Yellen Tells Lawmakers That American Workers Would Be Her Core Focus -- 3rd Update

By Kate Davidson

WASHINGTON -- Janet Yellen told lawmakers Tuesday she would make the needs of America's workers her core focus if confirmed as the next U.S. Treasury secretary and ensure the U.S. has a competitive economy that offers good jobs and wages workers in cities and rural areas.

"I will be focused on day one on providing support to America's workers and to small businesses, putting into effect as quickly and efficiently as I can, the relief in the bill that was recently passed, and then over time working for a second package that I think we need to get through these dark times," she told the Senate Finance Committee at her confirmation hearing before a vote on her nomination.

Ms. Yellen said that additional spending that provides relief for struggling families and businesses could provide the most "bang for the buck" for the economy as a whole, including extended jobless benefits and nutrition assistance.

Ms. Yellen also affirmed the U.S.'s commitment to market-determined exchange rates, and she made clear the U.S. doesn't seek a weaker dollar for competitive advantage. She added that efforts by foreign countries to artificially manipulate their currencies are "unacceptable."

She also took aim at China, saying the U.S. should address its "abusive, unfair and illegal practices," including undercutting American companies by dumping products, erecting trade barriers, giving illegal subsidies to corporations and stealing intellectual property.

"These policies, including China's low labor and environmental standards, are practices that we're prepared to use the full array of tools to address," she said.

In her earlier prepared remarks, Ms. Yellen urged lawmakers to "act big" to avert a protracted economic downturn and put aside concerns about the mounting national debt.

"Economists don't always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now -- and long-term scarring of the economy later," Ms. Yellen said.

President-elect Joe Biden's $1.9 trillion coronavirus relief package, unveiled last week, provides for another round of direct stimulus payments, extended and enhanced jobless benefits, funding for schools and first responders and the creation of a nationwide vaccination program. The proposal also includes longstanding Democratic priorities, such as raising the federal minimum wage to $15 an hour and expanding paid leave for workers.

Republicans have decried the size and scope of the measure, arguing it would spend more than the economy needs. Some Republicans and Democrats have also expressed concern about the growing national debt, which at $21.6 trillion exceeds the annual output of the U.S. economy.

Ms. Yellen aimed to address those concerns in her testimony, saying the government's long-term fiscal trajectory is a cause for concern and will eventually need to be addressed.

"But it's also important for America to invest: Invest in our infrastructure, invest in our workers, invest in research and development -- the things that make our economy grow faster, make it more competitive," she said.

She also reiterated that interest rates are at historic lows, making debt more affordable. Though rates may eventually rise, "right now our challenge is to get America back to work and to defeat the pandemic," she added.

Asked whether the U.S. should revisit the possibility of issuing 50-year bonds, Ms. Yellen said she was open to the idea and would study the market's appetite for such debt.

"There is an advantage to funding the debt, especially when interest rates are very low, by issuing long-term debt," she said.

The Treasury last year began regularly issuing 20-year bonds for the first time in decades, but decided against selling longer-term debt after determining there wasn't sufficient investor demand.

Mr. Biden's advisers have argued that the low cost of borrowing and weak economy call for larger short-term deficits to shore up the recovery. But it isn't clear how much of their broader agenda -- which includes investments in infrastructure, health care and green energy -- they intend to finance through borrowing and how much they would offset with new revenue, such as tax increases on the wealthy.

Ms. Yellen said that as Treasury secretary, she would face a "dual mission." The first is to see Americans through the pandemic. "But then there is the longer-term project. We have to rebuild our economy so that it creates more prosperity for more people and ensures that American workers can compete in an increasingly competitive global economy."

Mr. Biden's nomination of Ms. Yellen positions the 74-year-old labor economist to lead his administration's efforts to advance the recovery from the destruction caused by the coronavirus pandemic and related shutdowns. She will also play a key role in pushing the administration's economic agenda on Capitol Hill, a job that starts in earnest Tuesday, said Tony Fratto, a senior Treasury and White House aide in the George W. Bush administration.

"She's a known quantity in terms of testifying there, but I think this is the first time she has had to go to really be something of a salesman on policy before," Mr. Fratto said. "She's the primary spokesperson now."

The Senate confirmation hearing is Ms. Yellen's fifth during her three decades at the forefront of economic policy-making. If confirmed, she will be the first woman to serve as Treasury secretary and the first person to have led the Fed, the Treasury and the White House Council of Economic Advisers.

The hearing comes at a time of growing uncertainty over the progress of the pandemic, which has killed close to 400,000 people in the U.S., as well as the state of the economy. Retail sales fell for the third straight month in December, and employers cut jobs, ending seven months of employment gains.

Write to Kate Davidson at [e-mail]

(END) Dow Jones Newswires

01-19-21 1241ET