The United States should take advantage of current low borrowing rates to make investments aimed at "unwinding" destructive trends in the economy, including wage inequality, Treasury Secretary Janet Yellen said Wednesday.
President Joe Biden's budget proposal takes steps to address these "destructive forces" including helping Black and low-income families progress up the income ladder, Yellen told the Senate Finance Committee.
"We need ambitious fiscal policy to start unwinding these trends... and now is fiscally the most strategic time to make them," Yellen said in her prepared testimony.
"We expect the cost of federal debt payments will remain well below historical levels through the coming decade. We have a window to invest in ourselves."
The world's largest economy has seen a "robust recovery" from the Covid-19 crisis, in large part due to massive government aid programs, she said.
"But we have to be clear-eyed about something: the pandemic was not our only economic problem."
Americans have faced "a series of long-term, structural economic challenges," Yellen said, naming stagnant pay for lower-income families and a lack of progress in narrowing the gap between the wealth of Black and white families, as well as womens' continued exclusion from the workforce.
A lack of investment in training programs that would boost wages and childcare to allow women to work are among the reasons "these destructive forces have festered," she said.
Responding to a question about rising prices, Yellen repeated her view that the recent "burst of inflation" is likely temporary and due to difficulties reopening the economy.
But it is "critically important" for the government to put spending on a "responsible course" to avoid fueling inflation.
"We're monitoring inflation very carefully and do take it very seriously. No one wants to return to the bad high-inflation days of the 70s," she said.
Biden's budget "is both fiscally strategic and fiscally responsible," and "pays for itself through a long overdue reformation of the tax code that will make it fairer."
Republicans in Congress have steadfastly rejected the president's call to roll back a portion of the 2017 tax cut for wealthy Americans in order to pay for some of his ambitious social programs and infrastructure projects.