Treasury Secretary Janet Yellen is set to testify before the Senate Finance Committee on Wednesday.
Photo: Jacquelyn Martin/Associated Press
WASHINGTON—The U.S. economy needs ambitious fiscal policy to help unwind destructive forces, such as racial inequality and climate change, that have kept prosperity out of reach for millions of Americans, Treasury Secretary Janet Yellen will tell lawmakers Wednesday.
Ms. Yellen, who is set to testify before the Senate Finance Committee, defended the Biden administration’s $6 trillion budget proposal for fiscal year 2022 in prepared testimony, calling for policies such as paid family leave, modernizing infrastructure, reducing emissions and making housing and education more affordable. The private sector doesn’t make enough of these investments to reverse long-term, structural economic challenges, such as falling labor-force participation and wage inequality, Ms. Yellen said.
“We need to make these investments at some point, and now is fiscally the most strategic time to make them,” she said in her prepared remarks.
While federal debt has climbed during the pandemic, the Biden administration expects interest payments on the federal debt to remain well below historic levels through the coming decade. Ms. Yellen also noted the administration has proposed to pay for its long-term economic policies through tax increases on companies and wealthy Americans.
“There are some tough trade-offs in fiscal policy, but this—a fairer tax code for a structurally sound economy—is not one of them,” she said.
President Biden has proposed plans for $4.5 trillion in spending on infrastructure and social programs over the next decade. Ms. Yellen’s testimony comes as Democratic leaders began discussing a broad-ranging child care, climate and education package this week in an effort to appease the concerns of the party’s liberal wing over the narrower scope of a bipartisan infrastructure proposal under discussion.
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