During a televised interview with Fox News’ “Your World” program Thursday, US Treasury Secretary Janet Yellen said the current level of the national debt is “normal.” However, she also added that President Joe Biden does want to cut the deficit with “deficit reduction” proposals that would “improve tax fairness” by placing high taxes on the rich.
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Fox anchor Neil Cavuto had brought up a June 13th clip on CNBC’s Squark Box in which Yellen said, “I think that if the debt is stabilized relative to the size of the economy, that we’re in a reasonable place. The way I look at it is that we should be looking at the real interest cost of the debt, that’s really what the burden is.” Cavuto questioned her on the characterization of the fiscal situation as “reasonable,” sympathizing with her if she meant it in regards to interest but not in regard to the debt.
“Well, the ratio of debt to GDP—we have a very large economy, and the ratio of debt to GDP is about 100 percent,” Yellen said. “Which is high in historical terms, but real interest rates are lower than they have been throughout much of our history. And so, right now, the interest burden of the debt is at what I would call “normal historical levels.”
She went on to say that maintaining that normalcy will require containing “deficits” and “counter[ing] what would otherwise be an increase in the burden of the debt, and President Biden’s proposed—”
“But that’s not happening,” Cavuto interrupted, citing a new CBO report that said we are going to see the deficit rise to $2 trillion and that the debt could reach $50 trillion in ten years.
Yellen replied that Biden’s budget is “full of proposals” to “contain deficits,” but did not explain what they were. She said we must let expire certain parts of the Tax Cuts and Jobs Act of 2017, pushed through Congress by Republicans and passed by President Trump, and “reinvest” in the economy. The proposals Biden is pushing will allegedly promote “tax fairness” and implement policies that would be good for “working families.” Biden will protect tax credits for people with smaller incomes but will institute high taxes for those with larger incomes.
“And he has a number of other proposals that would promote tax fairness, by asking high income individuals and corporations to pay their fair share,” she added.
When asked about high prices on goods, Yellen said, “The president has recognized as I have that many American households are really struggling,” with “healthcare, housing, childcare, and education,” but said the costs have been rising for “decades.” She said Biden has proposals to bring down these costs like “controlling the cost of insulin, bringing down prescription drug prices, making sure that healthcare is affordable, lowering energy prices for households, you know, programs that will address the high cost of living.”
Shane Devine is a writer covering politics and business for VT and a regular guest on The Unusual Suspects. Follow Shane’s work here.
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