President-elect Biden’s Treasury Secretary nominee Janet Yellen appeared before the Senate Finance Committee Feb. 19, fielding questions on the economy, taxes and debt, as well as her views on various retirement security issues.
Yellen is widely expected to be confirmed by the Senate, perhaps as soon as this week, so the hearing was, in large part, more of a formality, but the former Federal Reserve chair and Treasury nominee did share some important insights.
Under questioning by Sen. Ben Cardin (D-MD), she indicated support for efforts to help Americans save more for retirement. Cardin premised his question by noting that, as a result of COVID-19, many households are not saving anything for retirement and that he is working with Sen. Rob Portman (R-OH) on bipartisan legislation in this current Congress. “I would just urge you to be an active partner with us and how we can increase retirement security options for workers in this country,” Cardin stated.
“I completely agree with the priority that you place on this,” Yellen said in response. “Really, so many families are not prepared for retirement; they have not been able to save for it. It’s a huge problem and the pandemic is making it worse as hard-hit families are running down there saving. I think in this economy, everyone needs access to a workplace retirement savings plan and look forward to working with you to address this issue.”
Efforts to improve retirement plan access are expected to get a big push in this Congress, as Biden takes office and the Democrats take control of the Senate and maintain control of the House of Representatives. In fact, House Ways & Means Committee Chairman Richard Neal (D-MA) last week outlined an ambitious retirement policy agenda for the 117th Congress. Moreover, as Cardin alluded to, he and Portman have previously introduced legislation to strengthen the existing retirement-security system.
Committee Chair Shuffle
In the meantime, however, Republicans are still in control of the Senate until the two senators-elect from Georgia and former Sen. Kamala Harris’ replacement are sworn into office. As such, Sen. Charles Grassley (R-IA) opened the hearing as the existing chairman of the Committee, but because he will be term-limited from continuing to serve as chair under the Senate Republican rules, he turned the gavel over to Sen. Mike Crapo (R-ID), who chaired the remainder of the hearing. Crapo will serve as the ranking Republican on the Committee once Sen. Ron Wyden (D-OR) takes over as chairman.
For his part, Wyden noted that his top economic priority going forward is “avoiding the mistake Congress made in the last recession [in] taking a foot off the gas pedal before recovery took hold,” arguing that the Biden administration and Congress should approve another economic relief package, including additional stimulus checks and extending unemployment benefits, among other things.
Wyden also noted, however, that he believes Congress needs to fix the “broken tax code,” suggesting that “corporations, millionaires and billionaires must pay a fair share.” To that end, Wyden noted that he’s developing a proposal to reform the taxation of capital gains for the top three-tenths of 1% of taxpayers. “My plan would equalize tax rates for wage and capital income and minimize the benefit of deferring taxes,” Wyden stated.
Amid all the discussion about economic recovery and increasing debt levels, Yellen received numerous questions about her views on raising taxes during the pandemic, as well as the possibility of entitlement reforms.
The Treasury nominee agreed that it is essential to put the federal budget back on a path that’s sustainable, but she suggested that the most immediate priority is defeating the pandemic, getting people back to work and making long-term investments to help the economy grow. As such, she implied that she would not necessarily advocate raising taxes now, but that future tax increases would be needed after the economy has stabilized.
“Addressing debt now would leave us worse off in the long term; the loss of small businesses would harm the economy and it would be difficult to get back on the growth path,” Yellen explained in response to a question by Sen. John Thune. “I would agree with you that the long-term physical trajectory is a cause for concern something we will eventually need to attend to, but it’s also important for America to invest in our infrastructure, invest in our workers, invest in R&D and the things that make our economy grow faster and make it more competitive,” she further emphasized.
Yellen did not rule out raising some taxes in the context of Biden’s “Build Back Better” plan, but also indicated that she would not push for a complete repeal of the 2017 Tax Cuts and Jobs Act.
Yellen also reiterated support for protecting Social Security and Medicare, but observed that as the population continues to age, the programs face increasing shortfalls and Congress will eventually need to find a way to address them. At the same time, she also emphasized the importance of having incentives for people to save for retirement.
Lost and Found
Yellen was asked by Sen. Steve Daines (R-MT) whether she would support legislation he introduced with Sen. Elizabeth Warren (D-MA) to create a national, online “lost and found” database to help plan participants keep track of their retirement accounts as they move from job to job. “I think it’s an important objective that you’ve outlined there and if it does become law, of course, we will do everything possible to make sure that it’s implemented effectively,” she answered.
Committee members, including Sens. Debbie Stabenow (D-MI) and Sherrod Brown (D-OH), also emphasized the need to find a solution to the multiemployer pension crisis.