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Janet Yellen Set to Lead Treasury Department Under Biden

WASHINGTON — Janet L. Yellen became an economist at a time when few women entered the profession and fewer still rose in a male-dominated environment. She is now poised to become the first female Treasury secretary and one of few people to ever have wielded economic power from the White House, the Federal Reserve and the president’s cabinet.

Her expected nomination would come as rebuilding a U.S. economy battered by the coronavirus pandemic and saddled with high unemployment presents a central challenge for President-elect Joseph R. Biden Jr.’s administration.

While Ms. Yellen is not the type of firebrand nominee some progressives might have hoped for — she has warned that the United States is borrowing too much money, a fact that some liberals count against her — she has paid consistent, careful attention to inequality and labor market outcomes, even when doing so earned her backlash from lawmakers.

As the chair of the Federal Reserve from 2014 to 2018, Ms. Yellen also oversaw an extremely slow set of interest rate increases as she and her colleagues tested whether unemployment could fall further without leading to higher prices. Her patience drew criticism from inflation-wary economists at the time, but the policies laid the groundwork for a strong labor market and a record-long expansion that drove unemployment to its lowest rate in 50 years before the pandemic turned the world upside down.

Senator Elizabeth Warren of Massachusetts, one of the most prominent progressive Democrats in Congress, wrote on Twitter that Ms. Yellen “would be an outstanding choice for Treasury Secretary.”

But she faces a steep challenge: As Treasury secretary, Ms. Yellen will be at the forefront of navigating the economic fallout created by a pandemic that continues to inflict damage. While growth is recovering from earlier coronavirus-related lockdowns, infections are climbing and local governments are restricting activity again, most likely slowing that rebound.

Ms. Yellen has been a clear champion of continued government support for workers and businesses, publicly warning that a lack of aid to state and local governments could slow recovery, much as it did in the aftermath of the Great Recession, when Ms. Yellen was leading the Fed.

“While the pandemic is still seriously affecting the economy, we need to continue extraordinary fiscal support,” she said in a Bloomberg Television interview in October. She called fiscal support early in the crisis “extremely impressive” but noted that key provisions had lapsed.

Unlike the independent Fed, Ms. Yellen as Treasury secretary would find herself in a much more political role — one that is likely to require negotiating with a Republican-controlled Senate. With Mr. Biden expected to push for additional economic aid, Ms. Yellen would be central to brokering a stimulus deal in a politically divided Congress that has so far failed to agree on another round of aid.

Ms. Yellen declined to comment on her expected nomination, which was reported earlier by The Wall Street Journal.

She would be the first woman to hold a job that has been dominated by white men — like Alexander Hamilton — throughout its 231-year history and would have held the government’s top three economic jobs, including leading the White House Council of Economic Advisers during the Clinton administration.

A former academic who taught at the University of California, Berkeley, Ms. Yellen was also the president of the Federal Reserve Bank of San Francisco, a Fed governor and the Fed vice chair before becoming the central bank’s first female chair.

Ms. Yellen said she wanted to be reappointed when her term as Fed chair ended in 2018, but President Trump, eager to install his own pick, decided against renominating her.

By replacing Ms. Yellen, Mr. Trump broke with precedent. The previous three Fed chairs had been reappointed by presidents of the opposite political party.

Instead, Mr. Trump chose Jerome H. Powell, the Fed’s current chair, with whom Ms. Yellen could soon be working closely as Treasury secretary. The two still talk, and Ms. Yellen has consistently praised Mr. Powell’s performance at the Fed, suggesting they would have a good relationship.

Born in Brooklyn in 1946, Ms. Yellen was raised in Bay Ridge, a middle-class neighborhood across the waterfront from Staten Island. Her mother was a teacher who stayed home to raise Ms. Yellen and her brother. Her father was a family doctor. She was both valedictorian and editor of the newspaper at her high school.

She attended Brown University and went on to receive a doctorate from Yale. In an interview in 2013 with Simon Bowmaker, an economics professor at New York University, Ms. Yellen explained her rationale for becoming an economist, saying she had always liked the rigor of math but economics offered something more.

“I care about people,” she said. “I discovered that economics was of enormous relevance to our lives and had the potential to make the world a better place.”

She met her husband, George A. Akerlof, an economist who is now a Nobel laureate, while working in a research position at the Fed in 1977.

