization of American infrastructure since Eisenhower built the Interstate Highway System, also pointing to how the plan will expand fiber optic cable to connect every home to broadband internet, as well as repairing roads, extending transit lines, and installing 500,000 electric vehicle charging stations.

Answering the question, is America overinvesting now? Yellen’s response was a definitive no, based on what she sees as at least three compelling reasons.

1- Now is the right time to make such investments, given the low interest rates.

2- Fiscal responsibility, with investments spread over time and those making less than $400,000 a year not seeing any tax increases.

3- Opportunity cost

Indeed, the crucial question isn’t “What if we make these big investments?” It is: “What if we don’t?”