Janet Yellen calls for “big” stimulus under Biden administration as US recovery slows

The unprecedented public health crisis remains deeply entwined with a difficult economic climate, underscoring the significant challenges that await the Biden administration.

Now that Joseph R. Biden, Jr. has been sworn in as the 46th president of the United States, attention has turned to America’s ongoing recovery from the coronavirus pandemic.

With more than 400,000 Americans dead from the coronavirus, the country remains in the depths of what the new president has referred to as a “dark winter.”

As the new Biden-Harris administration takes the reins in Washington, the US economy also remains in peril. For the week ending January 9, applications for US state unemployment benefits surged to their highest level since late March – when the first wave of the pandemic was at its height.

The unprecedented public health crisis remains deeply entwined with a difficult economic climate, underscoring the significant challenges that await the Biden administration.

But Biden’s team is not without a plan. Not only does the Biden administration plan to accelerate the national vaccination program, it has also placed the economic recovery from the coronavirus pandemic at the top of its first 100 days agenda.

Providing additional impetus to further relief efforts is incoming treasury secretary and former Federal Reserve Chair Janet Yellen. Yellen recently advised lawmakers to “act big” on pandemic and economic relief, ignoring concerns about the national debt – for now – in order to get the US economy back on track.

Economic woes

Nearly a year since the beginning of the pandemic in the US, the public health and economic crisis remains as bad as at any single point in the crisis.

The US reached the ominous figure of 400,000 dead from COVID-19 this month, with experts warning of the potential that this figure may climb to 500,000 by mid-February.

The national vaccination program in the US also remains behind schedule. The Trump administration had planned to vaccinate some 20 million Americans by the end of 2020. By mid-January, the number of Americans who had been vaccinated was only nine million.

As deaths passed 400,000, applications for state unemployment benefits also reached their highest level since the first wave of the pandemic in late March.

According to data from the Labor Department, for the week ending January 9, jobless claims for state unemployment programs rose some 181,000 for a total of just under 965,000.

These figures exceed even the worst jobless numbers during the 2007-09 economic recession.

“Act big”

Given this climate, it is no surprise that both President Biden and his incoming administration are prioritizing more pandemic stimulus and economic relief.

Additional economic relief will form a significant part of Biden’s agenda in his first 100 days as president. The Biden administration intends to pass a US$1.9 trillion stimulus bill, which would include US$1,400 direct payment stimulus checks, on top of the US$600 checks included as part of the previous stimulus package.

Biden’s inaugural address emphasized the immediacy with which this aid is required to push forward America’s recovery from the pandemic.

“We will press forward with speed and urgency, for we have much to do in this winter of peril and possibility,” Biden said in his inaugural address. “Few periods in our nation’s history have been more challenging or difficult than the one we’re in now.”

President Biden is not alone in emphasizing the importance of strong relief for the American economy and its citizens during this “winter of peril.”

During her recent confirmation hearing, Biden’s nominee for treasury secretary, the famed economist and former Federal Reserve Chair Janet Yellen, called for lawmakers to “act big” on coronavirus relief without worrying about the national debt.

“In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time,” Yellen said in remarks to the Senate Finance Committee on January 19.

Dismissing Republican concerns of rising debt, Yellen argued that “without further action, we risk a longer, more painful recession now and long-term scarring of the economy later.”

Economists have been pushing for the need for more economic stimulus for months. President Donald Trump’s federal reserve chair, Jerome Powell, argued in October that “too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” whereas “overdoing” stimulus yielded few negatives.

Just as President Biden’s part-virtual inauguration ceremony was without precedent, so too are the challenges facing his new administration.

Yet the Biden-Harris team has clearly focused on the need for further economic relief and recovery from the coronavirus pandemic as its first and foremost legislative priority.

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