Yellen defends Biden on tax cuts

Treasury Secretary Janet Yellen came under fire from Republican lawmakers Tuesday over a quip from President Joe Biden about letting tax cuts enacted by predecessor Donald Trump expire.

Yellen repeatedly emphasized that the administration's principles on tax policy had not changed, and that Biden supports retaining tax reductions for families earning less than $400,000.

The exchanges underscore how heated the fight is likely to be next year as the expiration date approaches for individual rate reductions championed by Trump in a 2017 package.

Tierney L. Cross/Bloomberg

Biden in remarks on April 19, and again in an April 23 posting on X, formerly known as Twitter, said he would let the Trump tax package expire, saying it had "overwhelmingly benefited the wealthy and big corporations." While he has long said he would seek to renew cuts for households making less than $400,000 a year, while letting the rest expire at the end of 2025, he didn't use that language in the remarks earlier this month.

Multiple Republicans on the House panel seized on that discrepancy, and pressed Yellen on Biden's tax policy. Representative Ron Estes of Kansas said, "If this tweet is right, that came from President Biden, he is going to increase taxes on people making less than $400,000."

Testy exchange

Yellen refuted that, saying the administration's policy had not changed.

"President Biden has repeatedly issued a set of principles that will guide his negotiations, and he has repeatedly said he will not support increases on families making under $400,000," she said. While he hasn't "offered a detailed plan on how to make sure" that happens, "he's made clear he stands ready to work with Congress" on it, she said.

A handful of other Republicans also raised the issue, including Minnesota's Michelle Fischbach. Biden "told the American people flat out that he intends to let the Trump tax cuts expire and remain expired," she said. 

Fischbach went on to press on whether Biden would lay out his principles for negotiations with Congress over taxes, prompting a sharp reply from the normally placid Yellen.

Revenue raisers

"He told you what the principles are. I'm telling you what the principles are," she said.

The Treasury chief also said that Biden would propose, when negotiations begin, a "set" of revenue-raising measures to cover the cost of keeping the tax cuts in place for families earning less than $400,000.

The administration has also proposed raising revenue through new taxes on people with $100 million-plus in wealth, and has pressed for enacting parts of a global tax deal endorsed in 2021 but which Congress hasn't approved.

Yellen acknowledged that the federal deficit is a significant concern, but said Biden's proposed budget would begin addressing that.

Republicans argued that boosting taxes on the wealthy and corporations will sap revenues by acting as a drag on economic growth.

— With assistance from Christopher Condon