U.S. Sen. Chuck Grassley (R-IA) on Thursday grilled Treasury Secretary Janet Yellen on whether she still believes inflation is a positive for Americans and the economy.
During the Senate Finance Committee hearing on President Joe Biden’s $6.9 trillion budget proposal, Grassley also asked Yellen whether her boss has it in him to rise about politics and lead on shoring up a troubled Social Security system headed down the road to insolvency.
Grassley, the committee’s senior member, noted that Yellen is a member of Social Security’s Board of Trustees. The board’s reports during Yellen’s tenure have recommended “lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them.”
The Congressional Budget Office (CBO) in January issued detailed Social Security projections finding that the trust funds are headed for insolvency by 2033 on a theoretically combined basis. Without legislative action, CBO estimates that benefits would be automatically cut by 23 percent across the board.
“As a Social Security Trustee, do you stand by your recommendation that lawmakers act sooner rather than later to shore up the Social Security Trust Fund? When can Congress expect to see the President’s proposal to put Social Security on sound fiscal footing?” said Grassley, who also serves as ranking member fo the Senate Budget Committee.
It would help, Iowa’s senior senator added, if Biden would quit “demagoguing the Social Security issue the way he has in recent weeks.”
The Democrat skewered Republicans over Social Security and Medicare in his State of the Union address, claiming the GOP wants to slash the entitlement programs. He has pounded the talking points since.
Yellen offered a mealymouthed answer, insisting Biden “stands ready to work with Congress to shore up Social Security.”
“He has made explicit proposals in connection with Medicare and shoring it up, and it’s important to have that conversation about Social Security.”
On inflation, Grassley noted Yellen’s defense of the president’s hefty spending proposals which have contributed to soaring inflation rates.
The Treasury secretary claimed inflation was a temporary or “transitory” side effect of a booming economic recovery. In March 2021, she said there was only a “small risk” of escalating inflation, and it would be “manageable.”
“If we ended up with a slightly higher interest rate environment it would actually be a plus for society’s point of view and the Fed’s point of view,” Yellen said In June of that year.
Meanwhile, inflation kept soaring, rising to levels not seen in 40 years.
“When you made this comment, inflation was 5.4 percent and the federal funds rate was effectively zero. Since that time, inflation hit a 40-year high and the Fed has responded by aggressively hiking interest rates,” Grassley said. “As a result, families and small businesses are paying the price by way of higher interest costs on home loans and business lines of credit. Moreover, bank failures this past week highlight how fragile our economy is given rising interest rates and decades-high inflation.”
“Do you still see our inflation driven interest rate hikes as a ‘plus for society’? he pointedly asked.
Nearly two years later, the Treasury secretary claims that she considers “high inflation the No.1 economic problem that all of us need to face and address.”
“It’s the president’s top priority,” Yellen responded to Grassley as the Finance Committee addressed Biden’s bank-breaking $6.9 trillion budget plan — on top of his ill-named Inflation Reduction Act and the other massive spending bills Democrats pushed through when they were in control of congress during Biden’s first two years in office.
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M.D. Kittle is the National Political Editor for The Star News Network.