Washington — At her confirmation hearing in early 2021, Treasury Secretary Janet L. Yelen told lawmakers:Act bigThe pandemic bailout package downplays concerns about deficits at low interest rates permanently and warns that neglect can mean a widespread economic “scar”.
A year and a half later, prices have soared and interest rates have risen. As a result, Yellen’s role in developing and selling the $ 1.9 trillion US bailout plan passed by Congress last March is intensifying criticism to identify the person responsible for the highest inflation rate in 40 years. It is analyzed in. .. Yellen admitted last week that it was “wrong” after months of price increases due to a temporary supply chain problem that would disappear, putting the Biden administration on the defensive and political. I threw myself in the midst of a storm.
“I think we were wrong about the path of inflation,” Yellen said in an interview with CNN, adding that the economy faced an unexpected “shock” that pushed up food and energy prices.
Republicans, who have spent months blaming President Biden and Democrats for rising prices, as evidence that the administration has mismanaged the economy and should not be trusted to maintain political control. , Happily caught the entrance.
The Treasury has scrambled to clarify Mr. Yellen’s remarks. She said her misunderstanding of inflation meant that she could not foresee progress such as the war in Ukraine, a new variant of the coronavirus, and the blockade in China. After Yellen’s excerpts suggested that he supported a stimulus less than $ 1.9 trillion approved by Congress last year, the Treasury issued a statement denying that she urged more spending restraints. ..
Yellen is expected to face tough questions about inflation as he testifies at the Senate Finance Commission on Tuesday and the Houseways and Means Commission on Wednesday during this dilute moment of his tenure. While the hearing is ostensibly about the president’s budget demands for fiscal year 2023, the Republican Party has accused Biden of including a $ 1.9 trillion stimulus for high prices for consumer products, Yellen. Comments are the first term to them as his failure.
“How can Americans trust the Biden administration when the same people who were very wrong are still in charge?” Tommy Piggott, head of the Republican National Committee’s swift response. Stated.
Understand inflation and its impact on you
Glitter is particularly unpleasant because Yellen, an economist and former chairman of the Federal Reserve Board, is proud to give honest answers and overcome political conflicts.
In recent weeks, Yellen has had to defend the Biden administration’s economic policies, even if fault lines appear within the economic team.She expressed her reservation for her lack of progress Rollback some of the Trump administration’s Chinese tariffsShe saw this as a “non-strategic” consumer tax and was reluctant to support the student’s debt forgiveness proposal.
Yellen fired again over the weekend after an excerpt from her next biography showed that she failed to cut the pandemic aid bill because of inflationary concerns. The Treasury issued a rare Saturday statement from Mr Yellen denying that she claimed her package was too large.
“I never encouraged the adoption of a smaller US rescue program package,” she said, claiming that the funds helped the US economy survive the pandemic and collapse from the Russian war in Ukraine.
Throughout last year, Mr. Yellen was an avid public lawyer on the Biden administration’s economic agenda. She has had open clashes with critics such as former Treasury Secretary Lawrence H. Summers. Too much irritation It can overheat the economy.
Yellen (and many other economists) have described inflation as “temporary” for months, and rising prices are the result of dissipating supply chain problems.Basic effectWas worsening monthly figures compared to prices that fell in the early days of the pandemic.
By May last year, Mr Yellen seemed to admit that the Biden administration’s spending proposals could overheat the economy. She said at the Atlantic Future Economy Summit that policies could spur growth and the Fed may have to intervene in “moderate” interest rate hikes if the economy recovers too much. ..
“Even if the additional spending is relatively small compared to the size of the economy, it may be necessary to raise interest rates somewhat to prevent the economy from overheating.” Yellen said..
However, economic indicators still suggested that inflation remained restrained throughout most of the spring. In an interview with the New York Times last June, Yellen said inflation expectations were in line with the Fed’s 2% target and wages were rising, but there was no “price spiral” on the horizon. Said that. It has the potential to settle inflation.
“We do not want a long-term over-demand situation in the economy that is endemic due to increased wage and price pressures.” She said, she added that she didn’t see it happening.
What is inflation? Inflation Loss of purchasing power over timeThat means that tomorrow the dollar will not rise as much as it does today. This is usually expressed as an annual change in the prices of daily necessities and services such as food, furniture, apparel, transportation and toys.
In the months that followed, as prices continued to rise, Yellen admitted that supply chain problems such as chips, which are important for a variety of products, including automobiles, were more serious than initially perceived. She began to predict that inflation could continue into this year.
“I’m ready to retire from temporary words.” Yellen said At a Reuters-sponsored December event, he noted that new virus variants disrupted the economic outlook. “I can agree that it was not a proper explanation of what we are dealing with.”
Jerome H. Powell, Chairman of the FRB, Signaled just a few days ago The Federal Reserve has stopped using the term to describe inflation, indicating that Mr Yellen was inconsistent with other major economic policy makers.
Some Republicans have called for Mr Yellen to resign, but last week Democrats inside and outside the Biden administration came to her defense.
Summers said in CNN last week that Yellen reflected the views of most mainstream economists last year who curbed inflation, and those false predictions called for a rethinking of the economic model.
“There was no risk of overheating in the consensus.” Mr. Summers said.. “I’ve been wrong many times in my life, but I’ve seen a huge amount of demand pressure rising. Given the bottleneck, it seemed plausible.”
Brian Deese, chairman of the White House’s National Economic Council, rejected the proposal that Yellen could resign because he is trying to change the way he communicates about the economy.
“Yellen is our chief spokesman for the economy,” Dies told Fox News last week. “It will continue, as it has always been.”