Janet Yellen wins unanimous Senate panel vote for Treasury despite Republican tax, debt concerns

Republicans called for Yellen (above) to work with them in developing economic policies.
Republicans called for Yellen (above) to work with them in developing economic policies.PHOTO: REUTERS

WASHINGTON (REUTERS) - The Senate Finance Committee unanimously approved Janet Yellen's nomination as the first woman Treasury secretary, indicating that she will easily win full Senate approval, but Republicans called for her to work with them in developing economic policies.

Yellen's nomination was approved 26-0 in the evenly split committee, with concerns expressed by Republicans about President Joe Biden's ambitious plans for massive coronavirus relief spending, infrastructure investment and tax hikes failing to sway them against the former Federal Reserve chair.

"There is no question she is qualified for this role," said fiscal conservative Republican Senator James Lankford, noting that he has policy disagreements with Yellen.

Biden has proposed a US$1.9 trillion (S$2.5 trillion) coronavirus relief plan and has pledged to invest US $2 trillion in infrastructure, green energy projects, education and research to boost American competitiveness.

Republicans are expressing concerns over its price tag and increased debt in a return to fiscal conservatism after running up deficits with the 2017 tax cuts and nearly US$5 trillion in coronavirus spending last year under former Republican President Donald Trump.

Yellen's Republican predecessor, Steven Mnuchin, was not confirmed until three weeks after Trump's inauguration, and then by a 53-47 nearly party-line vote in a Republican-controlled Senate.

Senate aides have said the committee vote could pave the way for a full Senate confirmation vote later in the day on Friday.

Concerning comments

Yellen's confirmation hearing on Tuesday highlighted some Republican lawmakers' concerns about her role in executing Biden's economic policies, including a bigger federal debt burden and repealing parts of their signature 2017 tax cuts.

Yellen told senators they needed to "act big" on the proposed US$1.9 trillion stimulus package or risk a longer recession and long-term economic scarring, job and revenue losses.

Her remarks represent a new attitude towards government debt among some economists and policy-makers: Focus on the interest rate being paid and the returns it will generate, rather than the overall amount borrowed.

In recent months, Treasury's interest outlays have fallen from pre-pandemic levels due to lower rates.

In written answers to senators' questions, Yellen said she would study raising tax rates for "pass-through" small businesses including sole proprietorships, imposing a new minimum corporate tax and raising capital gains taxes on the wealthy.

She also endorsed an effective carbon pricing system and financial regulation to combat systemic risks from climate change.

With Yellen still awaiting confirmation, the Biden administration on Wednesday named Andy Baukol, a longtime career international finance official, as acting Treasury secretary. A confirmation hearing for Deputy Treasury Secretary nominee Wally Adeyemo has not yet been scheduled.