Rep. Wagner grills Yellen on Biden’s tax plan
Yahoo Finance's Alexis Christoforous and Brian Cheung discuss the latest from Treasury Secretary Janet Yellen and Fed Chair Jerome Powell's testimony in front of Congress.
Video Transcript
ALEXIS CHRISTOFOROUS: And as we've been discussing, one of the themes throughout that testimony with Janet Yellen and Jay Powell today with lawmakers has been higher taxes. And of course, we have lawmakers on both sides of the aisle for and against raising taxes, especially as the economy continues to recover from the pandemic. I want to bring in our Fed correspondent Brian Cheung, who has been listening, or was listening, to that testimony. And Brian, what were some of the key moments when lawmakers were talking about taxes?
BRIAN CHEUNG: Well, there's a lot of components to this, Alexis. And we have to think about the kind of context of all this. On one hand, there is a lot of questions about how the government is going to finance the $1.9 trillion in spending that we already had at the beginning of the Biden administration. But then looking forward, keep in mind the White House proposing a $3 trillion infrastructure plan that's undergoing the works right now. So the question from a lot of Republican members of the House Financial Services Committee is, how are you going to pay for it? Is it going to be coming from increased taxes? Here's what the Treasury Secretary told Ann Wagner, a representative from Missouri, in this morning's hearing.
- The Biden administration is not going to propose policies that hurt small businesses or Americans. The Biden administration is going to propose investments this economy has long needed to be competitive and productive and support for--
- With all due respect, ma'am, I would say this-- certainly raising taxes on business and industry is going to affect consumers and households and American families in a very adverse way.
BRIAN CHEUNG: So you can hear the tension right there between the Treasury Secretary and the representative from Missouri. Janet Yellen did add later that if they do want to have investments, which she felt was a good investment, or rather, was a good payout when it comes to trying to get people more skills as we get out of this pandemic, improve the road network in this country, for example, she said there may be a need to raise taxes. So, again, not off the table. We already know that the Bush administration has clarified it does not want to raise taxes on individuals making more than $400,000.
But of course, the questions that were in this hearing extended far beyond tax policy, in addition to some of the nitty gritty things like Jared was just pointing out when it comes to SDRs and the IMF. There was a lot of questioning specifically on climate change. It did appear that was the primary focus of this hearing, even though this was really supposed to be a focus on CARES Act spending.
But a lot of questions to Chairman Powell as well on the Federal Reserve's intention to tackle the risk to the financial system that could come from surprise weather events. It was interesting because concurrently, during this hearing, there was a separate speech from Fed Governor Lael Brainard, when she said that she was going to be setting up as part of a system wide Federal Reserve network approach to climate change. It will be including the 12 regional banks within the Federal Reserve to try to make sure they're assessing those risks within the financial institutions that they regulate, Alexis.
ALEXIS CHRISTOFOROUS: All right, Brian, thanks so much.
