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Yellen confirmed as US Treasury head but faces massive challenges

(ATF) US President Joe Biden’s pick for Treasury Secretary, Janet Yellen, won overwhelming Senate confirmation on January 25 and she is set to become the first woman to hold the prestigious job.

She will face huge challenges from day one, having to work with Congress on passing the coronavirus pandemic relief package, negotiating fraught trade and economic relations with China, reforming financial regulation and kickstarting the US economy.

The Senate voted 84-15 to confirm Yellen, with all opposition coming from Republicans, several of whom have expressed concerns about Biden’s proposed $1.9 trillion pandemic aid plan, tax increases, calls for a federal minimum wage and other spending initiatives.

“Secretary Yellen’s confirmation shatters another glass ceiling,” Democratic Senator Dianne Feinstein of California said in a statement. “In a field dominated by men, it’s refreshing to finally see a woman leading the Treasury Department.”

Yellen, 74, made history in 2014 when she became the first woman to chair the Federal Reserve. The White House had no immediate comment on when Yellen would be sworn in, or by whom.

She won the votes of 34 Republicans in a strong bipartisan vote, with a number of them pledging to work with her. “I hope bipartisanship continues & we can work 2gether on commonsense tax/fiscal policy for all Americans,” Republican Senator Chuck Grassley of Iowa wrote on Twitter.

Yellen will support Biden’s bid to persuade Congress to raise the corporate tax rate to 28% from 21% and increase taxes on Americans making more than $400,000 a year.

FISCAL PROBITY RETURNS

Republicans have expressed concerns over increased debt in a sudden return to fiscal conservatism after supporting ex-president Donald Trump’s huge deficits caused by 2017 tax cuts and nearly $5 trillion in coronavirus spending.

Yellen told senators at her confirmation hearing last week that they needed to raise the minimum wage and “act big” on stimulus measures or risk a longer, more painful recession brought on by the pandemic.

Yellen’s confirmation less than a week after Biden took office is quick by recent standards. Her Republican predecessor, Steven Mnuchin, was not confirmed until three weeks after Trump’s 2017 inauguration on a party-line vote.

Meanwhile, the Treasury named Natalie Wyeth Earnest as counsellor to the secretary for strategic communications. Mark Mazur, director of the Urban-Brookings Tax Policy Center and a former Treasury assistant secretary for tax policy, was named as deputy assistant secretary for tax policy.

Senate majority leader Chuck Schumer said on Monday that Democrats might try to pass much of the coronavirus relief bill using a process that would bypass a Republican filibuster by needing only a majority vote – 60 votes are required for a filibuster to delay proposed laws. The Senate is split 50-50 between Democrats and Republicans, with Democratic Vice-President Kamala Harris holding the tie-breaking vote.

Biden said he expected negotiations in Congress over his $1.9 trillion Covid economic relief plan could take another two weeks. “I don’t expect we’ll know whether we have an agreement and to what extent the entire package will be able to pass or not pass until we get right down to the very end,” Biden told reporters at the White House.

Republicans in Congress are signalling strong reluctance to go along with the Democratic bill, which seeks to boost funding for vaccinations, add $400 to weekly unemployment benefits, and issue Americans $1,400 in cash payments. The bill would come on the heels of a $900 billion package passed just last month.

‘BUY AMERICAN’ PUSH

Separately, Biden signed an executive order on Monday giving US companies and products priority in contracting with the federal government, as the new administration attempts to spur domestic manufacturing.

While the order is aimed at boosting national production and saving industrial jobs by increasing investments in factories and workers, it could conflict with country’s outsourced supply chains and also rankle trading partners, notably Canada.

Washington spends $600 billion each year on contracts, and the order tightens loopholes that allow federal agencies to buy products stamped “Made in America” but which are often manufactured by companies that only produce a small portion of their products in the US.

“American manufacturing was the arsenal of democracy in World War II and it must be part of the engine of American prosperity now. That means we are going to use taxpayer money to rebuild America,” Biden said.

With reporting by Reuters and Agence France-Presse

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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