October 2, 2022

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Yellen denies urging Biden to scale back stimulus over inflation fears

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Janet Yellen has denied claims she wanted US President Joe Biden to scale back the size of his $1.9bn Covid stimulus package last year over fears it could stoke inflation.

The US Treasury secretary issued a statement on Saturday rebutting claims made in a forthcoming book that she initially wanted to trim the bill by a third.

The book threatens to give ammunition to Biden’s critics, who accuse him of having helped unleash the highest US inflation in decades with large spending bills in the opening months of his administration.

Yellen said in her statement: “I never urged adoption of a smaller American Rescue Plan package, and I believe that ARP played a central role in driving strong growth throughout 2021 and afterwards.”

She issued her statement after excerpts from the book alleged she initially agreed with Larry Summers, one of her predecessors at the Treasury, that the president’s signature economic measures were going to push up prices.

According to reports, Owen Ullmann states in Empathy Economics, his new biography of Yellen: “Privately, Yellen agreed with Summers that too much government money was flowing into the economy too quickly.” His publisher PublicAffairs claimed Ullmann had “unfiltered access” to the Treasury secretary while researching the book.

Inflation has soared for much of 2021 and the early part of 2022. Core inflation was 4.9 per cent in April compared with the previous year, according to the Federal Reserve’s preferred personal consumption expenditures price index. It hit 5.3 per cent the previous month on an annualised basis.

High prices have taken a heavy political toll on Biden, whose approval rating is languishing around 40 per cent, even as the jobs market continues its steady recovery from the Covid-19 lows.

The president’s critics have accused him of ignoring the warnings of people such as Summers, who said last year the bumper Covid relief and bipartisan infrastructure…



2022-06-04 18:30:14

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