Outgoing Federal Reserve Chair Janet Yellen holds a press conference following a two-day meeting of the Federal Open Market Committee (FOMC) on December 13, 2017 in Washington, USA.
Jonathan Ernst | Reuters
The US could get back to full employment in 2022 if President Joe Biden’s $ 1.9 trillion coronavirus bailout package passes, Treasury Secretary Janet Yellen said Sunday.
“There’s absolutely no reason we should have a long, slow recovery,” Yellen said during an interview on CNN’s State of the Union. “I would expect to get full employment again next year when this package is passed.”
Long-term unemployment is nearing a historic high almost a year after the pandemic began. Almost 40% of the unemployed have been unemployed for six months, the Bureau of Labor Statistics reported on Friday. Almost 9 million Americans are now working fewer than last February. The unemployment rate fell to 6.3% in January.
The unemployment rate caused by pandemics will remain increased for years without further support from the federal government, said Yellen, citing an analysis by the budget office of Congress. Without additional incentives, it could take until 2025 for the unemployment rate to fall back to 4%.
Yellen also said that former Obama economic adviser Larry Summer’s concerns about Biden’s stimulus package, which carries inflationary risks, are minor compared to economic damage caused by insufficient economic support during the pandemic. The US “has the tools to deal with inflation risk,” Yellen said.
Democrats in Congress have decided to pass the stimulus plan within two weeks without GOP support. A parliamentary process known as reconciliation was used in this process.
The plan is the first of two major spending initiatives Biden is pursuing and includes provisions like direct payments to Americans, weekly unemployment benefits through September, and funding for vaccines and testing. The second bill will focus on infrastructure reforms, climate change and racial justice, among other things.
“We have people who are suffering … through no fault of their own,” said Yellen. “We have to get them to the other side and make sure it doesn’t take a permanent toll on their lives.”
Republicans have opposed the price of the proposal, calling for a lowering of the income limit for receiving the full direct payment of $ 1,400. However, Yellen signaled that it was reluctant to lower the income cap to $ 50,000.
“When you think of an elementary school teacher or cop who makes $ 60,000 a year and faces children who are out of school and people who may have had to retire to care for them. .. [Biden] thinks, and I would certainly agree, that it is appropriate for the people there to have support, “said Yellen.
Senator Patrick Toomey, R-Pa., Said Sunday the economy had “roared back” and called Biden’s stimulus plan “inadequate” since Congress passed an aid package in December.
“We have tens of billions of dollars that haven’t made it because the ink is barely dry on the last bill,” Toomey told CNN.