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Janet Yellen: Biden's infrastructure plan is a down payment on the economy America can – and should – have

Yahoo Finance’s Jessica Smith joins the Yahoo Finance panel to discuss the Exclusive Op-Ed from Treasury Sec. Janet Yellen.

Video Transcript

- Treasury Secretary Janet Yellen is speaking out on Biden's infrastructure plan. We have an exclusive op-ed with her. And for that, we're going to get Jessica Smith in here for some of the details. Jessica.

JESSICA SMITH: Yeah, Jared. In this op-ed, Treasury Secretary Janet Yellen makes the case for President Biden's economic agenda. That's the bipartisan infrastructure package and the reconciliation bill that Congress is going to try and pass with only Democratic votes. In this op-ed, she argues that the US has under-invested in education, in child care, and in infrastructure for more than a generation. She makes the case that the under-investment has fueled the racial wealth gap, it has fueled the decline in labor force participation rate, and it's part of the reason why lower earners haven't seen more wage growth.

This plan that she is advocating for does have free community college free, universal pre-K, expanded child care options, and more. And it does come with a big price tag of $1 trillion for the infrastructure package and then $3.5 trillion at this point for that reconciliation bill. As it stands now, Republicans are largely opposed to that. So they need to pass it with only Democratic votes. Republicans say the big price tag is mainly the reason why they are opposing this.

And in this op-ed, Treasury Secretary Yellen outlines three reasons why she thinks this spending is necessary. She says right now is the time to do it because of low interest rates. She also says the cost is going to be spread out over time and largely paid for with tax hikes on the wealthy and on corporations. And finally, she says to think about the opportunity cost of not making the investment.

She went on to say that America is not destined to remain the world's greatest economic power. And she says that she questions whether the US can retain that title if it doesn't act. She goes on to say the crucial question isn't what if we make these big investments, it is what if we don't. We are now engaged in the most important economic project in recent history-- repairing the broken foundations of our economy. And on top of them, building something stronger and fair than what came before.

Now, the House is set to come back next week to start considering that budget resolution, which would allow for the crafting of the reconciliation package. But it is going to be difficult to get that done at this point because of the divide that we're seeing between moderate and progressive Democrats. So we will see how that shakes out over the next week or so. But if you want to read the full op-ed, that is on yahoofinance.com.