Yellen says threats to democracy risk US economic growth, an indirect jab at Trump
Treasury Secretary Janet Yellen testifies during a House Ways and Means Committee hearing, Tuesday, April 30, 2024, on Capitol Hill in Washington. (明星黑料 Photo/Mariam Zuhaib)
WASHINGTON (明星黑料) 鈥� Treasury Secretary Janet Yellen argues that a fractured democracy can have destructive effects on the economy 鈥� an indirect jab at Donald Trump.
Yellen delivered an address Friday in Arizona, using economic data to paint a picture of how disregard for America鈥檚 democratic processes and institutions can cause economic stagnation for decades.
Yellen, taking a rare step toward to the political arena, never mentioned Trump, the presumptive Republican presidential nominee, by name in her speech for the McCain Institute鈥檚 Sedona Forum, but she hinted at the former president鈥檚 potential impact if he regains the White House.
Her remarks serve as a sort of warning for business leaders who may overlook Trump鈥檚 disregard for modern democratic norms because they prefer the former president鈥檚 vision of achieving growth by slashing taxes and stripping away regulations.
Yellen acknowledged that democracy 鈥渄oesn鈥檛 seem like typical terrain for a treasury secretary,鈥� but she added that 鈥渄emocracy is critical to building and sustaining a strong economy.鈥�
鈥淭he argument made by authoritarians and their defenders that chipping away at democracy is a fair or even necessary trade for economic gains is deeply flawed,鈥� she said. 鈥淯ndercutting democracy undercuts a foundation of sustainable and inclusive growth.鈥� She pointed to a study suggesting that democratization in the long run.
Yellen cited the insurrection on Jan. 6, 2021, as a day when democracy came under threat as 鈥渞ioters, spurred on by a lie, stormed the Capitol.鈥� Trump, who made false claims that the 2020 election was stolen from him, has been charged with conspiring to overturn the election, among four criminal cases he is facing. He denies any wrongdoing.
And though Yellen didn鈥檛 specifically cite Trump鈥檚 comments, he again undermined the tradition of a peaceful transfer of power this week when he refused to commit to accepting this year鈥檚 presidential results in an interview with the Milwaukee Journal-Sentinel.
Farther from home, Yellen cited other global threats to democracy such as Russia鈥檚 invasion of Ukraine.
Trump and those associated with him say they want to centralize the government鈥檚 powers within the Oval Office, such that he might subject people or companies that cross him to investigations, lawsuits and other penalties. That approach could undermine the rule of law that has enabled America鈥檚 market-based economy to thrive.
In her speech, Yellen pointed to China as a cautionary example and warned that its future growth is 鈥渇ar from certain.鈥� She said the absence of some democratic pillars will 鈥渃ontinue to pose challenges as China navigates the transition to an advanced economy.鈥�
Yellen鈥檚 speech comes when there is speculation that if Trump regains the White House he may put political pressure on the Federal Reserve to lower its benchmark interest rate, which stands at a two-decade high of roughly 5.3%. Fed Chair Jerome Powell this week said gaining confidence to lower rates 鈥渨ill take longer than previously expected.鈥�
鈥淎s chair of the Federal Reserve, I insisted on the Fed鈥檚 independence and transparency because I believe it matters for financial stability and economic growth,鈥� Yellen said in her speech. 鈥淩ecent research has been consistent with my belief: It has shown that greater central bank independence is associated with greater price stability, which contributes significantly to long-term growth.鈥�
A representative from the Trump campaign did not respond to an Associated Press request for comment.
Other leading economists and academics are challenging the right鈥檚 claims to the mantles of economic growth and liberty.
The Nobel Prize-winning economist Joseph Stiglitz, a friend of Yellen鈥檚, last month published a book entitled 鈥淭he Road to Freedom.鈥� Stiglitz, in an interview, said Trump has preyed on people鈥檚 economic insecurities after decades of inequality and the erosion of the middle class.
鈥淭he economic state is what creates the fertile field for these demagogues,鈥� Stiglitz said. 鈥淚f they were feeling their incomes were going up rather than down, I don鈥檛 think they would find Trump attractive.鈥�
In a paper released this week, Vanessa Williamson, a senior fellow at the Urban-Brookings Tax Policy Center, said that businesses should be more concerned about the rule of law and democratic values.
She argued that there need to be stronger nonpartisan business associations and that CEOs and executives need to be fully aware of how a move away from democracy could hurt their bottom lines.
There is 鈥渋ndisputable evidence of the economic costs of democratic decline,鈥� she said. 鈥淭hese costs include stagnation, policy instability, cronyism, brain drain, and violence.鈥�
