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Original title: In addition to helping Biden push forward the rescue plan, Yellen is also planning these “actions.”
Yellen said that in light of the large expenditures required by the Biden administration in expanding U.S. infrastructure and social safety nets, he will work with members of Congress to quickly pass a series of tax increases for U.S. businesses. and the rich.
As the United States’ first female Secretary of the Treasury, what plans does Yellen have during her tenure?
Judging by his recent remarks on several occasions, in addition to promoting US President Biden’s $ 1.9 trillion bailout plan, he will also promote domestic investment in the United States and raise taxes on America’s rich.
Priority will be given to US domestic investment.
Yellen told US congressmen on Friday that the Biden administration will prioritize national investment in wage earners and infrastructure before embarking on negotiations for a new trade deal.
Yellen said that Biden has confirmed that economic recovery is the top priority. No free trade agreement will be signed until the government has completed significant investments in wage earners and infrastructure.
This is consistent with Biden’s statement in early December of last year. At the time, Biden said: “I want to have priority to invest in the United States to ensure that we win this battle of the infernal model. I will not sign any agreement with anyone before making large investments in the country, in our workers.” and education. New trade agreement “.
Specifically, the Biden administration has listed energy, biotechnology, advanced materials, and artificial intelligence as mature areas for large-scale government research and investment.
However, this does not mean that the Biden administration does not attach importance to trade deals. In a written response to questions from members of Congress, Yellen stated that the Biden administration plans to implement a “stable trade agenda” and, by rebuilding communication with allies, “rebuild a trade agreement that will bring national prosperity and the interests of the working class first. ” .
Raise taxes on businesses and the rich
To support these expenses, tax increases have become an option of the Biden administration. In a written response to a question from Senate members last Thursday, Yellen stated that since the Biden administration requires a large amount of infrastructure spending from the US and the expansion of the social safety net, it will work with members of Congress to quickly pass a number of specific projects. Tax increases for American businesses and the wealthy. Previously, the Biden administration predicted that two-thirds of “blue tide” tax expenditures would come from a tax increase.
During the campaign, Biden said in an interview that “taxes will be increased for anyone making more than $ 400,000,” but will not increase for those making less than $ 400,000. Other tax measures include the taxation of long-term capital gains obtained by individuals with an annual income of more than US $ 1 million at the ordinary income tax rate, up to 39.6%; and the performance gains obtained from the fund by general partners of private investment funds. Taxes can be levied at a general income tax rate of up to 39.6%; The applicable tax rate for capital gains of non-Americans when investing in the United States in the future has been adjusted from the previous maximum of 37% to 39.6%.
As for whether households with an annual income less than $ 400,000 will keep the original tax level, Yellen said that will be decided after consulting with members of Congress.
In addition, in accordance with Biden’s campaign policy tax proposal, he proposes to reduce the lifetime allocation of federal estate tax from $ 11.58 million in 2020 to $ 3.5 million, which is the level during the Obama administration in 2009. Yellen said: “According to the plan, around six of the richest people in every thousand properties will have to pay taxes.”
Yellen also said she hopes to raise the corporate tax rate from 21% to 28% soon. As for the discussion about whether this will reduce the competitiveness of US companies, Yellen’s attitude is that the tax rate will remain “substantially lower than the level of previous decades.” In addition, the increase in corporate tax rates will be accompanied by “large investments”, which can be used to invest in infrastructure and other projects that promote the development of American companies.
Temporarily “ignore” debt levels
As the new Secretary of the Treasury, when the total debt level of the United States continues to rise and the Biden administration is still trying to promote a new round of fiscal stimulus plans, Yellen’s vision on high debt has also attracted the attention of the market.
In the past four years, new US government debt reached $ 7 trillion, bringing the total US debt level to $ 21.6 trillion, making its debt / debt ratio Current GDP exceeds 100%, that is, the scale of the debt. has exceeded annual economic output.
Stanford University economist Michael Boskin, chairman of the Bush Administration’s Council of Economic Advisers, warned that the government cannot run a huge fiscal deficit indefinitely because interest rates will eventually rise. “At some point, we will start to pay for it.”
Yellen has long been averse to high debt. When she served as chair of the White House Council of Economic Advisers during the Clinton administration, she actively promoted balancing the government budget. In 2017, Yellen, then chairman of the Federal Reserve, also raised concerns about America’s high debt. “I just want to say that I am very concerned about the sustainability of the current development trajectory of US debt. The current debt-to-GDP ratio is around 75%. This ratio is not scary enough, but it is not low.” She said it at the time.
However, as the new Treasury secretary, Yellen’s view on high debt has changed compared to before. He said at a recent Senate hearing that both President Biden and I have considered this series of rescue plans. On the burden of America’s debt. If Congress does not approve more aid, the United States may face a longer and more painful economic recession. Considering that US interest rates are currently at record lows, the smartest thing to do is take action. In the long run, I believe the benefits will far outweigh the costs, especially if we care and help those who are struggling for a long time.
Not only Yellen, but also Office of Management and Budget nominee Neera Tanton (Neera Tanden) and White House Council of Economic Advisers Heather Boushey (Heather Boushey) are also supporting the government to expand spending. prosecutors to solve the problem. current economic problems. In an article written in March 2020, the two and the other two authors said together that, considering the intensity of the crisis caused by the epidemic, current lawmakers need not worry about deficits and debts when considering what action to take. Despite rising debt, the United States should still increase federal government spending to help households and businesses overcome the epidemic.
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