WASHINGTON:
Janet Yellen became an economist at a time when few women entered the profession and fewer still rose in a male-dominated environment. Her expected nomination would come as rebuilding a US economy battered by the
coronavirus pandemic and saddled with high unemployment presents a central challenge for President-elect Joseph Biden’s administration.
While Yellen is not the type of firebrand nominee some progressives might have hoped for — she has warned that the US is borrowing too much money, a fact that some liberals count against her — she has paid consistent, careful attention to inequality and labour market outcomes, even when doing so earned her backlash from lawmakers.
As the chair of the Federal Reserve from 2014 to 2018, Yellen also oversaw an extremely slow set of interest rate increases as she and her colleagues tested whether unemployment could fall further without leading to higher prices. Her patience drew criticism from inflation-wary economists at the time, but the policies laid the groundwork for a strong labour market and a record-long expansion that drove unemployment to its lowest rate in 50 years before the pandemic turned the world upside down.
Senator Elizabeth Warren of Massachusetts, one of the most prominent progressive Democrats in Congress, wrote on Twitter that Yellen “would be an outstanding choice for Treasury secretary”.
But she faces a steep challenge: As
Treasury secretary, Yellen will be at the forefront of navigating the economic fallout created by a pandemic that continues to inflict damage. While growth is recovering from earlier coronavirus-related lockdowns, infections are climbing and local governments are restricting activity again, most likely slowing that rebound.
Yellen has been a clear champion of continued government support for workers and businesses, publicly warning that a lack of aid to state and local governments could slow recovery, much as it did in the aftermath of the Great Recession, when Yellen was leading the Fed. She called fiscal support early in the crisis “extremely impressive” but noted that key provisions had lapsed.
Unlike the independent Fed, Yellen as Treasury secretary would find herself in a much more political role — one that is likely to require negotiating with a Republican-controlled Senate. With Biden expected to push for additional economic aid, Yellen would be central to brokering a stimulus deal in a politically divided Congress that has so far failed to agree on another round of aid. Yellen declined to comment on her expected nomination, which was reported earlier by The Wall Street Journal.
She would be the first woman to hold a job that has been dominated by white men — like Alexander Hamilton — throughout its 231-year history and would have held the government’s top three economic jobs, including leading the White House Council of Economic Advisers during the Clinton administration.
A former academic who taught at the University of California, Berkeley, Yellen was also the president of the Federal Reserve Bank of San Francisco, a Fed governor and the Fed vicechair before becoming the central bank’s first female chair.
Yellen said she wanted to be reappointed when her term as Fed chair ended in 2018, but President Donald Trump, eager to install his own pick, decided against renominating her.
Yellen is a Keynesian economist, which means she believes markets have imperfections and sometimes need to be rerouted or kick-started by government intervention.