WASHINGTON (AP) – Treasury Secretary Ethan Yellen believes the US government has more room for borrowing, but says higher taxes will be needed in the long run to increase future spending.
Yellen appeared before the Senate Banking Committee with the Biden administration, taking into account up to $ 3 trillion in additional spending on infrastructure, green energy, and education. The Better Build program will be in line with the $ 1.9 trillion economic assistance package approved earlier this month.
Yellen said her views on borrowing had changed since 2017, when she expressed concern about federal debt, which at the time was about 75 percent of the US economy. That ratio has since risen slightly above 100%.
Answering Senator Richard Shelby’s question to R-Ala, Yellen said the persistence of low interest rates had changed his views on federal debt. Lower interest rates have made it easier for the federal government to cover its debt interest rate, he said. In fact, government interest payments as a share of the economy have remained unchanged since 2007, when debt was only 35% of output, Yellen said.
“I think this is a more meaningful measure of the burden of public debt on federal finances,” he said. “And so I believe we have more fiscal space, but that certainly does not mean that something is going wrong.”
Yellen said she supports borrowing $ 1.9 trillion to finance the bailout because it is a temporary expense in response to the crisis.
“But in the long run, we have to raise revenue to cover ongoing costs,” he said.
The Biden administration is considering a corporate tax rate hike of up to 28% instead of the current 21% after the Trump administration cut it from 35%. They also discuss raising taxes on higher-income Americans.
Yellen նախագահ Federal Reserve Chairman ome Jerome Powell testified for the second day Wednesday in front of a congressional panel as part of congressional oversight of last year’s $ 2 trillion emergency package.
Powell reiterated that the recent jump in 10-year treasury yields, which rose less than 1% at the beginning of the year to 1.6% on Wednesday, was largely a sign of investor confidence that the economy was improving.
“It was a good process,” he said. “I would be worried if it were not regulated,” or if rates were so high that borrowing, spending, and the economy would slow down.
D-Md. During questioning of Sen. Chris Van Hollen, Yellen said Congress should allocate more money to the IRS so that the tax agency can reduce tax evasion. The amount of uncollected taxes is referred to as the “tax gap”, հարցը this week the issue received more attention after the publication of a study that showed that the richest 1% of Americans can protect 20% of their income from taxation.
“The tax gap is huge,” Yellen said.