Janet Yellen to lawmakers: Spend big now, focus on debt later

Incoming Treasury Secretary Janet Yellen had this message for lawmakers: spend big now and pay down the debt later.

During her Senate Confirmation Hearing, Yellen backed President-Elect Joe Biden’s $1.9 trillion stimulus and relief package to help the U.S. economy recover. The former head of the Federal Reserve believes this amount of spending “creates more prosperity for more people and ensures that American workers can compete in an increasingly competitive global economy.”

Her spending priorities? Public health, vaccination, extended unemployment, food stamps, and small business relief.

And concerns for breaking the budget should take a back seat to these priorities, telling the Senate Finance Committee:

“Neither the president-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big. Even though the amount of debt relative to the economy has gone up, the interest burden hasn’t.”

But when do politicians ever think about the debt and deficit? They use this line constantly, even during the boom phase of the business cycle: spend now to ensure the economy maintains its growth and worry about paying down the debt when the time comes.

Now that interest rates are artificially at historic lows, these people think they have carte blanche to spend like drunken sailors, using the pandemic as an excuse.