Ms. Yellen has spent her post-Fed years at the Brookings Institution, occupying an office close to Ben S. Bernanke, who preceded her as Fed chair, and other former Fed officials. They call their corridor the “F.O.M.C., Former Open Market Committee,” a play on the central bank’s rate-setting Federal Open Market Committee.

Ms. Yellen is a Keynesian economist, which means she believes markets have imperfections and sometimes need to be rerouted or kick-started by government intervention.

As Fed chair, she gave important speeches — including one at the storied annual conference in Jackson Hole, Wyo. — advocating continued watchfulness and wariness when it came to financial overhauls instituted after the 2008 crisis. She has struck a concerned tone about regulatory rollbacks under the Trump administration.

“It is certainly appropriate to simplify regulations that impose unnecessary burdens, particularly on small community banks,” she said in 2019. “But I’m greatly concerned that the regulatory work needed to address financial stability risk has stalled. There have been some worrisome reversals.”

She is relatively moderate on many topics, including trade. Mr. Akerlof recalled in a biographical note in 2001 that when he met her: “Not only did our personalities mesh perfectly, but we have also always been in all but perfect agreement about macroeconomics. Our lone disagreement is that she is a bit more supportive of free trade than I.”

Ms. Yellen has been a major influence on leading officials at the Fed. John C. Williams, who worked for her in San Francisco, now leads the Federal Reserve Bank of New York. Mary C. Daly, who now leads the San Francisco Fed, cites Ms. Yellen as a key mentor.

That, along with Ms. Yellen’s experience working with Mr. Powell, could help facilitate the kind of close relationship needed between the Fed and Treasury, which are collaborating on a variety of crisis response programs.

Henry M. Paulson Jr., who served as Treasury secretary under President George W. Bush, praised the selection. He said Ms. Yellen “will have a tough job ahead of her, but she has the experience, talent, credibility and relationships with members of Congress on both sides of the aisle to make a real difference.”

While the other leading contenders for the job also had extensive experience that spanned fiscal and monetary policy, Ms. Yellen was seen as well placed to make it through Senate confirmation, even if Republicans maintain control of the chamber.

Lael Brainard, another top candidate for the role, is the only remaining Fed governor from the Democratic Party on the seven-member board, which currently has two open slots. She might have been difficult to replace at the Fed: Nominees have been hard to confirm over the past decade, and the Senate may remain under Republican control.

While leading the Fed, Ms. Yellen at times had a testy relationship with congressional Republicans. In one instance, Representative Mick Mulvaney, then a South Carolina Republican, said Ms. Yellen was overstepping her boundaries by talking about inequality.

“You’re sticking your nose in places that you have no business to be,” Mr. Mulvaney said at a hearing in 2015.

But in many ways, those conflicts underline how much Washington has changed over the past five years. Fed officials now regularly talk about inequality, entirely unchallenged. The central bank has formalized policies much like Ms. Yellen’s patient approach to interest rate-setting as its official stance, which it explicitly hopes will foster more inclusive growth.

“It seems like a pretty subtle shift to most normal human beings,” Ms. Yellen said of that move. But “most of the Fed’s history has revolved around keeping inflation under control. This really does reflect a decisive recognition that we’re in a very different environment.”

Reporting was contributed by Michael D. Shear, Jim Tankersley, Alan Rappeport and Thomas Kaplan.

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In Building Economic Team, Biden Faces Tug From Left and Center

WASHINGTON — If he wins the presidency, Joseph R. Biden Jr. will inherit an economy struggling to recover from its steepest plunge in decades. His economic team will need to help workers and businesses survive a pandemic winter, while developing policies to address the racial and income inequalities the crisis has exacerbated in the labor market.

Assembling that team would force Mr. Biden to balance competing impulses. He wants to surround himself with aides who have experience battling past downturns — a talent pool that is overwhelmingly white, male and centrist. But he also wants to stock his administration with advisers who represent the racial, gender and ideological diversity of the nation and his party better than previous administrations.

Allies inside and outside Mr. Biden’s sprawling network of informal economic advisers say there are signs that, even as Mr. Biden looks to familiar names from his White House years with President Barack Obama, his potential administration is on track to include far more economists of color, women and progressive economic thinkers than Mr. Obama’s initial team, which was stocked with establishment white male economists.

