White House policies saved US economy, Treasury’s Yellen says

Treasury Secretary Janet Yellen on Thursday praised the Biden administration’s economic policies during a speech at a Ford Motor Company electric vehicle plant in Michigan on Thursday.

Yellen, who spoke after a tour of the Rouge Electric Vehicle Center in Dearborn, touted the Democrat-led Cut Inflation Act, the bipartisan Infrastructure Act and the CHIPS and Science Act as benefits. for manufacturing and job growth.

His speech comes as Democrats aim to highlight their economic successes ahead of the midterm elections in November, which will determine whether Republicans can take over one or both houses of Congress. President Joe Biden will travel to Ohio on Friday to promote the opening of an Intel semiconductor manufacturing facility.

Many of the administration’s policies conform to Yellen’s so-called modern supply-side economics framework. Before the pandemic, she said, higher inequality was accompanied by slower economic growth.

“And now, with an economy at full employment, we are uniquely positioned for a supply-side expansion that delivers sustainable growth and reduces inequality,” Yellen said.

She also noted that the Biden administration’s stabilization efforts will “get the United States back to full employment in record time” after the pandemic, declining labor force participation and the war in Ukraine weighed on the economy. American economy.

“Taken together, the bipartisan Infrastructure Act, the Chip Act and the Cut Inflation Act authorized one of the most significant investments our country has ever made,” Yellen said. “I firmly believe that they will help us achieve stable and sustainable growth and move us towards a fairer and more resilient economy.”

Yellen attributed an economic recovery during the pandemic to one of President Joe Biden’s political priorities upon entering the White House.

“Thanks to the US bailout and our vaccination campaign, the United States has experienced the fastest pace of job creation in our history,” she said. “Household balance sheets are strong and businesses continue to invest.”

Biden signed the $1.9 trillion pandemic relief package in March 2021, authorizing payments of up to $1,400 for most Americans, extending $300 a week unemployment insurance and expanding child tax credit. The package also included $20 billion for Covid-19 vaccinations and millions in rental assistance.

The unemployment rate returned to its pre-pandemic level in July and tied for the lowest level since 1969 for all demographic groups except African Americans, according to data from the Bureau of Labor Statistics.

During her visit, the Treasury Secretary also visited small business recipients of Detroit’s Motor City Match grant program. The expansion of this program was made possible by $15 million in US bailout funding.

Republicans hammered Democrats for passing the legislation, saying the massive injection of government aid helped fuel inflation.

The $80 billion allocated to the IRS under the Cut Inflation Act to enforce a 15% minimum tax on large corporations will help fix a two-tier tax system “by ensuring that large corporations and high-income individuals cannot avoid paying the taxes they owe,” Yellen said.

The tax cap – the amount of money owed but unpaid to the IRS – will rise to $7 trillion over the next decade and is “disproportionately concentrated among high earners”, she said. declared.

IRA resources “will allow the IRS to increase audits of high-end taxpayers and collect taxes from those who haven’t paid their bills in full,” Yellen said.

The GOP has also targeted tax increases included in the bill, which Democrats aim to use to pay for massive investments in climate change mitigation.

CHIPS, a Biden-backed bipartisan law that makes a historic investment in domestic semiconductor manufacturing, will allow the United States to economically compete with China and other countries that have historically invested more in research and development. , Yellen said.

“The United States now ranks 10th in the world in terms of R&D investment as a percentage of output,” she said. “The estimated cost [of] the decline in public R&D represents a loss of economic output of 200 billion dollars per year. And meanwhile, competitors in China and the rest of the world are making progress.”

About $40 billion in incentives injected into the chip manufacturing sector will reduce foreign reliance on the technology needed to make cars and other goods, Yellen said.

Yellen said modern supply-side policies promoted by the Commerce Department and the White House are pro-growth as well as pro-equity. The wealthiest Americans and big corporations have benefited the most from tax incentives from previous administrations, she said. But the Biden administration has focused on investing in disadvantaged communities.

“Put simply, this approach embraces the notion that some of the best opportunities for growth occur when we invest in people in places that have been forgotten and overlooked,” Yellen said.

The Treasury Secretary said the Commerce Department will establish at least 20 technology and innovation hubs “geographically dispersed as a priority for underserved and underrepresented communities.”

“Such a dispersion of economic opportunity across the country will result in good new jobs and industries,” Yellen said.