Introduction
U.S. Treasury Secretary Janet Yellen recently compared President Joe Biden’s economic approach to that of former President Donald Trump, claiming that Biden’s strategy has resulted in the “fairest recovery on record” and will bring more advantages to the middle class. Yellen made these remarks during her visit to Chicago, aiming to combat low voter approval ratings for Biden’s handling of the economy. She emphasized the increase in incomes and the outpacing of subsiding inflation.
Biden’s Extensive Policies
Yellen praised the Biden administration for implementing a comprehensive range of policies and investments that benefit the middle class and stimulate economic growth. Some of these key components of “Bidenomics” include a $1.9 trillion COVID-19 rescue package, a $1.2 trillion bipartisan infrastructure bill, a $52 billion investment in semiconductors and research, and a $430 billion clean energy and healthcare law. These initiatives are specifically designed to facilitate middle-class-driven economic growth.
Positive Impacts of Spending
Yellen highlighted how this significant expenditure has enabled the U.S. economy to rebound from the COVID-19 pandemic with historically low unemployment rates. Additionally, it has helped the nation avoid a slow and painful recovery, similar to what was witnessed after the 2007-2009 recession caused by the global financial crisis. These positive effects have been observed not only among middle-class Americans but also across different demographic groups. For instance, there has been a rapid decline in unemployment rates among Black and Hispanic Americans.
Contrasting Tax Policies
Yellen contrasted Trump’s major economic policy, the 2017 Republican-backed tax cut package. She criticized how it increased the U.S. deficit by $2 trillion over a decade and prioritized tax cuts for corporations and high-income earners, while not significantly fostering investment. Although these tax cuts did benefit some middle- and lower-income tax brackets, other advantages, such as deductions on state and local taxes and home mortgage interest, were reduced, leading to increased tax bills for some middle-class individuals. It’s worth noting that Trump’s individual tax cuts will expire in 2025. Yellen affirmed Biden’s intention to revamp the tax code in the coming year, targeting wealthy individuals and corporations to contribute more. However, Biden has made a firm commitment not to raise taxes for those earning less than $400,000 annually.
Biden’s Investment Strategy
Yellen emphasized that Biden’s investments in infrastructure, technology, and clean energy are not based on “trickle-down economics.” Instead, they represent essential investments that most people recognize as necessary but have not been adequately addressed until now.
Managing Inflation Concerns
Yellen acknowledged the importance of addressing concerns about inflation and plans to actively promote Biden’s economic achievements in the following months. While inflation fears may persist due to recent price shocks, Yellen believes that they will gradually fade over time. Charles Franklin, director of the Marquette Law School Poll, points out that voters tend to be more preoccupied with rising prices than with low unemployment rates. However, Yellen intends to focus on positive changes, such as the decline in inflation and the avoidance of a recession.
Impact on Voter Perception
To improve voter perception, Franklin suggests highlighting major investments like the federal funding of $1 billion for a new bridge between Superior, Wisconsin, and Duluth, Minnesota. Yellen understands that lower inflation does not equate to deflation, as certain prices, such as those for food and rent, remain high. However, she underlines the importance of wage gains that are currently being achieved.
In summary, Yellen is determined to advocate for Biden’s economic policies. She believes that the extensive investments and strategic initiatives will continue to benefit the middle class and foster economic growth. The focus now is on addressing concerns about inflation and emphasizing the positive changes in the economy.