Bloomberg Audio Studios, podcasts, radio news.
Welcome to our TV audience and ready audience worldwide here in the Treasure Department with Secretary Jenna Yellen. Great to be with you, and there's a lot I hope to cover, and I wonder if we could begin first with your work on the world stage. We can start with Ukraine, and something that Bloomberg reported overnight is that you and the administration are considering new sanctions on Russian oil, perhaps looking at Russian oil exports, at these shadow tankers that
the Russian government has. I guess, first of all, I wonder if you can confirm that those conversations, those discussions are underway.
Well, let me say we never preview sanctions, and we've constantly been tightening our sanctions on Russia. Our overall aim is to impair Russia's ability to continue conducting this brutal war, to try to deny it the military equipment it needs to be able to do that, and taken a variety of steps to do it. But we have been focused since the outset on Russian oil revenue. It's a critical component of the Russian budget, and we've been looking for
creative ways to try to reduce Russia's revenue. One of the most creative policy making things that I've been involved at during my career occurred here in Treasury when we were able to devise away and convince our allies to join us in this imposing a price cap on Russian oil, which was a way of avoiding price spikes when the war started for oil and actually succeeded in keeping Russian oil flowing into the market. So we continue to look.
Of course, over time, while these sanctions have been effective, Russia has invested a lot its own fleet of ships to carry its own oil.
We cut it off.
From allied ships new insurance that have been costly to Russia to have to make those investments. Now, what's unusual about this moment is that the oil market seems to be well supplied.
Prices are relatively cheap.
Prices are relatively low. Global demand is down, and there really has been an increase in supply. American firms have stepped up, we have vastly expanded oil production. OPEC countries like Saudi Arabia have excess capacity at this time. So the global oil market is softer, and that create it's possibly an opportunity to take some further action.
We're talking at it.
You talk about creative policy making, and so visa the Ukraine. There was a moment this week when you dispersed twenty billion dollars to Ukraine a loan and they'll be paid for with interest on frozen Russian assets. So another creative
piece of policy making that you've been involved with. We're at this moment where I think there are a lot of questions about what policies can remain in place, and I wonder when you look at that in particular, are you confident that under a new administration that program can continue in perpetuity.
Well, we have worked with if you're talking about the so called ER loans, Extraordinary Acceleration loans, We've now transferred twenty billion dollars, which is the United States contribution to this loan package, to the World Bank, to a financial intermediary phone, and that was set up to channel these moneies over time in coordination with our allies to Ukraine as as it's needed. So and as you mentioned importantly,
this is not using US taxpayer resources. These loans will be paid off over time by the extraordinary or windfall revenues that are being earned in Europe at Euroclear on the Russian assets that are being frozen there. So Russia is really helping with this to pay Ukraine to you know, help it, help it fight the war. So I feel confident that this is something that can stay in place.
And what what we're really trying to do is to strengthen Ukraine's situation, its ability to defend itself and hopefully at some point to come to the table to bargain with Russia for a just piece. We want to strengthen its ability to have the equipment it needs, to have the money it needs to continue to finance schooling and emergency services to its people, and to put it in the best possible situation to support a lasting and just peace.
Let me pivot to China, and this has been a relationship. I think you've invested a lot of time and energy and kind of rebuilding a conduitive communication between Washington and Beijing. You have deputies right now heading to China for meetings with their counterparts, meetings taking place in South Africa as well. Reportedly, there is concern about what would happen if that relationship, the US China relationship were to return to the place it was in when you took office now four years ago.
How much does that concern you?
What would the consequences of that be if the efforts that you've put in to rehabilitate that relationship go to the wayside.
So I do think it's important to have ongoing communications at all levels, from the President and she talking to senior US officials to staff that need to communicate. Just having open channels of communication is valuable and I believe it will be seen as continuing to offer value. These are channels by which we can make clear what we're unhappy about, where our concerns are, and why we have them. Well, we have significant concerns about Russia's economic policies that we
discuss in these channels. It's also the case that we have shared global interests, whether it's in climate change, combating pandemics, dealing with potential financial disruptions that could affect global financial markets. We're also using these channels to build trust, in channels for cooperation so that we can work together where our
interests coincide. So there's no question that we have serious concerns, both from a national security point of view and a broader economic view with China's behavior, but nevertheless is the two largest economies in the world. It's critical to have
open channels of communication. It helps avoid misunderstandings. We've used these channels when we've taken action like export controls or our recent outbound investment restrictions to explain what we're trying to accomplish, to avoid misunderstandings that can worsen the relationship needlessly.
You have a particular insight into what makes your counterparts tick. I imagine through those conversations that you've had and so we've seen the present left talk about large universal punitive tariffs. Do you have any insight into how they might respond if they are threatened with something like that.
