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

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

Yellen said in an interview with CNBC that details are still being worked out on the infrastructure and clean energy package, which would come on top of a $ 1.9 trillion coronavirus plan now running through Congress.

She said it would include investment in clean energy to combat climate change and investment in education and training to build the skill level of US workers and boost US competitiveness.

“Certainly some of the package, the parts that are permanent, will be paid so as not to cause shortages in the long run, but we are still working on the details of the package.”

The infrastructure, climate and education plan is likely to be presented later this year and would involve spending several years, “and tax increases to pay for at least some of it are likely to be phased in gradually.”

Biden’s $ 1.9 trillion COVID-19 stimulus package aims to ensure that growth is strong enough to return to full employment faster than recent base estimates from the Congressional Budget Office, which earlier this month predicted it would under current laws, it would take until 2024 before achieving pre-pandemic employment.

With the Biden incentive plan and good progress on vaccines to beat the pandemic, “I think we can get back to full work by next year,” she said.

Yellen downplayed the potential inflation risk of trillions of dollars 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 risk of scarring is higher and people who have this pandemic take a permanent lifelong toll on their lives and livelihoods,” she said if no further assistance is provided.