Treasury Secretary nominee Janet Yellen probably said it best during her Senate Finance Committee confirmation hearing last week.
"Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later," according to the text of her prepared remarks.
President Joe Biden unveiled a $1.9 trillion relief package on Jan. 14 that includes direct payments to people, raises the minimum wage to $15 an hour, provides aid to small businesses, state and local governments, and creates a national vaccination program. Ms. Yellen, in her virtual committee appearance, said it is crucial that the package is passed quickly.
As a publication that focuses on long-term investing, Pensions & Investments agrees with Ms. Yellen's assessment and suggests that after the initial round of economic aid is approved, the federal government could go further.
Throughout the Trump administration, the U.S. and global investors were promised an "Infrastructure Week" that would direct both public and private money to repairing, expanding and enhancing U.S. infrastructure.
It has been reported that Mr. Biden's "American Rescue Plan" will be followed in February by a broader relief plan. Long-term investors around the world undoubtedly would cheer infrastructure spending on projects that create jobs — and even new industries around green power and other climate-aware initiatives. Such public and private investments could provide investors — facing a persistent low-yield environment — with a way to earn reliable, consistent returns that come closer to matching their liabilities.
Acknowledging that the national debt and the federal deficit are both long-term issues, it is vital at this point in time, when the economy is struggling under pandemic-related restrictions, to dig deep.
Again, Ms. Yellen said it very well in her testimony: "With interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time."