Well, I really don't want to make a forecast. Many countries, when they're faced withlateral actions of that sort look for ways to retaliate, and my guess would be that they would do that. We have in areas of concern where I've expressed repeatedly concerns with over capacity that is developed in Chinese advanced manufacturing industries and clean energy semiconductors in
the like. We think it reflects active large subsidies that are flooding the world with exports and threatened to drive our firms out of business and areas that we think are critical to our own future. We've put in place tariffs. Now it's their strategic They affected eighteen billion dollars worth of trade, certainly not all of our trade with China, and we did it to make sure that China's actions
don't undermine our own plans to support these sectors. But broad based tariffs, almost all economists agree that what they will do is hurt us by raising prices, possibly substantially, and making it more expensive for firms that need puts from China to be able to acquire them, and harm more competitiveness of firms that rely on those imports. So we've taken this strategic approach, focusing narrowly and a broad based approach. I have serious concerns with as most economists do.
There's been a lot of talk about the dollar, the safety of the dollar as a global reserve currency, and I wonder if that's something that you think American should be preoccupied with. It's something that we hear about from
the President elect and his team. Something else they've floated is perhaps the opportunity for a successor of the Plaza Cords there could be, as it's been put a mar Lago, a cord where you could get the US together with Europe and China and Japan maybe talk about domestic production, how.
Narrow trade deficits.
Is there an appetite or an opportunity for that, and is this something that you think most Americans should.
Be worried about.
Well, you started by asking me about I think the reserves take that served role of the dollar, and the use of the dollar in global transactions and financial markets and in trade is underpinned by a very strong US economy with deep and liquid capital markets, the role of treasuries as the safest asset in the world, the role of law, a well managed economy with low inflation and
solid macroeconomic policy. And when you think about what other currencies could possibly replace the dollar, the list is short. Possibly there is no currency that at this point could possibly rival the dollar. So I do think it's advantageous to the United States that the dollar is used as the reserve currency. But I don't see the dollar under threat, and so an agreement that could affect the value of
the dollar. You know, the policy that our administration has articulated is that major countries should have the value of their currencies determined in world markets. So intervention might be appropriate on occasion to counter extreme volatility, but we believe that it's best for markets.
To determine the value of the dollar, and.
There hasn't been any intervention in foreign exchange markets. I think it should stay that way now. We do issue a foreign exchange report twice a year. We are not approving of countries that attempt to manipulate their own currencies to try to gain a competitive advantage. And we're very attentive and reacts strongly when we see countries manipulating their
currency to try to retain an advantage. And of course we work with our other countries routinely to discuss coordination of macroeconomic policies to make sure what we all do translates into success for as many countries as possible in the global economy.
Ask your last question just about the fiscal outlook. The person that Donald Trump is named as your presumpted successor, Scott doesn't to suggested that he wants to cut the deficit in half by twenty twenty eight. Is that necessary? Is that even possible? I guess what I'm asking more broadly is how worried are you about the fiscal outlook at this point in time.
Well, I am concerned about the fiscal outlook, and I believe the deficit reduction is necessary to keep us on a sustainable fiscal core. Now. President Biden signed into law a trillion dollars of deficit reduction over the next ten years. He did that in the agreement to raise the debt ceiling. And our budget proposes an additional three trillion dollars of deficit reduction over ten years, and I think that's necessary
to make sure that our fiscal path is sustainable. Now, Congress hasn't really done anything to, you know, beyond what I've mentioned, to improve the fiscal outlook, and I think that's a shame. I'm disappointed in that, and I think
Congress needs to work hard on that. There is a threat going forward that many of the provisions on the individual tax side of the Job's Job Cuts and Tech JCTA enacted by the Trump administration in Congress in twenty seventeen, they will sunset at the end of next year, and many Republicans have expressed a desire to keep all those provisions in place. Cbo said, that will cost five trillion
dollars over ten years. So that really is and so that would be a blow in a situation where I believe an additional three trillion, that not doing the five trillion and three trillion more is necessary, and if the provisions are just extended, this will be a serious blow without finding ways to.
Pay for them.
We proposed a lot of pay for us that we think would fairly ask corporations, wealthy individuals to pay their fair share. We've negotiated an international tax agreement that would
create a level playing field worldwide for multinationals. The United States has not yet joined, although many other countries have, and that would be a revenue raising measure that I think would be very valuable, and there is certainly more so I do hope that the new administration and Congress will, if they extend features of JCTA, find ways to pay for what they do, and also make sure that the benefits go not to the wealthiest individuals but to middle class families.
Then Secretary, thank you very much. Thank you