What Yellen told Congress means big trouble for your wallet in 3 key areas
In her testimony before the Senate Finance Committee this week Treasury Secretary Janet Yellen lost even more of her economic credibility
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In Senate testimony on Thursday, Treasury Secretary Janet Yellen desperately tried to lend economist credence to President Biden's tax-and-spend approach that has caused historic inflation and a runaway national debt.
Yellen spoke out of both sides of her mouth, claiming that inflation is the nation's number one economic priority while also supporting Biden's proposed budget released last week that would only accelerate price increases.
She started her testimony by stating, "Our banking system is sound." Yet Americans should take no comfort from these words. The Treasury Department and Biden's banking regulators failed to spot this foreseeable crisis resulting from rapid Federal Reserve interest rate hikes to contend with Bidenflation. This whiff was just the latest sign of incompetence from the Biden administration.
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Yellen lost her remaining economic credibility in her 2021 Congressional testimony when she called inflation "temporary." Since then, the dollar's value has declined by nearly 15%. On Tuesday, the Bureau of Labor Statistics announced that the Consumer Price Index increased by 6% — three times the Fed's target rate. Core inflation, excluding food and energy prices, actually rose on a monthly basis.
Treasury Secretary Janet Yellen is a left-wing activist in economist clothing.
Yet Yellen doesn't seem to have learned her lesson. When Sen. Ron Johnson, R-Wis., asked how the Biden administration's reckless spending has bid up prices, she said, "I don't believe deficit spending is one of the main causes of inflation."
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In reality, Biden's budget blowout would fuel the inflationary fire. Biden's budget includes $2.6 trillion in new spending that would dilute the currency and lead to more dollars chasing the same amount of goods and services.
Yellen claimed Biden's budget would result in "deficit reduction." In reality, it would raise the deficit from $1.4 trillion in 2022 to $1.6 trillion in 2023 and $1.8 trillion in 2024. The total deficit would increase by $17 trillion over ten years.
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She lent her support to counterproductive Biden programs like the expansion of the child tax credit, which would only exacerbate the labor shortage facing small businesses.
And she ignored how Biden's budget would hurt the economy through $4.7 trillion in tax increases, including painful new levies on small businesses and families that would raise the top tax rate to 45%.
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Biden's budget would also double the capital gains rate from 20% to 39.6%, punishing entrepreneurs who have worked a lifetime to grow their small businesses. And it would raise the corporate tax rate from 21% to 28%, hitting over one million small businesses structured as corporations.
No American Treasury Secretary worth their salt would support such a big government economic transformation.
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Finally, Yellen showed no concern for the fate of community banks, whose depositors are currently fleeing in mass to the nation's big banks. Senator James Lankford, R-Okla., asked Yellen, "What is your plan to keep large depositors from moving their money from community banks to large banks?" Yellen had no answer.
Treasury Secretary Janet Yellen testifies about the Biden administration's FY2024 federal budget proposal before the Senate Finance Committee in the Dirksen Senate Office Building on Capitol Hill on March 16, 2023 in Washington, D.C. (Chip Somodevilla/Getty Images / Getty Images)
This is a major blind spot. Community banks are of outsized importance to small businesses and the overall economy. They hold 15% of total banking industry loans but 36% of the industry's small business loans. Unfortunately, they have been disproportionately hurt by misguided Dodd-Frank financial rules, closing at a rapid rate in recent years. They need support from the Treasury Secretary.
Yellen is a left-wing activist in economist clothing. The American public and their elected officials should ignore her partisan political pronouncements in favor of their own common sense about how Democrats' deficit spending and tax increases have impacted and would further affect the economy, the federal fiscal situation, and the value of the dollar.
Alfredo Ortiz is president and CEO of Job Creators Network and author of "The Real Race Revolutionaries: How Minority Entrepreneurship Can Overcome America's Racial and Economic Divides."