When Joe Biden was asked who he would appoint as secretary of the Treasury, he said he would appoint someone with whom both the moderate and progressive wing of his party agreed. That person turne out to be Janet Yellen, the former chairwoman of the Federal Reserve (FED).
With this appointment, Biden seeks to place in one of the most important positions of the executive a person whose name does not raise protests over the most radical wing of his party, nor does it generate much resistance among the Republicans, who so far dominate the Senate.
With her appointment, Janet Yellen would become the first woman to serve as Secretary of the Treasury in the United States. Yellen was also the first woman to hold the Chair of the FED, a position she held for four years.
Janet Yellen studied economics at Brown University in 1967 and earned her doctorate in Yale adviced by Joseph Stiglitz in 1971. His studies focused primarily on the causes, mechanisms, and implications of long-term unemployment in the United States.
The former president of the FED has taught at Berkley, Harvard and the London School of Economics, she is also a member of the American Economists Society, of which she was president during 2004-2005.
She held the FED presidency in 2014, replacing Ben Bernanke. During her Capitol hearing, Yellen defended the $ 3 trillion stimulus program launched by his predecessor to reclaim the American economy from the 2008-2009 crisis.
In 2015, Janet Yellen raised interest rates after years of staying at zero interest rate. According to several analysts, this increase was rushed, which in 2016 led the nation to a small recession, which may have been one of the reasons why Hillary Clinton failed to reach the oval office.
Janet Yellen takes office as Treasury secretary in a recovering economy that continues to lose strength while begging for a new stimulus still under debate between Democrats and Republicans in Congress.
The US economy had been recovering since July, however, as coronavirus cases increased again and consequently closings, job recovery appears to have stalled. Investment Bank JP Morgan Chase & Co. announced that they expect the US economy to contract during the first quarter of 2021.
Once she takes office, Yellen will have to sit down with Republicans and Democrats to come to a deal that is agreed to by both parties. Currently, Congress fails to define the appropriate amount for the stimulus plan, as both parties propose very dissimilar figures, $ 3 trillion from the Democrats side, and only $ 650 billion from the Republican side.
Yellen agrees with the consensus of economists that withdrawing public spending and transfers established by CARE Acts at this time would be rushed and would lead to a slower recovery, as occurred during the 2007 and 2009 recession. As reported by current Treasury Secretary Steven Mnuchin by the end of this year, if a new bailout has not been approved, aid to millions of Americans and companies by the Government will cease.
Yellen’s other challenge will be to manage the United States debt, which makes 27 trillion dollars, more than 100% of the country’s Gross Domestic Product. Although it is still perceived as distant, the consequences of a debt crisis would make the nation’s liabilities unpayable, mainly affecting the Social Security payments of millions of Americans, who are the main holders of this debt.
Most certainly Janet Yellen will push for a new stimulus to the American economy, as she mentioned in past comments where she insisted the Trump administration “spend whatever it takes” to prevent small businesses from being forced into bankruptcy.
The new secretary will also have to predict a possible de-escalation between the trade war with China, in turn satisfying the contradictory rhetoric of Joe Biden, who tried to emulate Trump’s position facing the Asian giant in campaign, while posing as an opening player against European countries.
Another important task of the Treasury secretary is to ensure the integrity and security of the financial system. In other words, it is not used to launder the assets of criminals and dictators like Nicolás Maduro. Regarding Venezuela, Yellen has not ruled on this matter and there is concern that under her sight U.S. Treasury will not continue to target Maduros regime finances, as it was done under Steven Mnuchin’s sight.