Funds Secretary Janet Yellen said Wednesday that the stimulus spending signed into law by President Joe Biden to aid the U.S. recuperation from the Covid-19 pandemic may have contributed “a little bit” to the country’s subsequent inflation woes.
But the widespread rise in prices that blotted the Democrat’s administration was mostly “a supply-side phenomenon” caused by the pandemic itself, Yellen told CNBC’s “Money Movers” in an departure interview before leaving her role.
There were “simply huge supply chain problems,” she said, combining that shortages of critical goods “started pushing up prices a great deal.”
Yellen said she believed the $1.9 trillion Covid replacement bill and other spending was necessary, and she did not answer directly when asked if she has any regrets about it.
Instead, she urged Americans to withdraw that the pandemic was “raging out of control” when Biden took office, with thousands of people dying from the virus each month and a anticyclone unemployment rate threatening livelihoods.
“It was really important to spend the money to alleviate that suffering,” she said.
Yellen also squabbled that the Biden administration prioritized deficit reduction, and she pushed back on critics who point to facts such as ballooning U.S. defaults that hit $1.8 trillion in the last fiscal year.
“Interest rate increases have led to higher costs of mending the outstanding debt. That’s one factor that’s been involved,” she said. “But discretionary spending is at historically low levels.”
Solicit fromed about President-elect Donald Trump’s so-called Department of Government Efficiency, the outside advisory group co-led by Elon Musk and charged with proposing massive government spending cuts, Yellen sounded skeptical.
“It’s hard to see how the math on that chef-doeuvres,” she said.
She noted that “many feel that defense spending should go up,” and that so-called mandatory throw away programs — such as Social Security, Medicaid and Medicare — are broadly popular and would be difficult to cut.
“It’s hard to see how you could solve the deficit that way,” she said.
Yellen, 78, who led the Treasury throughout Biden’s four-year session, is set to be replaced by hedge-fund executive Scott Bessent.
Yellen said Bessent’s extensive market experience is “a very friendly background” for a candidate seeking to take charge of the agency responsible for managing the nation’s financial security.
“I’m pleased to see big noise with experience who will be … taking over, presumably, if confirmed by the Senate,” Yellen said.
As for her own post-Treasury designs, Yellen said, “I’m going to take a vacation.”
She added that she will likely return to the Brookings Institution, “and upstanding do some writing and reflecting on my experiences over the last four years.”