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President-elect Joe Biden has nominated former Federal Reserve Chair Janet Yellen as his Treasury secretary, tapping the first woman to lead the department as the recovery from the COVID-19 recession is losing momentum and talks on a new stimulus package remain stalled in Congress.
Assuming lawmakers don't pass a relief measure before Biden is inaugurated, Yellen's first mission will be persuading recalcitrant Republicans in the Senate to pass robust legislation that would provide more aid to the unemployed, struggling small businesses and teetering states and cities.
If she's confirmed, Yellen, 74, whom President Obama picked as the first woman to lead the Fed, combines a long history of fighting unemployment with a reputation for consensus building, Yellen headed the Fed from 2014 to 2018 after serving more than three years as vice chair. She previously headed up the Council of Economic Advisers to President Bill Clinton.
"Dr. Yellen is a traditional left-of-center economist who will likely push for more stimulus," Brian Gardner, chief Washington policy strategist at Stifel, wrote in a note to clients.
Yet Yellen, he says will need to be a salesperson. "That is not something she has been heavily involved with previously," Gardner says, noting the Fed is an independent agency
Yellen argued in August that Congress needed to approve additional stimulus to spur growth amid the coronavirus pandemic, as she wrote in an op-ed in the New York Times and told National Public Radio. As a member of the Climate Leadership Council, she supported taxing carbon emissions as the most efficient way to curb greenhouse gas emissions.
Biden, a former 36-year senator and eight-year vice president, had hinted Friday that his choice would be widely acceptable to Democrats. Her nomination was confirmed to The Associated Press by a person who spoke on condition of anonymity to discuss Biden's plans.
“You’ll find it is someone I think will be accepted by all elements of the Democratic Party, from the progressive to the moderate coalitions,” Biden said Friday.
During her tenure at the Fed, Yellen was considered one of the agency’s more “dovish,” or pro-growth policymakers – meaning she was more focused on keeping interest rates low to stimulate growth than on raising rates to ward off a spike in inflation. While she grew up in a working-class neighborhood in Brooklyn she became acutely aware of the ravages of unemployment by her father, a doctor, and mother, an elementary school teacher, both of whom lived through the Great Depression.
In 2007, Yellen was the only Fed policymaker to foresee the risks to the economy posed by the worsening housing market and sounded a warning at a Fed meeting.
As Fed chair, however, Yellen largely served as a centrist and consensus builder. And as the economy improved after the Great Recession of 2007-09, Yellen spearheaded a series of very gradual rate increases from late 2015 to late 2017, bringing the Fed’s key rate from near zero to a range of 1.25% to 1.5%. Her successor, Jerome Powell, oversaw further rate hikes before slashing the benchmark rate back to zero in March during the early days of the pandemic.
Biden has been selecting his top White House staffers and has begun naming his Cabinet picks as he prepares to take office Jan. 20. The president-elect has vowed to have a diverse Cabinet that "looks like America."
He named several other Cabinet positions earlier Monday: Longtime adviser Antony Blinken, who will lead the State Department; Alejandro Mayorkas who would be the first Latino to lead the Department of Homeland Security; and Avril Haines, the former deputy director of the CIA, who would serve as Director of National Intelligence. If confirmed, Haines would be the first woman to lead the intelligence community, where the upper echelons have traditionally been dominated by men.
Other prospects for Treasury could have been lightning rods for one faction or another, and faced greater difficulty winning confirmation in a narrowly divided Senate. Sen. Elizabeth Warren, D-Mass., was favored by progressives for her fierce advocacy for consumers against big banks, but that raised concerns among moderates and on Wall Street.
Dealing with China will be a major challenge for the next secretary. President Donald Trump has imposed tariffs on imports from China, in an effort to balance trade, and threatened more punishment because of that country’s initial lack of international cooperation in warning about COVID-19.
Biden told reporters Friday his goal is to get China to obey international rules. Biden said the U.S. would rejoin the World Health Organization and the Paris climate accord, from which Trump withdrew.
“It’s not so much about punishing China. It’s about making sure China understands they’ve got to play by the rules,” Biden said. “We have to not only deal with this pandemic, we’ve got to plan for the next one.”
Yellen told the Asian Financial Forum in January that despite a truce in the trade war with China, issues remained over Chinese subsidies to state-owned businesses and competition between the countries over technology such as artificial intelligence and 5G mobile networks.
"These issues are going to be quite difficult to deal with and will have very significant consequences for the global economy," she said.
Biden has praised recent moves by the Federal Reserve, which governs monetary policy by setting interest rates for banks that translate into interest rates for consumers, with a goal of full employment and stable prices. Low-interest rates can lead to inflation, but high-interest rates can lead to unemployment.
Biden said he supported the historically low-interest rates during the pandemic, to help revive the economy through deficit spending.
“The way the Federal Reserve has been approaching dealing with the dollar, I think has been in a positive direction,” Biden said. “Our interest rates are as low as they’ve been in modern history. I think that is a positive thing. It lends credence to the possibility of us being able to spend the money and deficit spend in order to create economic growth right off the bat.”
Yellen served as a Fed governor for three years in the mid-1990s and as chief executive of the Federal Reserve Bank of San Francisco from 2004 to 2010.
Yellen left the Fed board in 1997 to serve as chair of the Council of Economic Advisers for nearly three years. During that period, she led the economic policy committee for the Organization for Economic Cooperation and Development.
Yellen is professor emeritus at the University of California at Berkeley where she was on the faculty since 1980. She graduated summa cum laude from Brown University with a degree in economics in 1967 and received a doctorate in economics from Yale University in 1971, when she was the only woman in her class.
Contributing: The Associated Press
This article originally appeared on USA TODAY: Biden picks Janet Yellen, a former Federal chair, to lead Treasury