By David Lawder
DETROIT (Reuters) – U.S. Treasury Secretary Janet Yellen said on Thursday that President Joe Biden’s agenda has made the economy stronger than before the COVID-19 pandemic, but said more work is needed to protect gains , especially by dealing with inflation.
Traveling to Detroit to outline the impact of recent legislative achievements ahead of congressional elections in November, including hundreds of billions of dollars in investments in semiconductors, research, health care, green energy and infrastructure, Yellen said fighting inflation remains the “top” of the government. economic priority”.
“Our plan worked,” Yellen said in a campaign speech that highlighted job gains and improved economic equality at Ford Motor Co’s Rouge electric vehicle plant in Dearborn, a city just outside Detroit. “By any traditional measure, we have experienced one of the fastest economic recoveries in modern history.”
However, Yellen acknowledged that inflation, which is running at 40-year highs, remains a major concern. He said the Biden administration is working to lower costs for Americans by easing supply chain bottlenecks, releasing oil from the Strategic Petroleum Reserve and reducing health care premiums and drug costs through the recently enacted “Inflation Reduction Act.” ” $430 billion.
“The most immediate challenge is to return to an environment of stable prices without sacrificing the economic gains of the past two years,” Yellen said, adding that the Federal Reserve has the primary responsibility for containing inflation. “To ensure our long-term financial stability, we must keep our public finances on a sound footing.”
Yellen said the administration would continue to push for additional tax increases beyond a new alternative minimum tax of 15 percent for large corporations, as well as implementing a global tax reform deal that was left out of the most recent legislation.
“That includes closing loopholes and returning interest rates for high earners and corporations to historic levels,” he said, indicating the administration still wants to reverse the 2017 tax cuts enacted by former President Donald Trump and colleagues by the Republicans – an effort thwarted by the Democrats. slim majority in Congress.
Biden’s party is trying to retain 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 improvements in the economy.
Yellen’s remarks did not mention Biden’s executive order to forgive up to $20,000 in student loan debt for people earning up to $125,000 or $250,000 for a married couple. The plan responds to calls for debt relief from progressives on the Democratic left, but has drawn criticism for handing out aid to a few wealthy earners, potentially fueling inflation and creating hundreds of billions of dollars in new debt.
A Treasury official said the purpose of Yellen’s speech was to focus on the economic impact of the recent legislation, which meant some material had to be cut.
Yellen said the green energy, technology and infrastructure investment plans are “pro-growth and pro-fairness and will shift investment more broadly across the United States, not just to prosperous coastal cities.
The Treasury chief previously characterized Biden’s economic agenda, including previous, unfulfilled plans to spend more on child care and education, as “modern supply-side economics.”
In contrast to the term, which became popular in the 1980s to describe the Reagan administration’s focus on tax cuts and deregulation to encourage productive investment, Yellen argued that Biden’s version would focus on a series of investments to boosting productivity in more “sectors, people and places”. “
“We know that a disproportionate share of economic opportunity has been concentrated in large coastal cities. The investments from the Biden economic plan have already begun to shift that dynamic,” Yellen said.
(Reporting by David Lawder; Editing by Paul Simao)