The Washington Post

Bi­den to nom­i­nate Yellen as his trea­sury sec­re­tary

If con­firmed, for­mer Fed chair would be first woman to lead agency

- BY JEFF STEIN AND RACHEL SIEGEL jef­frey.stein@wash­post.com rachel.siegel@wash­post.com Business · Finance · U.S. News · US Politics · Politics · Joe Biden · Federal Reserve System · Janet Yellen · Barack Obama · U.S. Treasury · United States Senate · Twitter · San Francisco · Bill Clinton · Washington · Department of Homeland Security · John Kerry · Republican Party (United States) · U.S. government · United States of America · Donald Trump · Jerome Powell · Democratic Party (United States) · White House · Bernie Sanders · Vermont · Elizabeth Warren · Steven Mnuchin · San Francisco Federal Reserve Bank · American Economic Association

Pres­i­dent-elect Joe Bi­den will nom­i­nate for­mer Fed­eral Re­serve chair Janet L. Yellen as his trea­sury sec­re­tary, ac­cord­ing to three peo­ple in close com­mu­ni­ca­tion with aides to the pres­i­dent-elect.

Yellen, who was ap­pointed chair of the Fed­eral Re­serve by Pres­i­dent Barack Obama, would be the first woman to lead the Trea­sury Depart­ment if con­firmed by the Se­nate. Bi­den said last week that he has de­cided on his choice for trea­sury sec­re­tary and that the name would be an­nounced pub­licly ei­ther shortly be­fore or af­ter the Thanks­giv­ing hol­i­day.

On Mon­day af­ter­noon, Bi­den ad­viser Jen Psaki wrote on Twit­ter: “The Pres­i­dent-elect looks for­ward to an­nounc­ing some mem­bers of his eco­nomic team early next week who will work with him to build the econ­omy back bet­ter.”

If con­firmed, Yellen, 74, would bring decades of ex­pe­ri­ence as a reg­u­la­tor and economist to the cru­cial post, al­though she has never worked at the Trea­sury Depart­ment. She would have a rare public ser­vice ré­sumé for a trea­sury chief, hav­ing served as Fed chair, pres­i­dent of the Fed­eral Re­serve Bank of San Francisco and a top eco­nomic ad­viser to Pres­i­dent Bill Clin­ton. She was con­firmed to lead the Fed in 2014 by a vote of 56 to 26. Eigh­teen sen­a­tors didn’t vote.

Her nom­i­na­tion would be one of the early signs that shows Bi­den plans to lean on ex­pe­ri­enced Wash­ing­ton vet­er­ans to lead the gov­ern­ment next year. On Tues­day, he is ex­pected to an­nounce he will nom­i­nate Antony Blinken as sec­re­tary of state; Ale­jan­dro May­orkas as sec­re­tary of the Depart­ment of Home­land Se­cu­rity; and John Kerry as cli­mate czar, among other top po­si­tions.

Yellen would over­see the Trea­sury Depart­ment at one of the most per­ilous mo­ments for the Amer­i­can econ­omy in decades. The pan­demic caused an eco­nomic con­trac­tion from which the na­tion has not yet re­cov­ered, and full dis­tri­bu­tion of a vac­cine ap­pears months away.

Yellen and the rest of Bi­den’s in­com­ing team will in­herit an econ­omy badly bruised in sev­eral key sec­tors and still reel­ing from the coro­n­avirus, as well as ex­pected po­lit­i­cal op­po­si­tion to their leg­isla­tive agenda in a Se­nate prob­a­bly con­trolled by Repub­li­cans. The Trea­sury Depart­ment runs tax pol­icy and is­sues gov­ern­ment debt, two is­sues that could be flash points in Bi­den’s first years in of­fice. The bud­get deficit eclipsed $3.1 tril­lion in 2020, and Repub­li­cans have re­cently sig­naled they want to dra­mat­i­cally cut back on spend­ing at a time when Bi­den says large lev­els of gov­ern­ment sup­port are needed to bring the econ­omy back to life.

“She’s walk­ing into a night­mare. Peo­ple are go­ing to be get­ting evicted, los­ing their houses, and state and lo­cal gov­ern­ments are fac­ing dis­as­trous sit­u­a­tions,” Dean Baker, a lib­eral economist, said. “These are hor­ri­ble prob­lems, but Yellen has been around so she knows both her eco­nomics and Wash­ing­ton. If there’s a way to get through this, she’s as good as any­one."

Yellen told The Wash­ing­ton Post in Au­gust that it was “ur­gent” to en­act more fis­cal stim­u­lus in re­sponse to the down­turn. She said she was es­pe­cially wor­ried about cities and mu­nic­i­pal­i­ties run­ning out of money and low-in­come work­ers suf­fer­ing per­ma­nent scars from be­ing un­em­ployed for a year or more.

In her time in the Clin­ton ad­min­is­tra­tion, Yellen was sup­port­ive of ef­forts to bal­ance the fed­eral bud­get, but she has be­come an ad­vo­cate of spend­ing more money now that in­ter­est rates are at his­toric lows, mak­ing it cheap for the U.S. gov­ern­ment to bor­row money.

