US Treasury Secretary Janet Yellen on Sunday tamped down concerns that President Joe Biden’s plans for infrastructure, jobs and families will cause inflation, saying the spending will be phased in over a decade.
“It’s spread out quite evenly over eight to 10 years,” Yellen, former Federal Reserve chair, said in an interview with NBC’s “Meet the Press.”
She said the Federal Reserve will monitor inflation carefully and has the tools to address it if necessary.
“I don’t believe that inflation will be an issue but if it becomes an issue, we have tools to address it. These are historic investments that we need to make our economy productive and fair.”
Biden’s pandemic stimulus and recovery plans total around $6t and will be paid for in part by a series of tax increases on the wealthiest Americans, less than 1 per cent of the population, and on raising corporate taxes.
Cecilia Rouse, chair of the White House National Economic Council, said there is no evidence that portends runaway inflation.
“So when we get to the other side of this pandemic, I fully expect that our labor market will come back and be flourishing,” Rouse said on “Fox News Sunday.”
“But for the time being, we expect at most transitory inflation, that is what we expect coming out of a big recession.”
Some Democratic lawmakers have expressed concerns that the tax increases would slow economic growth.
Yellen would not speculate on whether Biden would accept a bill from Congress that does not include a way to pay for the spending increases in his plans.
“He has made clear that he believes that permanent increase in spending should be paid for and I agree,” she said.
Biden administration officials have said a significant cut in the corporate tax rate in 2017 by Republican Donald Trump did not result in a similar increase in investment and corporate competitiveness.
“We do not want to be hampering corporations but we do want to ensure that they are paying their fair share as well,” Rouse said.