Yellen says the tax increase would pay for part of the Biden infrastructure plan

WASHINGTON (Reuters) – US Treasury Secretary Janet Yellen said on Thursday that tax increases would be needed to pay for at least part of a large package of infrastructure, climate and education investments that President Joe Biden intends to introduce in May. later this year.

Yellen, in an interview with CNBC, said details are still being worked out on the infrastructure and clean energy package, which will come in addition to a $ 1.9 trillion coronavirus aid plan, which is underway. now working through Congress.

She said it will include investing in clean energy to combat climate change and investing in education and training to build the skill levels of American workers and increase US competitiveness.

“Certainly part of the package, the parts that are permanent, will be paid so as not to increase long-term deficits, but we are still working on the details of the package.”

The infrastructure, climate and education plan is likely to be proposed by the end of this year and would involve spending several years, “and tax increases to pay for at least part of it are likely to come slowly over time”.

Biden’s $ 1.9 trillion COVID-19 stimulus package aims to deliver growth strong enough to return to employment completely faster than recent estimates from the Congressional Budget Office, which projected at the beginning this month that, under current laws, would last until 2024 reach pre-pandemic occupation levels.

With Biden’s stimulus plan and good progress on vaccines to overcome the pandemic, “I think we could return to full employment next year,” she said.

Yellen downplayed the potential risk of multi-billion dollar inflation in new stimulus and infrastructure spending, saying inflation has been low for a decade and the Federal Reserve has the tools to deal with it.

“The higher the risk is to produce scars, and people suffering from this pandemic will lose their lives and livelihoods throughout their lives,” if no additional help is provided, she said.