Yellen says tax hike would pay for part of Biden’s infrastructure plan

WASHINGTON (Reuters) – US Treasury Secretary Janet Yellen said on Thursday that tax increases would be required to pay at least part of a large infrastructure, climate and education investment package that President Joe Biden plans to launch still this year.

Yellen, in an interview with CNBC, said that details are still being worked out about the infrastructure and the clean energy package, which would come under a $ 1.9 trillion coronavirus relief plan that is now underway in Congress.

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

“Certainly part of the package, the parts that are permanent, will be paid 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 later this year and will involve spending over several years, “and probably the tax increases to pay for at least part of it would likely be gradual over time.”

Biden’s $ 1.9 trillion COVID-19 stimulus package aims to ensure that growth is strong enough to return to full employment faster than the recent baseline estimates from the Congressional Budget Office, which it projected at the beginning this month that, based on current laws, it would take until 2024 to reach pre-pandemic employment levels.

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

Yellen downplayed the potential risk of inflation of trillions of dollars in new stimuli and infrastructure spending, saying that inflation has been low for a decade and the Federal Reserve has tools to deal with it.

“The greatest risk is of scarring and people with this pandemic cause permanent damage to their lives and livelihoods,” if there is no more help, she said.