‘We’re In A Deep Hole’: Yellen Warns Unemployment Will Stay Elevated For Years Without Stimulus

Topline

Treasury Secretary Janet Yellen on Sunday sought to quell concerns over the size of the $1.9 trillion Covid-19 relief plan President Biden is trying to push through a divided Congress, emphasizing the need to act quickly to remedy a “stalling” job market and combat “tremendous suffering in the country.” 

Key Facts

Key Background 

The $1.9 trillion package includes a wide range of immediate assistance, including $1,400 stimulus checks and unemployment, funding for vaccine distribution, and funding for state and local governments. Republicans argue that Biden’s package is too expensive, and contains measures that won’t successfully target Americans in need of relief. Earlier this week, former Treasury Secretary Larry Summers outlined his concern that the package would drive inflation in a Washington Post op-ed. “Whereas the Obama stimulus was about half as large as the output shortfall, the proposed Biden stimulus is three times as large as the projected shortfall,” wrote Summers. 

Crucial Quote

“My predecessor has indicated that there’s a chance that this will cause inflation to rise, and that’s also a risk that we have to consider,” Yellen said on Sunday morning. “We have the tools to deal with that risk if it materializes. But we face a huge economic challenge here and tremendous suffering in the country. We’ve got to address that. That’s the biggest risk.”

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