In selecting former US Federal Reserve chair Janet Yellen to be the first female US secretary of the Treasury, US president-elect Joe Biden chose a progressive macroeconomist focused on unemployment who supports fiscal stimulus and tackling climate change.
The 74-year-old made history when she became the first female head of the world’s most powerful central bank in 2014, and will repeat the achievement if confirmed by the US Senate to head the US Department of the Treasury.
That would put her in the center of the ongoing economic storm in the US, which has seen a record slowdown in annualized growth and tens of millions of layoffs as it grapples with the world’s largest COVID-19 outbreak.
Photo: AFP
Unless the US Congress acts before Biden’s inauguration in January, Yellen is likely to take the lead on trying to break an impasse on passing another stimulus measure to help the country’s economic recovery — a job she has signaled she is ready to do.
“Fiscal policy has a very important role to play now,” Yellen, a distinguished fellow at the Brookings Institution in Washington, said recently. “I believe it’s essential.”
A passionate economist with a scholarly, sometimes jargon-laden manner of speech, Yellen is married to George Akerlof winner of the Nobel Prize in Economic Sciences.
Her academic and public service background sets her apart from current US Secretary of the Treasury Steven Mnuchin, who spent years as an investment banker and film producer.
Her expertise in the job market at a time when the COVID-19 pandemic has doubled unemployment to 6.9 percent — along with the respect lawmakers have for her efforts at the Fed after the 2008-2010 global financial crisis — are considered assets.
She is close to the progressive economic elite, and has gone beyond Biden by calling for a carbon tax to fight climate change.
“We need public policy oriented toward making a big difference on climate change,” she said recently.
As chair of the central bank from 2014 to 2018, she was seen as a “dove” more inclined to keep rates low to support employment.
That prompted criticism from US President Donald Trump, who said on the campaign trail in 2016 that the ultra-low interest rate policy created “a big, fat ugly bubble” for Democrats.
Yellen knows Fed Chair Jerome Powell, who served as her lieutenant when she ran the central bank and whose term ends in 2022.
After taking office in 2017, Trump ousted Yellen from the Fed, making her one of the few chairs not to stay in office for a second term.
The daughter of a Jewish doctor, Yellen, graduated from Yale University and came and went from the Fed, first as an economic researcher and then in loftier roles, spending one-third of her career there.
She also served as an economic adviser to then-US president Bill Clinton between 1997 and 1999, taught at the University of California, Berkeley and ran the San Francisco Federal Reserve Bank.
In 2010, she became deputy to then-Fed chair Ben Bernanke, overseeing the large monetary support plan to help the US economy out of the 2008-2010 global financial crisis.
When she succeeded him four years later, Forbes magazine dubbed her the second-most-powerful woman in the world, behind German Chancellor Angela Merkel.
Affable and small in stature with her face framed by a helmet of white hair, Yellen never lost her composure in the face of attacks from Republican lawmakers.
Early in Trump’s term, she did not hesitate to warn of the risks tax cuts such as the one he was proposing would have on the budget deficit.
With the US budget deficit soaring, that would be an issue she must face again.
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