January 26, 2021
The U.S. Secretary of Treasury, Janet Yellen sent a memo to Treasury employees on Tuesday about the arduous but feasible tasks ahead for the agency in revitalizing the U.S. economy from the COVID-19 pandemic economic downturn, indicating swift actions need to be taken immediately.
“When President Biden asked if I would accept the position of Treasury Secretary, I said “yes” in large part because I knew who I would be working with,” Secretary Yellen remarked in the memo. “I had just spent fourteen years at the Federal Reserve. The Treasury staff weren’t exactly our coworkers. But during the financial crisis, the two teams grew close. I remember participating in a countless string of late-night conference calls and admiring the dedication and creativity of Treasury’s experts. Your work helped save the economy from its worst crisis since the Depression. Now we need to do it again.”
The first task at hand: Getting President Biden’s $1.9 trillion economic relief package approved by a partisan Congress and into the hands of millions of Americans that are struggling due to the pandemic.
“[While] the current crisis is very different from 2008, the scale is as big, if not bigger. The pandemic has wrought wholesale devastation on the economy. Entire industries have paused their work. Sixteen million Americans are still relying on unemployment insurance. Food bank shelves are going empty,” Secretary Yellen underscored in the memo,
“Chair Yellen knows that going small on economic recovery relief will be a big mistake. The Biden administration and Congress need to send major economic relief to American working families,” Sen. Ron Wyden told lawmakers during Yellen’s confirmation hearing on Jan. 19. “That means increasing relief checks, extending enhanced unemployment benefits to all of those who lost their jobs for no fault of their own.”
That first task for the Yellen Treasury is bound to face fierce oppositions from Republicans in Congress given the trillions of dollars that Congress already deployed and close to a trillion relief enacted in late December.
“The republican package reduced benefit in the CARES Act and extended them only until mid-March. There are groceries in my refrigerator that will last longer than [the republican] agenda,” Sen. Wyden said. “This is a common story in Washington: Key economic relief gets expired, then get extended. They expired, they get extended. Congress cannot go on with the snooze button legislating. Our workers and economy need a government that’s predictable and reliable and that means Congress need to tether the benefit to economic conditions on the ground with automatic triggers and should not be subjected to the whims of one elected official.”
Even with that stated obvious obligation to the American people and a split 50/50 Congress, Secretary Yellen and her team are still going to need an economic magic wand and arsenal to persuade some of the Republicans in Congress to get on the right side of history. A huge task, but nevertheless, a doable task for Yellen who is known for her effectual debates on economic policies. A pragmatic and fiscal discipline economist with deep policy expertise that matches her understanding of the impact economic and monetary policies have on people.
During her term at the Federal Reserve, Yellen changed decades of economic conventional wisdoms, urging policymakers to focus on wages, employment and inequality and that the economy will improve. As a results, unemployment went down, wages went up and a lot of workers were better off than they were before.
Secretary Yellen, who began her public service career in the late 1990s serving in President Bill Clinton administration as the leader of the Council of Economic Advisers and then worked her way up to become the first woman to helm the nation’s Federal Reserve System, collecting impressive credentials, accomplishments and praises as a trailblazer along the way, played a major role in the Great Recession’s post economic recovery.
A stalwart labor market economist and fiscal policy advocate with long experience in both academic, think tank and public service, Yellen takes over from her predecessor, Steven Mnuchin, a national economy in need of a triage and rebuilding from the sharpest downturn in history.
The unemployment rates keep surging. The Federal Reserve data shows the average American workers are facing a Great Depression level of jobless, with one out of five workers out of work. The country also is in the midst of an ongoing pandemic, along with significant division in Congress and a divisive society.
The Treasury Secretary and her team will also need to avoid the mistakes made in the last recession of taking the foot off the gas pedal, so to speak, before the full economic recovery took hold.
“My father had such a visceral reaction to economic hardship. Those moments remain some of the clearest of my early life, and they are likely why, decades later, I still try to see my science – the science of economics – the way my father saw his: as a means to help people,” Secretary Yellen, whose economic views were influenced by her father’s work as a physician, said in her memo to the staff. “I know that many of you share this sensibility. You see economic policy as a way to improve people’s lives; you see the humanity beneath the data.”
During her confirmation hearing, Yellen told lawmakers that those moments from her childhood, seeing her father treat his patients in such a dignified and holistic manner inspired her to become an economist.
“I cannot be sure about the future, but I expect that when economists look back at this period in American history, they’ll conclude that perspective helped us leave behind a stronger, more prosperous country,” Yellen said.
In addition to rebuilding the economy, Yellen said the department must continue its essential work that ranges from overseeing financial markets, to managing the nation’s finances, to strengthening the global economy and fighting illicit finance in partnership with America’s allies as well as other new long-term objectives.
“If you have listened to President Biden speak over the past few weeks, you have heard him talk about “four historic crises.” COVID-19 is one. But in addition to the pandemic, the country is also facing a climate crisis, a crisis of systemic racism, and an economic crisis that has been building for fifty years,” she noted in the memo. “People worry about a K-shaped recovery to the pandemic – and that is a cause for concern – but long before COVID-19 infected a single individual, we were living in a K-shaped economy, one where wealth built on wealth while certain segments of the population fell further and further behind. I believe our Department can play a major role in addressing each of these crises.”
“After all, economics isn’t just something you find in textbook,” she added. “Nor is it simply a collection of theories. Indeed, the reason I went from academia to government is because I believe economic policy can be a potent tool to improve society. We can – and should – use it to address inequality, racism, and climate change.”
Secretary Yellen was sworn in by Vice President Kamala Harris early Tuesday afternoon in front of her family-husband George Akerlof, a Nobel Laureate economist and her son, Robert Akerlof- an economist, becoming the 78th U.S. Treasury Secretary and the first woman to serve in that role. She was confirmed by the Senate on Monday with 85-5 votes. She will also serves as Chair of the Financial Stability Oversight Council.
“These are ambitious goals, and I am fully aware none of them will be accomplished by working exclusively with a small team out of the Secretary’s office,” said the newly sworn in Treasury Secretary in her memo. “Ours will have to be an inclusive Department. We must tap the full measure of the institution’s talent and expertise.”