Treasury Secretary Janet Yellen emphasized Friday that the administration’s infrastructure spending proposal would lower inflation by cutting many vital costs to households.
Speaking to CNBC from Rome where she is attending the G-20 conference of world leaders, Yellen renewed her push for White House spending plans that are unpopular with many congressional factions and have yet to be approved.
“I don’t think these investments are going to drive inflation up at all,” Sarah Eisen told CNBC during a live interview with the Worldwide Exchange.
The spending plan was drastically curtailed during negotiations with Congress. At its core is an effort to improve the country’s infrastructure, which the Biden administration has cast a broad umbrella over not only with investments, traditional roads and bridges but also across a wide range of social programs such as early child care.
The extra spending has raised inflation concerns at a time when prices are rising near their fastest pace in 30 years, but Yellen said the package would not exacerbate the problems.
“It will enhance the economy’s ability to grow, and the supply potential of the economy, which tends to push inflation down, not up,” she said. “For a lot of American families who are experiencing inflation, and you see gas prices and other things they buy going up, what this package will do is cut some of the most important costs, what they pay for health care, child care. It’s anti-inflationary in that sense as well.”
Yellen’s comments come at a weak time for the US economy.
Not only did inflation go up, it went up, but growth slowed as well. Due to supply issues that left dozens of ships stranded in US ports, the pace of GDP growth slowed to 2% in the third quarter, the slowest growth rate since the pandemic-induced recession ended in April 2020.
Part of the administration’s agenda for the G20 will address its economic concerns, including implementing a global minimum corporate tax, as well as tackling climate change and supply chain issues that have stymied growth and threaten to curtail holiday spending patterns. .
Yellen described the White House’s Build Back Better program as “transformative” in addressing the needs of the economy as the nation seeks to emerge from the COVID-19 pandemic. She insisted the spending plans were “fully paid” through proposals aimed primarily at higher-income earners.
“I think it really helps us invest in physical capital,” she said. “This public infrastructure is important for productivity growth.” “There is an investment in human capital, there is an investment in research and development, and the support that families are going to have that will help them participate in the labor market.”
This is urgent news. Please check back here for updates.