Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Yellen rebrands Biden economic agenda as 'modern supply-side economics'

EconomyJan 21, 2022 05:05PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. U.S. Treasury Secretary Janet Yellen addresses the U.S. Conference of Mayors winter meeting in Washington, U.S. January 19, 2022. REUTERS/Jonathan Ernst

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen on Friday rebranded the Biden administration's economic agenda as "modern supply-side economics," using a Reagan-era phrase favored by Republicans to assert that Democrats' spending plans will boost the U.S. economy's productive capacity.

Yellen said in a speech to the World Economic Forum that rather than tax cuts and deregulation, her modernized version seeks to increase labor supply and improve infrastructure, education and research to boost potential U.S. growth and ease inflationary pressures.

"Our new approach is far more promising than the old supply- side economics, which I see as having been a failed strategy for increasing growth," Yellen said. "Significant tax cuts on capital have not achieved their promised gains. And deregulation has a similarly poor track record in general and with respect to environmental policies — especially so with respect to curbing CO2 emissions."

Yellen did not announce any policy shifts as she introduced the concept, which suggests it may be a new tactic to persuade Americans and moderate Democrats in Congress to support the "Build Back Better" social spending and climate investment plan, which stalled in December.

The new nomenclature emphasizes the administration's efforts to expand the U.S. workforce - a sentiment echoed by President Joe Biden in a speech to mayors on Friday - and increase productivity, forces that could help quell inflationary pressures while supporting a stronger growth rate.

The administration is trying to blunt the political fallout from high inflation that hit 7% last month amid labor, housing and goods shortages, the biggest annual increase in nearly 40 years, and counter claims that further spending would fuel further inflation.

A DIFFERENT SUPPLY SIDE

Yellen's vision of "supply-side economics" would differ greatly from the "Reaganomics" version that burst into the mainstream in the 1980s with the election of Ronald Reagan as president.

Then, lower taxes and lighter regulation were touted as the fuel that would make U.S. businesses more competitive and profitable, unleashing capital investment that would "trickle down" to the wider economy, fueling growth and hiring.

At the same time, Republicans argued, the tax cuts would "pay for themselves" through turbocharged growth - a phenomenon that has never come to pass.

Yellen argued that the "supply" needs of the economy center around the availability of labor, which has been constrained by the pandemic and in the view of Democrats by the absence of policies around things like child and elder care that could allow more people to join the workforce.

Yellen identified two years of universal early childhood education and an expanded earned income tax credit as "core" components of the Build Back Better plan going forward.

She added that Republican-passed tax cuts in 2017, rather than encourage investment in the United States, have perpetuated the 'perverse corporate tax incentives' that have encouraged companies to shift productive capacity overseas as countries compete on taxes. The deal for a global 15% corporate minimum tax, which depends on passage of Build Back Better for implementation, would end this "race to the bottom" she said.

"Modern supply-side economics seeks to spur economic growth by both boosting labor supply and raising productivity, while reducing inequality and environmental damage," Yellen said. "Essentially, we aren’t just focused on achieving a high topline growth number that is unsustainable — we are instead aiming for growth that is inclusive and green."

Yellen rebrands Biden economic agenda as 'modern supply-side economics'
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (11)
taylor jason
taylor jason Jan 23, 2022 11:44AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yellen would say anything to agree with the president #worst former fed pres
John Doe
ForexInsiders Jan 22, 2022 8:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Is anyone really believing this woman anymore? haha
michel bovy
michel bovy Jan 22, 2022 8:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Correct!!!!!!!!
michel bovy
michel bovy Jan 22, 2022 8:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Nobody could continue to believe this kind of continuous lies!!!
Benoit Avril
Benoit Avril Jan 22, 2022 3:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I completely agree with her, at least what she says, but it should have been implemented under Obama after the 2008 crisis, not after one of the highest growth period in history, to which succeeded a sanitory crisis. That kind of plan should have most of its effect 10 to 20 years from now, Americans will never support that, they want fast results. Overall more spendings should increase inflation if anything, unless investments increase the supply of qualified workers (in 20 years), lower the cost of electricity (when the infrastructure will be built), or when new ways of productions and transport are in place, aka electrification (the same, when they will be built).
John Doe
ForexInsiders Jan 22, 2022 3:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Is the Kool Aid really that delicious? Socialism is Socialism. Go read a history book
Trevor Roberts
LimitUp Jan 21, 2022 8:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yellen is hot
Todd Gray
Todd Gray Jan 21, 2022 7:27PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Modern economics has led to 90% of the US population losing 35% of its purchasing power over the last 50 years. And, the destruction of natural population growth. But, hey! Do more of the same, only rebrand it. That's the golden ticket.
Benoit Avril
Benoit Avril Jan 21, 2022 7:27PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
That's completely false.
Thomas Simpson
Thomas Simpson Jan 21, 2022 7:17PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sure. Great job. Rename a failure and make it all better.
William Goodman
William Goodman Jan 21, 2022 5:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This certainly doesn't make any sense, the story and what she states is Biden's plan. What is needed is for those able to work, but not because of government payments, to ho back to work with the ending of the payments. Also, get the military to help unload the goods and products sitting off shore. Both of these two moves would work to decrease the cost of labor and products or materials. There are some supply sides actions to be taken that won't cost much in view of the return.
Nick Glaser
Nick Glaser Jan 21, 2022 5:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I wonder what it cost to buy her soul😏
pcg upstate
pcg upstate Jan 21, 2022 5:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
not much
Bev Mcguffee
Bev Mcguffee Jan 21, 2022 1:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If it costs more money, wait until we have paid off some present debt.  Isn’t that call intelligent money management?
Benjamin USA
Benjamin USA Jan 21, 2022 1:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Strawman
Alberto Vazquez
Alberto Vazquez Jan 21, 2022 1:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
New economy, better known as fascism
Benjamin USA
Benjamin USA Jan 21, 2022 1:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
You might want to find a dictionary and look up fascism, unless you think dictionary are also fake news because they dont reinforce your trash world view?
PM Coffee
PM_Coffee Jan 21, 2022 1:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Benjamin USA  economic facism.. also called corporatism - The state comes before the individual.
pcg upstate
pcg upstate Jan 21, 2022 1:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Benjamin USA You're the expert
Chris Harpole
Chris Harpole Jan 21, 2022 1:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
depends on when the dictionary was written. the liberal education system is rewriting history as they see fit.
Benoit Avril
Benoit Avril Jan 21, 2022 1:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I never heard of that term, but coroprations are not the product of the government, they are what happens when all resources belong to individuals. They can also buy the government.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email