The investment plans presented by Joe Biden will not weigh on the debt of the United States, said his Treasury Secretary Janet Yellen on Thursday, highlighting historically low interest rates which allow spending at a lower cost.
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"I believe that over the next decades, the burden of interest on the debt will be very manageable,"
said Minister Joe Biden, questioned by elected officials of the House of Representatives.
"Interest rates have been exceptionally low"
since the start of the crisis, she said, and
"most economists think it will last
.
"
This makes it possible to borrow money without bearing the burden of interest to be repaid.
The Biden administration will present its first annual budget on Friday, which includes $ 6 trillion in spending for 2022, the highest level since World War II, according to information from the
New York Times
.
By 2031, total spending must increase by $ 8 trillion, under the weight of the two investment plans that Joe Biden wants to pass in Congress and intends to finance in part through a tax hike, which Republicans refuse to 'hear talking.
Low risk of an inflationary effect
Janet Yellen again advocated for these plans, saying they should not help accelerate inflation. She stressed that it was necessary to balance
"the risk of a permanent scar"
on the economy and a slow recovery against
"the low risk that these plans will have an inflationary effect"
. However, she admitted that it was a risk that she was monitoring
"closely"
.
“We have the tools to deal with it,”
she reiterated. For her, as for other economists,
"inflation (...) will be temporary"
and is not
"endemic"
.
"I think it will last a few months and that we will see high rates of annual inflation until the end of the year,"
she detailed.
The markets have been worried for several months about inflation, driven by sustained demand and supply difficulties at the global level, with a particularly strong increase over one year, compared with prices falling in spring 2020 under l effect of confinement.
The PCE inflation index, used by the US Central Bank (Fed), will be released on Friday.
Another measure, the CPI, climbed in April to 4.2% year on year.
Some Fed officials believe that it will soon be necessary to start discussing a tightening of monetary policy. But several officials, including Fed Chairman Jerome Powell, consider this premature, worried about the labor market, which has not yet returned to pre-crisis levels.