WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said Thursday that tax increases would be needed to pay for at least part of a large infrastructure, climate and education investment package that President Joe Biden plans to introduce to end of this year.
Yellen, in an interview with CNBC, said details were still being worked out on the infrastructure and clean energy package, which would be in addition to a $ 1.9 trillion coronavirus relief plan that is now making its way into the Congress.
She said it would include investments in clean energy to combat climate change and investments in education and training to develop the skill levels of American workers and increase America’s competitiveness.
“Certainly part of the package, the pieces that are permanent, will be paid for so as not to increase deficits in the long term, but we are still working on the details of the package.”
The infrastructure, climate and education plan will likely be proposed later this year and would involve spending over several years, “and probably the tax increases to pay for at least part of it would likely be implemented slowly over time.”
Biden’s $ 1.9 trillion COVID-19 stimulus package aims to ensure growth is strong enough to return to full employment faster than recent benchmark estimates from the Congressional Budget Office, which projected earlier this month that under current laws it would take until 2024 to reach pre-pandemic employment levels.
With Biden’s stimulus plan and good progress on vaccines to defeat the pandemic, “I think we could go back to full employment next year,” he said.
Yellen downplayed the potential trillion-dollar inflation risk in new stimulus and infrastructure spending, saying inflation has been low for a decade and the Federal Reserve has tools to deal with it.
“The greatest risk is scars and people who have this pandemic take a permanent toll on their lives and livelihoods,” if no more help is provided, he said.
Reporting by Andrea Shalal and David Lawder; Editing by Leslie Adler and Aurora Ellis