Janet Yellen: "In circumstances like the current ones, you have to act big"

Janet Yellen appears telematically before the Senate Finance Committee, this Tuesday in Washington.ANNA MONEYMAKER / AFP

A superpower in low hours, subdued by the pandemic and subject to colossal threats such as climate change or "abusive, unfair or illegal" competition from China.

Janet Yellen has appeared on Tuesday telematically before the Senate to be confirmed as Secretary of the Treasury (Minister of Economy) of the United States, and outlined an alarming panorama of the challenges facing the country.

But to great evils, great remedies, the economist stressed as soon as she began her speech, and the opening of the New York Stock Exchange, on the rise, seemed to agree with her, while the euro appreciated against the dollar.

"In circumstances like the current ones, the smart thing to do is go big," he said by way of a declaration of intent.

"No one deserves more credit than Yellen to achieve a sustained economic expansion, so it should be confirmed on the first day," said Senator Ron Wyden Democrat when presenting it, although everything seemed to indicate - also his prolonged presentation, of three and a half hours of duration - that that was not going to happen this Tuesday.

Yellen explained to the Senate Finance committee that this is not the time to worry about the fiscal deficit when what is needed is to invest in infrastructure, R&D, education and training of the workforce, for which the richest will need to contribute with "fair and progressive taxes", reversing even parts of the great tax reform of 2017, which benefited large fortunes and corporations.

To prevent millions of Americans from being thrown out of the system by the pandemic, Yellen promised to expand unemployment benefits and food stamps, steps that will prevent "permanent job destruction" in the long run.

With the recipe for internal problems prescribed, Yellen cited China as "America's most important strategic competitor."

To deal with that threat, he stressed, President Biden plans to present a second package of measures - including investment in infrastructure - to strengthen the country's economic competitiveness.

The scepter of global superpower is at stake, and the measures, Yellen stressed, must be as ambitious as the challenges.

The White House is also preparing an arsenal of tools to tackle "abusive, unfair and illegal practices" in Beijing, he said, in a possible allusion to further sanctions.

In response to questions from senators, Yellen detailed these practices in a series of common policies that include illegal subsidies,

dumping

(selling below cost) of products, theft of intellectual property and entry barriers to North American products.

At the end of her presentation, the Economy Minister accused China of "horrendous human rights abuses."

The other great threat - "an existential threat", as he described it - is called climate change, and to tackle it the Democratic Administration will invest in clean technologies, renewable energies and the determined promotion of the use of electric vehicles, as this sector can also constitute a new vein of employment.

In the electoral program that has brought him to the White House, Biden has always equated reactivating the economy to overcome the pandemic with reformulating his conception and objectives.

Maintaining confidence in the US economy is good for the country, Yellen said, but also for its trading partners.

The value of the dollar and other currencies must be determined by the market, and not by other operators, so manipulating exchange rates to gain commercial advantage is “unacceptable”.

"I will oppose any attempt by any country to artificially manipulate exchange rates to take commercial advantage of the operation."

Under the long shadow of the great tax reform of 2017 - for many, the only legislative initiative of Trump's draft -, the candidate to occupy the Secretary of the Treasury indicated that ensuring access to financing for small and medium-sized companies is a priority.

Also guarantee the sustainability of the federal budget, and for this, nothing better than overcoming the pandemic.

"Without more help, we will have to mourn long-term economic problems," he said.

"The long-term fiscal trajectory is a cause for concern, something we must pay attention to, but it is important to remember that we are in a period of very low interest rates," stressed the former president of the Federal Reserve.

"Low rates are a sign of structural changes that are likely to last for a long time, although they may eventually increase to ensure that the primary deficit remains low."

The purpose of the Biden Administration's fiscal policy is not to raise taxes, he stressed, but to provide relief to victims of the health crisis.

"We must think of fiscal policy as part of investments in infrastructure, the promotion of R&D or the promotion of the manufacturing industry", and in no way in the increase of corporate rates to the level prior to the cuts in the Republican administration in 2017, as that is not Biden's intention, he said.

"But the big corporations and the great fortunes do pay their fair share."

In other words, he advised against thinking about tax increases in the abstract, and instead doing it "in the context of a vast investment program."

The Biden Administration's commitment to programs like Medicare, "whose benefits we must preserve," will continue.

With nods to the most precarious workers in cities, rural communities, the minorities most affected by the pandemic such as Afro-Americans or Latinos - "we must reduce the racial economic gap", he urged - and women, "victims in a disproportionate degree of the pandemic ”, the next Secretary of the Treasury descended at the foot of the street when it came to raising how the fight against the virus will be.

"Schools need more resources" for their digital transformation, allowing them to face a radically different type of education, "and Biden wants to reopen them in the next hundred days," he announced.

In his programmatic presentation, he left practically no aspect unnoticed, of the risk that cryptocurrencies present in money laundering to financial terrorism, linked to a constantly changing technological world.

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