WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said Thursday that tax hikes would be needed to pay for at least part of a large infrastructure, climate and education investment package that President Joe Biden anticipates introduce later this year.
Yellen, in an interview with CNBC, said details were still being worked out on the clean infrastructure and energy package, which would be added to a $ 1.9 trillion coronavirus relief plan now working on the Congress.
He 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 U.S. competitiveness.
“Certainly a part of the package, the parts that are permanent, will be paid for not increasing the 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 cost several years, “and tax increases to pay at least part of it would probably be incorporated slowly 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 was projected earlier this month which, based on current laws, would take until 2024 to reach pre-pandemic employment levels.
With the Biden stimulus plan and good progress on vaccines to defeat the pandemic, “I think we could return to full employment next year,” he said.
Yellen downplayed the potential risk of trillion-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 biggest risk is scarring and people suffering from this pandemic spend their lives and livelihoods forever,” if no help is provided, he said.
Report by Andrea Shalal and David Lawder; Editing by Leslie Adler and Aurora Ellis