U.S. Treasury Secretary Janet Yellen declared on Thursday that President Joe Biden’s agenda has made the economy stronger than before the COVID-19 pandemic, but said more work was needed to protect the gains, especially by tackling inflation.
Traveling to Detroit to tout the impact of recent legislative achievements ahead of congressional elections in November, including hundreds of billions of dollars of investments in semiconductors, research, health care, green energy and infrastructure, Yellen said combating inflation was the still the administration’s “top economic priority.”
“Our plan has worked,” Yellen said in a campaign-flavored speech that ticked off job gains and economic equality improvement improvements at Ford Motor Co’s Rouge EV plant in Dearborn near Detroit. “By any traditional metric, we have experienced one of the quickest economic recoveries in modern history.”
But Yellen acknowledged that inflation, which has been running at 40-year highs, is still a major concern. She said the Biden administration was working to reduce costs for Americans by easing supply chain bottlenecks, releasing oil from the Strategic Petroleum Reserve and cutting healthcare premiums and drug costs through the recently enacted $430 billion “Inflation Reduction Act.”
“The most immediate challenge is to return to an environment of stable prices without sacrificing the economic gains of the past two years,” said Yellen, adding that the Federal Reserve had primary responsibility for taming inflation. “To ensure our long-term economic stability, we must keep our public finances on sound footing.”
Yellen said the administration would continue to push for additional tax increases beyond a new 15 percent alternative minimum tax for large corporations, as well as for implementation of a global tax reform deal that was left out of the most recent legislation.
“This includes closing loopholes and returning rates for high earners and corporations to historical norms,” she said, indicating that the administration still wants to reverse the 2017 tax cuts enacted by former President Donald Trump and his fellow Republicans – an effort thwarted by Democrats’ thin majority in Congress.
Biden’s party is trying to maintain control of Congress in November, and Yellen’s speech in Detroit, the birthplace of America’s auto industry, is part of a month-long speaking tour to tout the economy’s improvements.
Meanwhile, the U.S. is on track to hit ambitious emissions-reduction goals following recent climate legislation that encourages investment in green technology, Yellen said.
The law, signed by President Joe Biden on Aug. 16, “represents the largest investment in fighting climate change in our country’s history,” Yellen’s prepared speech said. “This will put us well on our way toward a future where we depend on the wind, sun and other clean sources for our energy,” she said. “We will rid ourselves from our current dependence on fossil fuels and the whims of autocrats like Putin,” she said, referring to the Russian president.
Yellen was set to tour Ford’s Rouge Electric Vehicle Center, where the company makes the electric F-150 Lightning pickup, before her speech
While in town, the Treasury secretary also plans to visit small business owners in Detroit and meet with local officials.
Yellen said experts have estimated the new law — called the Inflation Reduction Act because it also aims to reduce the cost of prescription medication — will put the U.S. on a path to cut emissions by about 40 percent within eight years, compared with 2005 levels. She didn’t cite any studies backing that claim in the excerpt, and didn’t provide further steps the U.S. aims to take to reach net zero.
On his first day in office in 2021, Biden signed an executive order recommitting the U.S. to the 2015 Paris Agreement on climate, which pledges to reduce emissions by 50 percent by 2030.
— Reuters, Bloomberg and Crain’s Detroit Business contributed to this report.
