Treasury Secretary Says the Labor Market Is Stalling
- Author: Mary Singleton
- Posted: 2024-10-10
The labor market in the United States is stalling. It is in a deep hole that could take years to get out of unless Congress quickly passes an economic relief package. That package will need to give workers a bridge through the end of the pandemic. This warning came from Secretary of the Treasury Janet Yellen on Sunday, February 7.
What President Biden's Stimulus Package Could Do
If Congress is able to pass the $1.9 trillion package for economic relief that President Biden has proposed, the economy could return to a full employment level by 2022, explains Secretary Yellen. Secretary Yellen shot down concerns that spending so much money would lead to inflation. She said that the economy would get stuck in a long, slow recovery like the one that happened after the Great Recession of 2008. That long, drawn-out recovery after the housing bubble burst caused automakers, banks, insurance agencies and other large companies to declare bankruptcy. The same thing could happen again if lawmakers do not act now and act in a big way.
Why Lawmakers Need to Act Now
The biggest risk of the current economic climate is leaving workers behind and communities scarred by the financial impact of the pandemic. The huge toll that it has taken could be permanent if Congress doesn't act this week. Yellen made this statement on a program called "State of the Union" on CNN on Sunday morning.
What Past Treasury Secretaries Have to Say
Lawrence H. Summers, who was the Secretary of the Treasury under former President Bill Clinton, said that President Biden's proposal is so large that it could actually overstimulate the economy. Yellen argues against this. She said that she has spent years studying inflation and is confident that lawmakers and economists working for the government have all of the right tools to deal with the situation in the unlikely event that Summers' prediction were to come to fruition.
Democrats Fast Track the Proposal
Democrats in the House of Representatives moved last week to fast track the plan. The details are still being sorted. Yellen said that it is more important to ensure that low-income workers and those in the middle class get the additional financial support they need. In Yellen's view, no funds should go to the well-off families who don't need the help. Yellen made this statement on a program called "Face the Nation" Sunday morning on the CBS network. President Biden is in discussions with Congress about an income ceiling for eligibility for the individual economic stimulus funds.
What Is Needed Beyond the Economic Stimulus
Getting funding out for COVID-19 testing, schools, healthcare facilities and individual help is not the only thing Congress needs to do, said Yellen. She added that President Biden also wants to pass a jobs bill. The proposed jobs bill will focus around training workers for high-tech jobs, addressing climate change through the development of renewable energy and energy-efficient structures and investing in infrastructure. The Trump administration had promised to focus on infrastructure, and that promise was not kept. The nation's interstates, bridges, electrical grid and water and sewer systems need large investments.
Some Liken the Plans to FDR's New Deal
Some economists who have read President Biden's proposals and reviewed the rough drafts of the bills going through the House of Representatives have described the plans to be like FDR's New Deal. The similarity is striking, and perhaps it is linked to the fact that President Biden hung a portrait of FDR in the Oval Office. The FDR portrait replaced the portrait of Andrew Jackson that was in the Oval Office during the previous administration. During the New Deal, FDR put millions of Americans to work building infrastructure. The first highways were built, new bridges and dams were erected, and municipal water and sewer systems were built and expanded. The New Deal provided jobs to people who were unemployed as a result of the Great Depression.
Bipartisan Support Would Be Ideal
President Biden would like to have bipartisan support on his jobs proposal. The GOP often touts getting people to work instead of giving them cash or other benefits as a way to solve economic problems. If President Biden and Secretary Yellen can get the GOP on board with the idea that these two packages can increase employment, it is likely that at least some Republicans in Congress will vote for it.
