Experts across the political spectrum have long respected Janet Yellen as an accomplished economist, whether they share her views or not.
After all, she is a former chairwoman of the Federal Reserve and has a doctorate from Yale University and decades of experience working at the top levels of the field of economics. But Yellen’s early tenure as treasury secretary in the Biden administration is quickly tarnishing that reputation — because her convenient flip-flopping on key economic issues can only be explained by newfound political ambitions.
For example, similar to many economists, Yellen has long warned that the enormous national debt is a serious issue. Indeed, just in 2017, she said she was “very worried about the sustainability of the U.S. debt trajectory” and called it “the type of thing that should keep people awake at night.” Yellen offered this warning when the ratio of federal debt held by the public to the size of the economy was at just 75% — now, it’s over 100%.
But Yellen’s tune has changed now that she works for a Democratic president with massive spending ambitions. We’ve already spent an astounding $4 trillion on COVID-19 relief, much of which proved inefficient and rife with fraud. Yet Yellen is defending President Biden’s push to blow out the budget with trillions more and dismissing debt concerns.
“We think it’s very important to have a big package [that] addresses the pain [COVID-19] has caused,” Yellen said on CNBC. “I think the price of doing too little is much higher than the price of doing something big. We think that the benefits will far outweigh the costs in the longer run.”
The economist-turned-politician is making this argument even as the economy is projected to recover without more stimulus and as nonpartisan projections show our post-pandemic budget trajectory is even more disastrous.
Yellen’s flip-flop on the minimum wage is even more glaring.
Now that she’s working for Biden, Yellen says the job-killing impact of the proposed $15 federal minimum wage would be “very minimal.” This claim is contradicted by the economists at the nonpartisan Congressional Budget Office, which projects at least 1.4 million job losses from a $15 minimum wage, as well as a clear majority of empirical research on the subject. But more importantly, it’s contradicted by — Janet Yellen.
Just in 2014, Yellen gave congressional testimony acknowledging the job-killing impact of then-President Barack Obama’s proposed $10 minimum wage — a significantly less extreme measure than the $15 federal minimum wage now up for debate under Biden. Yellen agreed with the CBO then that the $10 minimum wage would kill 500,000 jobs, but she now claims a much higher wage would have no such effect.
“She is no longer speaking as an economist,” the Wall Street Journal concluded of Yellen’s reversal. “She’s a politician.”
Looking at how quickly and how conveniently Yellen’s views have evolved, it’s hard to reach any other conclusion. She may be an accomplished former Fed chairwoman and economist. But Yellen is in a new, political role now — and her arguments are starting to reflect that.
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