Janet Yellen - Turning Around the U.S. Treasury

Janet Yellen’s Recent History

In late November, Joe Biden announced that he plans to elect Janet Yellen as his Treasury Secretary. If she gets confirmed by the Senate, she will become the first woman to be the Treasury Secretary. She also broke barriers in 2012, when she was the first woman to be the Chair of the Federal Reserve. While working during Obama’s presidency, she took over an economy that was still recovering from the 2008 financial crisis. In her four years as the Chair, she primarily focused on America’s income inequality. As a result, the unemployment rate dropped from 6.7% to 4.1% during her term (Amadeo). By having the Dodd-Frank Wall Street Reform Act signed into law in 2010, it was also important for Yellen to ensure that the banking system was regulated in order to prevent another financial panic from occurring.

Yellen’s potential new position has different responsibilities than being the Chair of the Federal Reserve. She worked on monetary policy during her time at the Federal Reserve; however, she will begin to work on fiscal policy at the Treasury. As the Treasury Secretary, Yellen is ultimately the “chief financial officer for the federal government” (Amadeo). In her role, she will manage the public debt, collect taxes, and adjust the money supply. As Biden’s Treasury Secretary, it also gives Yellen the opportunity to push for certain financial policies to create a sustainable economy.

What Will Happen with Yellen as the Treasury Secretary?

If Janet Yellen succeeds Steve Mnuchin, she has the opportunity to fix a hurting economy. When she was the Chair of the Federal Reserve from 2012 to 2016, she assisted an economy that was facing its worst recession since the Great Depression. Being the Treasury Secretary, Yellen can advocate for financial programs directed at Americans who have struggled financially during the pandemic. Since March, a survey found that 63% of Americans are currently living from paycheck to paycheck (Leonhardt). With many Americans not having stable incomes, they are forced to either take on debt or dive into their savings. In either case, it is not creating a sustainable financial system.

Currently, $600 stimulus checks are being sent out to Americans’ direct deposit accounts. This money sent out by the IRS is meant to stimulate the economy and address unemployment issues. Yellen recently commented that the United States could face economic “devastation” as there is a “disproportionate toll on low-income families” (Politi). Given her recent comment, it can be inferred that she would advocate for more money in the stimulus checks. Even during her time as the Chair of the Federal Reserve, she wanted to address issues with income inequality. If she ends up getting confirmed as the Treasury Secretary by the Senate, addressing the pandemic’s impact on the economy will likely be her tallest task during her term. The pandemic is quickly expanding the income inequality gap and Yellen will have the opportunity to voice her opinion to significantly help those in a financial pinch.

Sources:

James Politi: https://www.ft.com/content/2f32d7ab-9d15-458d-9f3e-a32171990e8f

Kimberly Amadeo: https://www.thebalance.com/janet-yellen-3305503

Megan Leonhardt: https://www.cnbc.com/2020/12/11/majority-of-americans-are-living-paycheck-to-paycheck-since-covid-hit.html#:~:text=Nearly%20two%2Dthirds%20of%20Americans,information%20technology%20company%20Highland%20Solutions.