Yellen says the Inflation Reduction Act and CHIPS Act are saving the US economy

US Treasury Secretary Janet Yellen tours Ford Motor Company’s Rouge Electric Vehicle Center that builds the all-electric Ford F-150 Lightning with Linda Chang (R), the vehicle’s chief engineer, before delivering an economics speech in Dearborn, Michigan, on Sept. 2022.

Jeff Kowalski | AFP | Getty Images

Treasury Secretary Janet Yellen praised the Biden administration’s economic policies on Thursday during a speech at… Ford Motor Company Michigan electric car factory.

Yellen, speaking after touring the Rogue Center for Electric Vehicles in Dearborn, described the Democratic-led Inflation Act, the Bipartisan Infrastructure Act, the CHIPS Act and Science as a benefit to the manufacturing sector and job growth.

She spoke as a Democrat It aims to highlight its economic successes Ahead of November’s midterm elections, which will determine whether Republicans can regain one or both houses of Congress. President Joe Biden will travel to Ohio on Friday to promote the opening of Intel’s semiconductor manufacturing facility.

Many management policies are consistent with the so-called Yellen framework of modern supply-side economics. Before the pandemic, she said, rising inequality was accompanied by slower economic growth.

“Now with a fully functional economy, we are uniquely qualified to expand the supply side that delivers sustainable growth and reduces inequality,” Yellen said.

She also noted that the Biden administration’s stabilization efforts will “return the United States to full employment in record time” after the pandemic, declining labor force participation and the war in Ukraine weighed heavily on the US economy.

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“If we take into account the bipartisan infrastructure law, the chip law, and the authorized inflation-reduction law are among the most important investments our country has ever made,” Yellen said. “I firmly believe that they will help us achieve stable and sustainable growth, and they will lead us towards a fairer and more resilient economy.”

America’s rescue plan

Yellen has attributed the economic transformation during the pandemic to one of President Joe Biden’s political priorities upon entering the White House.

“Because of the US bailout and our vaccination campaign, the US has experienced the fastest pace of job creation in our history,” she said. “Family balance sheets are strong, and companies continue to invest.”

Biden signed $1.9 trillion pandemic relief package It became law in March 2021, allowing payments of up to $1,400 for most Americans, extending $300 a week in unemployment insurance and expanding the child tax credit. The package also included $20 billion in Covid-19 vaccines and millions in rental aid.

The The unemployment rate has returned to its pre-epidemic level in July and tied for the lowest level since 1969 for every demographic except for African Americans, according to data from the Bureau of Labor Statistics.

During her visit, the Secretary of the Treasury also visited Detroit’s Motor City Match grantee small businesses. This program was expanded thanks to $15 million in US bailout funding.

Republicans attacked Democrats for passing the legislation, saying the massive infusion of government aid helped fuel inflation.

Inflation reduction law

$80 billion allocated to the IRS under Inflation reduction law Imposing compliance with a minimum tax of 15% for large corporations would help correct a double tax system, Yellen said, “by ensuring that large corporations and those with high incomes cannot avoid paying the taxes they owe.”

She said the tax cap – the amount of money owed but not paid to the IRS – would add up to $7 trillion over the next decade and be “disproportionately concentrated among the highest earners”.

Yellen said resources from the IRA “will enable the IRS to increase taxpayer audits at the highest levels and collect taxes from those who haven’t paid their bills in full.”

The Republican Party has also targeted the tax increases included as part of the bill, which Democrats aim to use to drive massive investments in climate change mitigation.

Chips Law

The Chips LawYellen said, a bipartisan bill backed by Biden that has historically invested in domestic semiconductor manufacturing, would enable the United States to compete economically with China and other countries that have historically invested more in research and development.

“The United States now ranks 10th in the world in terms of research and development investment as a share of output,” she said. Estimated cost [of] The overall R&D decline is $200 billion annually in lost economic output. Meanwhile, competitors in China and the rest of the world are advancing.”

Yellen said the nearly $40 billion in stimulus being pumped into the chip-making sector would reduce foreign reliance on technology to make cars and other goods.

Investments of the Department of Commerce

Yellen said the recent supply-side policies being promoted by the Commerce Department and the White House are pro-growth as well as pro-equity. She said wealthier Americans and large corporations have benefited more from tax incentives than previous administrations. But the Biden administration has focused on investing in disadvantaged communities.

“From the layman’s perspective, this approach embraces the idea that some of the best opportunities for growth happen when we invest in people in places that have been forgotten and neglected,” Yellen said.

The Treasury secretary said the Commerce Department would establish at least 20 technology and innovation centers “geographically dispersed with priority given to underserved and underrepresented communities.”

“Such a dispersal of economic opportunity across the country would mean good new jobs and industries,” Yellen said.

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