Janet Yellen is set to become Treasury Secretary in a Biden cabinet – and here’s what it means for cash-strapped American families

Six years later, Yellen, 74, is reportedly President-elect Joe Biden’s choice for Treasury Secretary, first reported Monday by the Wall Street Journal.

If she is selected and confirmed – becoming the first woman to take the job – many families will rely on Yellen to stay focused on the connection between Capitol Hill and the decision on their own financial conditions.

Coronavirus has forced millions out of work; The unemployment rate fell to 6.9% in October, down from double digits in the spring, but some economists are worried that the recovery of coronovirus infections and more government shutdown orders will shake up the recovery. Various financial-relief deadlines such as expulsion postponements and withholding student-loan payments will expire on December 3, while negotiations on another congressional relief package are stuck.

Yellen, a labor economist who talks about the problems of income inequality, will remember Main Street, said Desmond Lachman, a resident fellow at the American Enterprise Institute, a right-leaning think tank. “He will be very responsible, but at the same time, he will go there to bat for the people at the lower end of the spectrum.” “She will be very sensitive to her problems.”

Here’s a look at what experts say the Yellen-led Treasury Department would mean for another round of government incentives, taxes and student-debt cancellations in a Biden administration.

Another round of government incentives

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First on track to close above the 30,000 mark in part by news about the vaccine, and some analysts said, the anticipated appointment of Yellen. Yellen’s possible selection is a good sign that the Biden administration is serious about getting another stimulus bill through Congress, now that the money from the $ 2.2 trillion CARS Act has dried up, he said.

Yellen has been vocal about the need for more financial help. Yellen, at the Brookings Institution, currently needs more pain to not expand throughout the economy and spend to reduce unemployment. Said at a July congressional hearing.

Ernie Tedchi, managing director and policy economist for the investment-banking advisory company Evercore ISI, wrote in a Monday note that Yellen “believes it is necessary to continue fiscal support for the fiscal and economy and possibly their The Congress will, over time, try to leverage credibility and promote more fiscal support for the unemployed and state and local governments. ”

Passing the stimulus bill is a political process that involves consensus, but Josh Bivens, research director at the Economic Policy Institute, a left-leaning think tank, said Yellen had issues and understanding to potentially persuade Republicans is. Further excitement is urgent, Bivens said, because “we are in for a very, very rough economic time.”

If Yellen is chosen and confirmed, he will have a former ally, Jerome Powell, to cooperate with in the Federal Reserve. Powell, who succeeded Yellen at the helm of the Fed, supports influencing the economy with more stimulus money.

Revision of tax code rules

Biden campaigned for richest individuals and corporations in positions including higher taxes. With a strong opportunity for a divided Congress, some observers say the tax-hike proposals are out the window. But, they say, there are still ways that the Biden administration can bring in more tax revenue from the wealthiest Americans and corporations, sharing the code for low-income people without congressional approval.

Yellen may have a central role in that effort, being within the Internal Revenue Service Treasury Department.

For example, a Yellen-led Treasury Department and the IRS may reissue certain tax-code rules relating to foreign assets of American multinationals. It’s an “open question” if Yellen and his Treasury Department unilaterally will have a hunger to make regulatory changes, Beavens said.

Another place where the IRS can bring in more money: a larger employee who can initiate more audits on affluent taxpayers, Baive noted.

Experts said a non-critical caveat is that a large IRS staff needs a large budget – and allocating budget funds, such as incentive negotiations, is a political process.

Cancellation of student loan

Advocates for student-loan borrowers say Biden has the power to cancel student loans, which has increased to $ 1.6 trillion.

Yellen is more widely aware of the debt burden and its implications for the purchase of a home, and the economy. For example, in 2016, the then-Fed chairman Yellen Told congress, “We’ve been very attentive to trends in student loans, [and] It has indeed grown to an extraordinary degree. “

It is difficult to say how those ideas can be converted into policy implications. The Department of Education is the agency primarily responsible for the student-loan program, but there are opportunities for the Treasury to play a role.

For example, usually the Treasury Department makes deposits on outstanding loans to the government, but Due to the discount provided By the Treasury to the Department of Education, the Department of Education typically manages the process of collecting on defaulted student-loan debt. (The agency hires contractors to do this work).

Theoretically, Treasury Department Can connect wire Exemption to push the Department of Education to shift its practices.

In addition, the Secretary of the Treasury technically appoints the Student Finance Loan Ombudsman of the Consumer Finance Security Board, one of the country’s top student-loan officers.

Do not miss: Under Biden, the CFPB will play a role in any student-loan-cancellation – and help deal with student-loan officers

The tax treatment of student-loan forgiveness is an area offering Yellen the opportunity to play a transformational role. If Congress discharges student loans of some or all borrowers, lawmakers may specify the tax treatment of that forgiveness. But if the administration goes ahead with the cancellation of student-loans on its own, the tax implications become explicit.

The Treasury Department and the IRS have the authority to cancel student-loans from a borrower’s income for tax purposes, George Brooks, a Georgetown University Law Center professor, Written in a paper Published by the Student Borrowers Protection Center, a borrower advocacy group.

“The Treasury Department through the IRS has sufficient authority to interpret the tax law in a particular way,” Brooks said. He said: “There is a need to reflect the policy agenda of the administration.” This means that guidance on this issue will be found from the Treasury Department and even the Treasury Secretary.