“You’d like a team that has kind of been to war,” said Stephanie Kelton, an economics professor at Stony Brook University who served on a task force when Mr. Biden became the nominee but is not currently an adviser to the campaign.

But Ms. Kelton, an increasingly important voice on the progressive side of the party, said it’s important to find people who realize that mistakes were made after the 2008 recession, because “it took seven years to claw back the jobs that were lost. We can’t afford that again.”

Robert E. Rubin, a former Treasury secretary under President Bill Clinton, who remains a leading voice among centrist Democrats, said Mr. Biden would be facing “the most daunting set of challenges that any president has faced since F.D.R. He needs people who are experienced, who are well equipped to deal with that.”

The nation is mired in a so-called K-shaped recovery in which some people and businesses have thrived as companies shifted to remote work and consumer demand skewed toward goods over services. Other workers have fallen into prolonged unemployment and a wave of small businesses have shuttered or are close to doing so. Mr. Biden’s allies have stressed that he will need to address that damage should he win the presidency.

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“What I think is important is to recognize that this is not your grandfather’s type of recession,” said Senator Ron Wyden of Oregon, the top Democrat on the finance committee. “There are two economies — Main Street getting hammered, Wall Street sky high.”

Perhaps the most important economic role to fill will be that of Treasury secretary, since that person will serve as a conduit between the White House, the Federal Reserve and Congress, along with playing a key role in diplomacy and financial regulation. During the financial crisis, the Treasury secretary played an outsize role in steering the response, first under Henry M. Paulson during the George W. Bush administration and then under Timothy F. Geithner during the Obama years.

Mr. Biden appears likely to tap a woman for the job — which would be a first in the Treasury Department’s 231-year history. Lael Brainard, a Federal Reserve governor and former Treasury official, tops many Biden advisers’ lists of possible future secretaries. Ms. Brainard, who served as the Treasury’s under secretary for international affairs during the Obama administration, has extensive recent experience in financial regulation and a proven track record of working well with the Fed chair, Jerome H. Powell.

Credit…Cliff Owen/Associated Press

Still, her background in trade could prove to be a liability with more progressive members of the party. While at the Treasury, Ms. Brainard was reluctant to take a hard line on currency manipulation, for instance when it came to the weak Chinese yuan in the early 2010s. That was an unpopular stance among some left-leaning senators worried about the competitive threat cheap imports from abroad posed to domestic manufacturers.

Other women also make the unofficial lists circulating, including Senator Elizabeth Warren of Massachusetts, who enjoys a lot of support among progressives. Sarah Bloom Raskin, formerly at the Treasury and Fed, is frequently discussed, as is Janet L. Yellen, the former Obama-era Fed chair.

Another name floating around the Biden camp is Roger W. Ferguson Jr., a former Fed vice chairman who is now president of the financial manager TIAA. Mr. Ferguson, the only Black person to ever serve in that high-ranking Fed position, has experience confronting crises — he played the central role in the Fed’s response to the Sept. 11, 2001, terrorist attacks because its chair, Alan Greenspan, was out of the country at the time.

Both have advised the Biden campaign from the outside, as part of a small group of economists Mr. Biden turns to for daily briefings and policy recommendations. That group includes Ben Harris, an economist at Northwestern University’s Kellogg School of Management who succeeded Mr. Bernstein as Mr. Biden’s chief economist, and who now plays a sort of clearinghouse role in economic policymaking for the Biden campaign. He could land a White House job as well.

Several other veterans of the Obama years also appear to be in the running for top economic jobs. Most of them are white men, including Austan Goolsbee, a former chairman of Mr. Obama’s Council of Economic Advisers; Gene Sperling, who led the National Economic Council for Mr. Obama and Mr. Clinton; and Jeffrey Zients, who succeeded Mr. Sperling and who is a co-chairman of Mr. Biden’s transition team.


Credit…John Lamparski/Getty Images

People in the Biden orbit are also eyeing veterans of the White House or the Fed who are not white men, including Lisa D. Cook, who served as chief economist for the Council of Economic Advisers under Mr. Obama; Raphael Bostic, who heads the Federal Reserve Bank of Atlanta, making him the first Black person to ever hold a regional Fed presidency; and Mary C. Daly, the president of the Federal Reserve Bank of San Francisco.

Mr. Biden may also have an opportunity to add staff to the Fed, which will continue to play a key role in supporting the labor market and economic recovery, potentially in close collaboration with the Treasury. While President Trump has nominated Judy Shelton and Christopher Waller for the two open slots, it is unclear whether they will win confirmation before the congressional term ends in January. Another Fed governor slot could open if Ms. Brainard is moved to the Treasury.

Mr. Biden would also need to make decisions about the Fed’s top spot, though not immediately. Mr. Powell’s tenure as head of the central bank does not end until early 2022. The Fed’s vice chair for supervision, a powerful position that influences banking regulation, will be up for replacement in October 2021.

Across the various roles, labor groups and the progressive wing of the Democratic Party are pushing Mr. Biden to elevate economic thinkers who are more liberal, and more focused on racial inequality, than previous Democratic administrations — citing the outsize damage the pandemic recession has dealt to women and to Black and Hispanic workers. They also want advisers who are not afraid to spend money on programs to help bring about economic equality — even if it means adding to the budget deficit.

“He’s going to have to have some people who are very good and credible at handling all of the extreme forms of inequality we’ve seen pop in from this, and can get the labor market back up and can especially undo the harm that’s been disproportionate on women and minorities,” said William E. Spriggs, the chief economist at the A.F.L.-C.I.O., who was part of a group of several hundred economic policy experts who prepared policy recommendations for Mr. Biden’s campaign this year.

“I think they get it,” Mr. Spriggs said. “But you know, personnel are chosen sometimes on the basis of other things.”

Ana Swanson contributed reporting.

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A Year After a #MeToo Reckoning, Economists Still Grapple With It

SAN DIEGO — When the nation’s economists gathered here over the weekend, the event looked different than in past years. There was a woman holding “office hours” to help victims of sexual harassment and abuse. Job interviews were no longer conducted in hotel rooms, where female candidates had long felt uncomfortable. There was a long list of panel discussions on racism and sexism in the profession.

There were even, some attendees noted with delight, long lines for the women’s restroom.

Many economists celebrated those developments as a sign of progress after a year of revelations — in front-page stories and surveys of the group’s members — about sexism, racism and harassment in the discipline.

But others stressed the need for even more aggressive action to address those issues, particularly racial discrimination. And the group’s leaders said they would need years of sustained effort to begin to erode the structural barriers that have held back women and nonwhite men in the field.

“There’s certainly a problem — we identified that problem,” said Ben S. Bernanke, the former Federal Reserve chair, whose one-year term as president of the group, the American Economic Association, ended Sunday. “Progress in terms of outcomes, it’s too soon to say, obviously. Progress in terms of process I think has been tremendous.”

In an interview, Mr. Bernanke and the new president, Janet L. Yellen, his successor as Fed chair, said the association would soon finalize procedures for investigating violations of its code of conduct and for punishing violators. One formal complaint has already been filed, they said.

Mr. Bernanke said further steps might be needed to diversify the profession’s power structures, still dominated by white men (although a majority of the association’s executive committee, with Ms. Yellen’s ascension, is female). Additional efforts could include grading university economics departments on their diversity efforts, and insuring racial and gender diversity in top positions at leading journals, which can make or break economists’ careers by choosing to publish or reject their research.

Economics is grappling with these issues as other academic disciplines are facing their own reckonings. The National Academy of Sciences in 2018 published a report finding widespread sexual harassment in science, engineering and medicine. Prominent scholars in political science, government, law and other fields have been accused of sexual harassment. But gender and racial gaps in economics are wider — and have been more stubborn — than in many other fields.

The lack of diversity in economics, particularly in the top ranks, is nothing new. But the discipline has been forced to confront its problems by a series of incidents in recent years. In 2017, an economics student, Alice Wu, published a paper documenting discrimination, harassment and bullying on a popular industry online forum. The following year, Roland G. Fryer Jr., a star economist at Harvard, was accused of harassing and bullying women at his university-affiliated research lab. (Harvard suspended Mr. Fryer last year.)

At the economics association’s meeting last year — less than a month after The New York Times published details of the claims against Mr. Fryer — some of the field’s most prominent women shared searing stories of harassment and discrimination. And in March, the association published the results of a survey finding that female and minority economists faced rampant bias, harassment and even outright sexual assault.

