Janet Yellen, the economist who came to Washington in 1994 to serve as a member of the Federal Reserve board of governors and took the town by storm, won Senate confirmation Monday to become the first female U.S. Treasury secretary in history.
The vote was 84-15, with 34 Republicans voting in favor. Analysts said Yellen is viewed by lawmakers as being in some sense above politics. This could come in handy as President Joe Biden fights to pass his $1.9 trillion COVID-19 relief package and an infrastructure bill expected to be unveiled next month.
Many Republican members of the Senate Finance Committee said they wanted their vote in favor on Yellen to show they were willing to work with Democrats on economic issues.
At the same time, GOP members have reservations about some of Biden’s economic priorities, including the proposed $15-per-hour federal minimum wage. And Republicans also don’t want to see a reversal of tax cuts they passed in 2017.
Democrats are eager to turn the page on the economic policies of the Trump administration and believe they have an ally in Yellen.
Yellen has urged lawmakers to “act big” now to save the economy and worry about the debt later.
Sen. Sherrod Brown, the chairman of the Senate Banking Committee and a Democrat from Ohio, said the U.S. was “done” measuring the economy by the stock market or corporate profits.
“We’re going to think about the economy the way workers and their families do — in terms of paychecks, and whether they can make rent or pay the mortgage this month, or afford child care, or pay for their prescription drugs,” Brown said.
After Yellen came to Washington to join the central bank, then headed by Alan Greenspan, she quickly earned a reputation for astute economic analyses. She even famously took on Greenspan in a debate over the path of interest-rate policy, something few on the central bank ever tried.
President Bill Clinton brought her to the White House to be the chair of his Council of Economic Advisers. After a stint as the head of the Fed’s San Francisco regional bank, she returned to the Fed as vice chair in 2010. Three years later, President Barack Obama nominated her to be the head of the Fed. After her four-year term ended in 2018, Yellen did not retire and move back to San Francisco, where she has a home, but instead worked at the Brookings Institution. Her name wasn’t mentioned often by the press as a possible Treasury secretary.
Her biography led Sen. Ron Wyden, a Democrat from Oregon and chairman of the Senate Finance Committee, to quip that Yellen belonged in the Senate confirmation “hall of fame.”
Yellen will need every ounce of her economic talents in her new post. The U.S. government remains on “war footing,” fighting an economic crisis caused by the coronavirus that is worse than the 2008 financial crisis, said Ken Rogoff, a leading economist and Harvard professor, in a recent interview. U.S. government debt held by the public is now over $21 trillion.
As part of her new job, Yellen will meet regularly with Fed Chairman Jerome Powell. The central bank has cut its policy rate to zero and is buying massive amounts of government securities to keep the financial markets stable. On Wednesday, Powell is expected to tell the markets that the Fed isn’t thinking about changing its policy stance even with stimulus from the new Biden administration and the two houses of Congress controlled by Democrats.
Fed officials have said repeatedly that Congress and Treasury must do more to help workers and small-business owners through grants and other relief programs. Under the law, the Fed can only lend funds.
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