Yellen denies urging Biden to cut stimulus amid inflation fears
Janet Yellen has denied claims she wanted US President Joe Biden to cut the size of his $1.9 billion Covid stimulus package last year, fearing it would stoke inflation.
The US Treasury Secretary released a statement on Saturday refuting claims made in a forthcoming book that she initially wanted to cut the bill by a third.
The book threatens to give ammunition to critics of Biden, who accuse him of helping to trigger the highest US inflation in decades with large spending bills in the first months of his administration.
Yellen said in his statement, “I have never called for the passage of a smaller US bailout, and I believe ARP has been pivotal in driving strong growth throughout 2021 and beyond.”
She released her statement after excerpts from the book alleged that she initially agreed with Larry Summers, one of her Treasury predecessors, that the president’s signature economic measures would drive prices higher.
According to reports, Owen Ullmann states in Economics of empathy, his new Yellen biography: “Privately, Yellen agreed with Summers that too much government money was pouring into the economy too quickly.” His publisher PublicAffairs claimed Ullmann had “unfiltered access” to the Treasury Secretary while researching the book.
Inflation has soared through much of 2021 and into early 2022. Core inflation was 4.9% in April from a year earlier, according to the Expenditure Price Index of personal consumption favorite of the Federal Reserve. It reached 5.3% the previous month on an annualized basis.
High prices have weighed heavily on Biden, whose approval rating languishes at around 40%, even as the labor market continues its steady recovery from Covid-19 lows.
The president’s critics have accused him of ignoring warnings from the likes of Summers, who said last year that the one-off Covid relief and bipartisan infrastructure bills would add fuel to an already battered economy. overheated.
Last week, Yellen said she was wrong last year about the likely path of inflation. She told CNN: “There have been unforeseen and significant shocks to the economy that have driven up energy and food prices and supply bottlenecks that have severely affected our economy. which I didn’t – at the time – fully understand, but we recognize that now.
Meanwhile, Biden has gone to great lengths in recent weeks to show that he views tackling high prices as his top concern. Last week, he wrote an article for the Wall Street Journal saying he realized Americans were “anxious” about high inflation. He also gave his public support to Jay Powell, the chairman of the Fed, to do whatever he deems necessary to rein in rising costs.
Last month, the Fed raised its benchmark interest rate by half a percentage point for the first time since 2000 and announced that it would do the same at the next two meetings.