Lawmakers pressure Treasury secretary on soaring gas prices, inflation

Yellen acknowledged that bringing inflation down should be our “number one priority,” but how to do that and what caused the inflation in the first place was up for debate.

Updated: June 8, 2022 - 12:11am

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U.S. Treasury Secretary Janet Yellen testified before the Senate Finance Committee Tuesday where lawmakers grilled her on the rising federal debt, energy costs and soaring inflation.

Gas prices have hit record highs almost daily over the past month, with the national gas price average for regular unleaded gas nearing $5 per gallon. Federal data shows that in the last 12 months, food prices have risen about 10%, energy prices have risen more than 30%, and prices overall have risen at the fastest rate in decades.

Yellen acknowledged that bringing inflation down should be our “number one priority,” but how to do that and what caused the inflation in the first place was up for debate.

Republicans lobbed questions at Yellen on these issues and asked what the Biden administration could do to address it and what they have done to create the problem in the first place.

“What I heard you say is that it is OK to raise taxes right now, and it is proper to have more stimulus spending to deal with this crisis,” said Sen. Mike Crapo, R-Idaho. “I just have to say I disagree with you on that. What I also didn’t hear you say was that we should increase our domestic energy production rather than depressing our domestic energy production.”

Yellen responded saying oil companies are sitting on thousands of unused leases. Crapo, though, shot back that Biden has not given companies the necessary permitting.

“But the permits on those leases are not being facilitated,” Crapo said. “The president’s executive orders have shut down the [Keystone] XL pipeline. They have stopped the issuance of more leases. They stopped the progress of permitting on those leases, stopped the offshore oil production. The fact is, we were energy independent, and now we are not, and its not the result of the failure of our capacity.”

Yellen argued the U.S. needs to become “more dependent” on wind and solar, referring to renewable energy. She also pointed to Russia’s invasion of Ukraine, which has disturbed the global oil markets.

At the hearing, Yellen said the U.S. is transitioning to a period of “stable and steady growth” and argued that the Biden administration’s spending helped avoid much worse unemployment numbers.

Yellen put the blame for high food and gas prices on Russian President Vladimir Putin’s invasion of Ukraine, though both were already rising significantly before the invasion. She also said the president is working on ways to lower costs.

“An appropriate budgetary stance is needed to complement monetary actions by the federal reserve,” Yellen said. “Moving forward elements of the president’s proposed legislation, including the clean energy initiatives and plans to reform the prescription drug market can help lower the cost paid by American consumers.”

Yellen admitted in an interview that she was wrong about inflation just days before the hearing.

"I think I was wrong then about the path that inflation would take," Yellen told CNN last week, referencing comments she made at the Wall Street Journal's CEO Summit in May of last year.

Those comments drew further criticism for President Joe Biden, who has seen prices soar since taking office.

Inflation has become a leading cause of concern for Americans and small businesses as the price of just about everything has soared. The small business network Alignable released a poll of small businesses last month, which found 51% of small businesses fear that inflation could “force them to close their businesses within the next six months.” Restaurant owners are most concerned with 72% saying they are worried about inflation.

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