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World

Yellen makes history again as US Treasury secretary

  • Early in Trump's term, she did not hesitate to warn of the risks tax cuts like the one he was proposing would have on the budget deficit.
27 Jan 2021

WASHINGTON: In selecting Janet Yellen to be the first woman to lead the US Treasury Department, President Joe Biden chose a progressive economist focused on unemployment who supports fiscal stimulus and tackling climate change.

After the Senate on Monday voted overwhelmingly to confirm her nomination, Yellen was sworn in Tuesday as Treasury secretary by the nation's first female Vice President Kamala Harris at the White House, facing the Treasury building.

The 74-year-old has made history before -- when she became the first female head of the Federal Reserve, the world's most powerful central bank, in 2014, and previously as head of the White House Council of Economic Advisors.

Her new role puts her at the center of the ongoing storm battering the US economy, which has seen a record slowdown in annualized growth and tens of millions of layoffs as it grapples with the world's largest coronavirus outbreak.

Yellen will take the lead in the effort to win Congressional support for Biden's proposed $1.9 trillion economic rescue plan, and increasing the federal minimum wage to $15 an hour.

In a note to Treasury staff, she praised their effort during the 2008 global financial crisis, saying they "helped save the economy from its worst crisis since the Depression.

"Now we need to do it again," Yellen said.

While the current crisis is very different from 2008, "the scale is as big, if not bigger" as the pandemic has inflicted "wholesale devastation on the economy," she wrote.

Passion for the job

For Yellen, who had a long career in multiple posts at the Fed, economics is a family business: she met her husband, economist and Nobel laureate George Akerlof, in the cafeteria at the Fed, and their son also is an economics professor.

Her academic and public service background sets her apart from many former Treasury secretaries, including her predecessor Steven Mnuchin, who spent years as an investment banker and film producer.

Her expertise in the job market at a time when the pandemic has doubled unemployment to 6.7 percent -- along with the respect lawmakers have for her efforts at the Fed after the 2008 crisis -- are considered assets.

She said economics can be used in the real world "to address inequality, racism, and climate change," and has gone beyond Biden by calling for a carbon tax to fight global warming.

'Dove' at the Fed

As chair of the US central bank from 2014 to 2018, she was seen as a "dove" disinclined to raise interest rates, and rather intent on keeping them low to support employment.

That prompted criticism from Donald Trump, who said on the presidential campaign trail in 2016 that the ultra-low interest rate policy created "a big, fat ugly bubble" for Democrats.

Yet he also complained loudly when Yellen oversaw multiple rate increases.

Trump ousted her from the Fed leadership role, making her one of the few chairs not to stay in office for a second term.

But Yellen worked for years with current Fed Chair Jerome Powell, whose term ends in 2022.

The daughter of a Jewish doctor, Yellen, who still speaks with the accent of her native Brooklyn, earned a PhD in economics from Yale University.

She served in multiple roles at the Fed, first as an economic researcher and then in loftier roles, spending a third of her career there.

Yellen also served as an economic advisor to then 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 Fed vice chair under Ben Bernanke, overseeing the large monetary support plan to help the US economy out of the 2008 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, and with her signature "popped collar," 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 like the one he was proposing would have on the budget deficit.

With the deficit soaring, that will be an issue she must face again.