LDN - Business

Yellen vote in U.S. Senate committee to test support for Biden economic plan

[January 22, 2021] By David Lawder and Andrea Shalal

WASHINGTON (Reuters) - The Senate Finance Committee will vote on Friday on Janet Yellen's nomination for Treasury secretary, an early litmus test of bipartisan support for President Joe Biden's ambitious plans for coronavirus relief, infrastructure investment and tax hikes.

Yellen, who would be the first woman to head Treasury after breaking that same barrier as Federal Reserve chair from 2014 to 2018, is highly regarded by both her fellow Democrats and by Republicans. The vote two days after Biden became president is quick by recent standards.

Biden has proposed a $1.9 trillion coronavirus relief plan and has pledged to invest https://www.reuters.com/article/us-usa-election-biden/biden-climate-plan-would-spend-2-trillion-in-bid-to-boost-economy-idUSKCN24F20 $2 trillion in infrastructure, green energy projects, education and research to boost American competitiveness.

Friday's vote on Yellen's nomination may reveal the level of Republican opposition to the Democratic president's plans, for which he is seeking bipartisan support.

Already some 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 $5 trillion in coronavirus spending last year under former Republican President Donald Trump.

Republican Senator Pat Toomey, a longtime fiscal hawk, said at Yellen's hearing: "We're looking at another spending blowout."

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.

The committee vote is scheduled for 10 a.m. (1500 GMT) and Senate aides said it could pave the way for a full Senate confirmation vote later in the day on Friday.

Yellen faces both an evenly split committee and an evenly divided full Senate, with Vice President Kamala Harris casting the tie-breaking vote if needed.

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Former Federal Reserve Chairman Janet Yellen speaks during a panel discussion at the American Economic Association/Allied Social Science Association (ASSA) 2019 meeting in Atlanta, Georgia, U.S., January 4, 2019. REUTERS/Christopher Aluka BerrY/File Photo

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 $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 toward 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.

Outside partisan factors could cast a shadow over the confirmation vote, including the pending impeachment trial of Trump and an ethics complaint against Republican Senators Josh Hawley and Ted Cruz over their objections to Biden's Nov. 3 election victory even after pro-Trump rioters stormed the U.S. Capitol on Jan. 6.

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.

(Reporting by David Lawder and Andrea Shalal; Editing by Heather Timmons and Peter Cooney)

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