Yellen says US economic performance 'vindicates' pandemic-era spending
By David Lawder
WASHINGTON (Reuters) -The U.S. Treasury Secretary Janet Yellen said on Wednesday the economy's strong performance is evidence that the $1.9 trillion American Rescue Plan Act was the right approach in 2021 to avoid a slow and painful recovery from the COVID-19 pandemic.
Yellen said in remarks to the U.S. Conference of Mayors in Washington that the U.S. faced a potential crisis on the scale of the 1930s Great Depression in 2020 and 2021. She said she and President Joe Biden «believed that the most dangerous risk was in going too small» with recovery spending.
«Many had argued that this Rescue Plan wasn't needed. But I believe seeing where we are today vindicates the approach we took,» Yellen said. «GDP growth is strong and inflation has declined significantly. Unemployment is near historic lows.»
The U.S. unemployment rate has remained below 4% for the longest period in 50 years and wage gains have been broadly shared, including by younger and less-educated workers, she added.
Republicans have blamed the massive relief spending during the COVID-19 crisis for fueling high inflation over the past two years by creating excess demand at a time when supply chains were slowly recovering from pandemic-related disruptions.
The higher federal debt taken on to fund the programs — the national debt is now above $34 trillion — has prompted Republicans in Congress to demand spending cuts as lawmakers scramble to avoid a partial government shutdown ahead of a deadline on Friday.
Yellen urged lawmakers to pass a bipartisan stop-gap funding measure to avoid a shutdown that would hurt American families and businesses.
Defending the Biden administration's pandemic-related spending, Yellen drew comparisons to the slow and
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