“Un­der cur­rent con­di­tions, I think we can af­ford to in­crease fed­eral spend­ing or cut taxes to stim­u­late the econ­omy if there’s a down­turn,” Yellen said in Jan­uary at the Amer­i­can Eco­nomic As­so­ci­a­tion an­nual meet­ing, where she served as pres­i­dent.

Yellen’s term as chair of the Fed­eral Re­serve ex­pired in 2018, and Pres­i­dent Trump re­placed her with Jerome H. Pow­ell, who re­mains the Fed chair. At the Fed, Yellen helped over­see an eco­nomic ex­pan­sion un­der the Obama ad­min­is­tra­tion but faced some crit­i­cism for back­ing in­ter­est rate in­creases in his sec­ond term, which some economists be­lieve sup­pressed de­mand be­fore the econ­omy had fully re­cov­ered. Trump had con­sid­ered reap­point­ing Yellen to serve as Fed chair for an­other four-year term, but some on Trump’s eco­nomic team felt she did not em­brace the pres­i­dent’s dereg­u­la­tory pol­icy. In an Au­gust 2017 speech, Yellen had called for reg­u­la­tors to stay vig­i­lant and closely mon­i­tor risks in the fi­nan­cial sys­tem.

Like many of the other an­nounced mem­bers of Bi­den’s in­com­ing team, Yellen has long­stand­ing ties in the Demo­cratic Party and a ré­sumé filled with decades at the high­est lev­els of public ser­vice. In ad­di­tion to her ser­vice in the White House and Fed­eral Re­serve sys­tem, she has most re­cently worked as an economist at the Brook­ings In­sti­tu­tion, a cen­ter-left think tank.

News of Yellen’s likely nom­i­na­tion was first re­ported by the Wall Street Jour­nal. Yellen de­clined to com­ment for this story. A spokesman for the Bi­den tran­si­tion also de­clined to com­ment.

Lael Brainard, who served at the Trea­sury Depart­ment un­der Obama, had emerged as an early front-run­ner for the Trea­sury po­si­tion. Brainard is a gov­er­nor on the Fed­eral Re­serve Board, which means ap­point­ing her to Trea­sury would have forced the Bi­den team into an­other battle with a re­cal­ci­trant Se­nate.

The pick also re­flects Bi­den’s at­tempts to bridge the dis­parate wings of the Demo­cratic Party. The pres­i­dent-elect told re­porters last week of his trea­sury se­lec­tion: “It’s some­one who will be ac­cepted by all ele­ments of the Demo­cratic Party, from the pro­gres­sive to the mod­er­ate coali­tions.”

Some on the left have dinged Yellen for what they see as her ef­forts to slowly but pre­ma­turely raise in­ter­est rates be­fore the econ­omy was fully re­cov­ered. Nathan Tankus, re­search direc­tor at the left-lean­ing Mod­ern Money Net­work, said those moves were “crit­i­cal mis­takes” dur­ing her ten­ure at the Fed­eral Re­serve, al­though he praised her com­pe­tence and ex­per­tise. “Some of her bad de­ci­sions meant weaker wage growth and higher un­em­ploy­ment for Amer­i­cans, es­pe­cially African Amer­i­cans and Lati­nos,” Tankus said.

Close al­lies of Sens. Bernie San­ders (I-VT.) and El­iz­a­beth War­ren (D-mass.) have sig­naled to Bi­den’s team that they could ac­cept Yellen as trea­sury sec­re­tary, ac­cord­ing to two peo­ple who spoke on the con­di­tion of anonymity to share de­tails of pri­vate con­ver­sa­tions. The left made it clear that they pre­ferred War­ren or for­mer Obama ad­min­is­tra­tion of­fi­cial Sarah Bloom Raskin, who is seen as more lib­eral than Yellen, for trea­sury sec­re­tary. But peo­ple close to Bi­den’s team have said for months that War­ren had lit­tle chance of se­cur­ing the trea­sury sec­re­tary po­si­tion.

The in­com­ing trea­sury sec­re­tary will work closely with Pow­ell on the coun­try’s on­go­ing eco­nomic re­sponse to the covid-19 cri­sis. That could in­clude a re­vamp of emer­gency fa­cil­i­ties propped up by the Fed and Trea­sury at the start of the pan­demic — pro­grams that the cur­rent trea­sury sec­re­tary, Steven Mnuchin, abruptly an­nounced would shut down at the end of the year.

 ?? BREN­DAN SMIALOWSKI/AGENCE FRANCE-PRESSE/GETTY IM­AGES ?? If con­firmed, Janet L. Yellen, pic­tured in 2017 when she served as Fed chair, would over­see the Trea­sury Depart­ment at a per­ilous time for the econ­omy. Her nom­i­na­tion would high­light the pres­i­dent-elect’s ef­forts to lean on Wash­ing­ton vet­er­ans and unite his party.
BREN­DAN SMIALOWSKI/AGENCE FRANCE-PRESSE/GETTY IM­AGES If con­firmed, Janet L. Yellen, pic­tured in 2017 when she served as Fed chair, would over­see the Trea­sury Depart­ment at a per­ilous time for the econ­omy. Her nom­i­na­tion would high­light the pres­i­dent-elect’s ef­forts to lean on Wash­ing­ton vet­er­ans and unite his party.

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