US Treasury Secretary Janet Yellen on Tuesday urged lawmakers to approve additional renewable energy investment and higher taxes for the wealthy as she defended the government’s efforts to mitigate the impact of inflation.
“I believe there is a lot that Congress can do to ease the burden on budgets,” Yellen told the Senate Finance Committee on the first of two days of testimony on President Joe Biden’s fiscal year 2023 budget.
In addition to investing in renewable energy — which Yellen said could help tackle high gasoline prices — the Treasury Secretary backed more spending on affordable housing and efforts to contain drug prices.
She also highlighted the Biden administration’s historically large release of oil from the Strategic Petroleum Reserve to bring down prices faced by drivers at the pump, which have skyrocketed since the Russian invasion of Ukraine and new ones daily Hitting records with the national average at $4.92 a gallon Tuesday.
“Although gas prices are very high … they would be higher without them,” Yellen said.
Yellen said the inflation forecast for 2022 as a whole is “probably higher” than the four percent originally forecast. The forecast will be updated in the coming weeks, she said.
“Inflation is really an economic issue at this point and it’s critical that we address it,” Yellen said, adding, “I expect inflation to remain high, although I really hope it’s coming down now.” .”
The hearings come as Biden struggles with a low favorability rating ahead of key midterm elections, with pain from higher gas and food prices outweighing a strong job market and an unemployment rate of 3.6 percent.
Yellen received a warm welcome from Senate Democrats, but Republicans cited the administration’s energy and climate policies as the cause of the energy crisis and cited Biden’s 2021 US bailout plan as the main cause of inflation.
“What I heard you say is that it’s okay to raise taxes now and it’s right to have more stimulus spending to deal with this crisis,” said Sen. Mike Crapo, a Republican who represents Idaho.
“I just have to say that I don’t agree with you.”
Yellen defended America’s bailout plan, saying the government was taking action to respond to forecasts that unemployment could top 9 percent amid headwinds amid the Covid-19 upheaval.
She said at the time, “The overwhelming risk was that Americans would be engulfed in a deep and prolonged recession.”
Republicans also took Yellen to task over comments in early 2021 calling inflationary pressures “temporary,” the same word used early on by Federal Reserve Chair Jerome Powell.
Yellen said her comments at the time did not anticipate the supply chain issues that emerged later in 2021 or the Russian invasion of Ukraine.
But Senator John Barrasso, Wyoming Republican, said of Yellen’s past assurances, “I wonder why Americans should trust your statements, decisions and recommendations today.”
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