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Treasury Secretary Janet Yellen faces judgement over inflation

STEVE INSKEEP, HOST:

What is causing inflation, and what can the United States do about it now? Janet Yellen was once in charge of managing inflation at the Federal Reserve. She's now a vital voice on economic policy as President Biden's Treasury secretary, and lawmakers have questions. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Members of a Senate committee grilled the Treasury secretary about what's behind today's high inflation and what the Biden administration plans to do about it. Yellen pointed to a number of contributing factors, including the war in Ukraine and stubborn supply disruptions tied to the pandemic that have consumer prices climbing near their fastest pace in 40 years.

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JANET YELLEN: Inflation is really our top economic problem at this point, and that it's critical that we address it.

HORSLEY: Yellen says the administration is doing what it can to address supply imbalances - releasing oil from the strategic stockpile, for example - while giving the Federal Reserve room to tamp down demand with higher interest rates. Republican senators, like Steve Daines of Montana, accused Democrats of stoking demand by passing another big round of COVID relief in the early months of the Biden administration.

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STEVE DAINES: We warned everybody up here, you can't spend another $1.9 trillion 'cause it will have inflationary effects.

HORSLEY: Yellen downplayed the role played by the American Rescue Plan, noting other countries that didn't spend heavily on COVID relief are also suffering with high inflation. Gasoline prices, which were depressed early in the pandemic, rebounded as the economy recovered and have soared since Russia invaded Ukraine. Republican Senator John Barrasso complains gas now costs more than twice what it did when President Biden took office.

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JOHN BARRASSO: In my home state of Wyoming, rural areas, people who volunteer to drive for Meals on Wheels to deliver meals to shut-ins have had to stop volunteering, not 'cause they don't have the time or the commitment or the open heart. They don't have the money for the gas.

HORSLEY: Senator Debbie Stabenow thinks she knows a long-term fix for that. The Michigan Democrat just bought an electric Chevy Bolt and drove it to Washington for the first time this past weekend.

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DEBBIE STABENOW: We went by every single gas station. It didn't matter how high it was. And so I'm looking forward to the opportunity for us to move to vehicles that aren't going to be dependent on the whims of the oil companies.

HORSLEY: Stabenow acknowledged there can be a long wait for electric vehicles, though. Production has been limited by the shortage of computer chips.

Scott Horsley, NPR News, Washington.

(SOUNDBITE OF RAMSEY ROAD'S "STAYCATION") Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.