The association has taken a number of steps in response to those revelations. It adopted a new code of conduct, and changed its bylaws to allow sanctions against members who violate it. It hired an ombudsperson to hear complaints, and a new general counsel who is empowered to investigate charges of misconduct. It has created task forces charged with addressing the profession’s problems and with recruiting more women and people of color, and a permanent committee on issues facing gay, lesbian and transgender economists.

“What I’ve heard, over and over again, is — this is the moment, we need to take advantage of it,” said M.V. Lee Badgett, a professor at the University of Massachusetts Amherst who is co-chair of the association’s new Committee on the Status of LGBTQ+ Individuals in the Economics Profession.

Some economists, particularly younger ones, are calling for a more radical rethinking of the discipline’s structure. Academic economics remains dominated by researchers who attended and work at a handful of elite institutions. Relatively few economists, particularly in top programs, come from working-class backgrounds or have parents who did not attend college.

“Diversity means not bringing people with darker skin who use exactly the same models and ask exactly the same questions and reach the same conclusions,” said Cecilia Conrad, an economist who is now an executive at the MacArthur Foundation. “Embracing diversity means opening up to the kinds of new questions and new ways of seeing the world that will eventually improve economic science.”

Ms. Conrad, who is black, spoke on a panel titled “How Can Economics Solve Its Race Problem?” Discussion of race and racism was more prominent on this year’s agenda, after organizers were criticized last year for neglecting those issues.

“Last year was the gender conference, this year is the race conference,” said Lisa D. Cook, an economist at Michigan State University who is one of the field’s most prominent black women. Gender and race, she added, go hand in hand — the association’s survey last year found that more black women report experiencing discrimination than any other group.

Ms. Cook is also one of four women newly elected to the executive committee. Economists, including many of the young activists, said the new leadership had made a difference, and credited Mr. Bernanke and Ms. Yellen with pushing the typically slow-moving association to become more aggressive.

There are also signs of a broader cultural shift. Many attendees said they had grown more comfortable raising questions about diversity in their departments, for example, and a growing list of schools have adopted rules meant to improve the tone of economics seminars, which some have described as toxic.

“The problem is not solved, absolutely not,” said Anna Gifty Opoku-Agyeman, a Harvard research fellow who as an undergraduate was a co-founder of the Sadie Collective, a group aiming to bring more black women into economics. “But we are seeing that the field itself is at a very high level taking measures to talk about diversity and inclusion in a very broad way.”

Research presented at the conference showed that decisions on promotion, invitations to present research and other milestones on the road to success still skewed disproportionately white and male.

An exhaustive study of economics seminars, presented by Alicia Sasser Modestino of Northeastern University on behalf of several co-authors, found that female economists face far more questions from men in the audience during their presentations than male economists do. “In general,” Ms. Modestino told a largely packed room for a session on gender in economics, “women are more likely to receive questions that are not fair.”

While economists have become more willing to talk about general issues of discrimination, many remain reluctant to go public with more specific allegations. Leto Copeley, a lawyer who has been made the association’s ombudsperson, said people had come to her with cases of severe abuse but were fearful of speaking out publicly.

Ms. Yellen said that “it’s not been a deluge of people coming forward” with allegations. “There is a concern,” she said. “In academia, you are really talking about power relationships, when women are being harassed by men who are important for their careers.”

At several points over the weekend, there were reminders that economists have pushed for greater diversity in the past with limited results. In the Friday session on race, panelists talked of a “golden age” in the late 1970s and early ’80s when top departments had a substantial number of black graduate students. But that moment quickly passed.

At a lunch on Saturday, members of the National Economic Association celebrated the group’s 50th anniversary. The organization was founded as the Caucus of Black Economists in December 1969 at an impromptu gathering in the midst of the profession-wide convention at a New York hotel. Several founders spoke at the lunch, praising the gains that black economists have won but lamenting that far more were needed.

One founder, Bernard E. Anderson, an emeritus professor at the University of Pennsylvania’s Wharton School of Business, said he was encouraged by the recent diversity focus by the American Economic Association and its leaders. He recalled that when his group first met at that New York hotel in 1969, association leaders summoned city police officers.

“They thought we were a bunch of radicals who wanted to disrupt the convention,” Mr. Anderson said, “when all we wanted to be was economists.”