Treasury Secretary Janet Yellen on Sunday defended the recently enacted Covid relief package, saying the benefits for the economy far outweigh any concerns that the burst of government spending could lead to inflation.
Speaking on ABC’s “This Week,” Yellen said, “We need to defeat the pandemic. This package really does that.”
President Joe Biden signed the $1.9 trillion relief package into law Thursday. Some economists, including former Treasury Secretary Larry Summers, have raised concerns the measure could lead to rising prices in coming months.
Yellen said the greater risk was in not bolstering the economy — saying the federal government needed to assist people who are out of work, who are facing eviction or foreclosure, or who simply don’t have enough food to eat.
“The most significant risk we face is a workforce that is scarred by a long period of unemployment. People being out of work, not able to find jobs, can have a permanent effect on their well-being. I think that’s the most significant risk,” Yellen said. “Is there a risk of inflation? I think there’s a small risk. And I think it’s manageable. “
Yellen did say that efforts needed to be made to keep deficits under control.
“Of course, we have to make sure that the economy, that the budget is on a sustainable path,” she told host George Stephanopoulos, “and this is something that we can afford. In the longer run, we need to get deficits under control.”