President-elect Joe Biden plans to nominate former Federal Reserve Chairwoman Janet Yellen, an economist at the forefront of policy-making for three decades, to become the next Treasury secretary, according to people familiar with the decision.
If confirmed by the Senate, Ms. Yellen would become the first woman to hold the job. Mr. Biden’s selection positions the 74-year-old labor economist to lead his administration’s efforts to further the recovery from the destruction caused by the coronavirus pandemic and shutdowns.
Ms. Yellen declined to comment on Monday.
Separately, Mr. Biden’s transition team said he would nominate Alejandro Mayorkas to lead the Department of Homeland Security and Avril Haines as director of national intelligence. Both are former Obama administration aides. John Kerry, who was secretary of state under President Barack Obama, will serve as special presidential envoy for climate change.
Mr. Biden’s economic team is set to confront a challenging outlook, with millions of people still out of work and job growth slowing after a sharp bounceback when businesses reopened in May, June and July. Economists at JPMorgan Chase & Co. said last week they expect the U.S. economy to contract slightly in the first quarter of 2021 due to rising virus infections.
While the Obama administration also faced a challenging landscape before taking office in January 2009, Democrats then enjoyed large House and Senate majorities that created far fewer political constraints to pursuing their preferred course of action—something Mr. Biden won’t have even if Democrats deny Republicans a Senate majority by winning two Georgia runoff elections in early January.
Ms. Yellen has said recently the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat. “There is a huge amount of suffering out there. The economy needs the spending,” Ms. Yellen said in a Sept. 28 interview.
While Ms. Yellen has argued strongly for more deficit-financed government spending since the pandemic devastated the U.S. economy, she said last year that federal budget deficits were on an unsustainable path.
In one speech last year to a housing trade group, she warned higher taxes might not be enough to put programs such as Social Security and Medicare on solid footing, warning of painful trade-offs. “This is root canal economics,” she said.
Ms. Yellen has written on a variety of macroeconomic issues, while specializing in the causes, mechanisms and implications of unemployment.
At Yale, she studied with the late Nobel Prize winner James Tobin, an intellectual heir to the Depression-era economist John Maynard Keynes, who saw a central role for government in combating economic downturns.
Ms. Yellen told her colleagues they should be more concerned about repeating mistakes made over more than a decade by Japan, which had been mired in deflation, by pulling back on stimulus prematurely.
“Prolonged failure to meet the central bank’s mandate can be just as damaging to its reputation” as losses on asset purchases, she said, according to transcripts of the meeting.