President Joe Biden's upcoming spending plan will push the record US national debt even higher, but not beyond the country's means, Treasury Secretary Janet Yellen told lawmakers Thursday.
Citing internal documents and people familiar with the matter, US media reported that the president will unveil a $6 trillion spending proposal on Friday composed mostly of plans he has already announced, including his approximately $2 trillion in infrastructure spending and $1.6 trillion aimed at improving education and the workforce.
Speaking during an oversight hearing at the House Appropriations Committee, Yellen did not give details of the budget but acknowledged that under the proposal, the US debt-to-GDP ratio is estimated "to rise a little bit higher" from the 100.1 percent of GDP hit in 2020.
Yellen however argued that with average inflation and Treasury bond yields both low, the country can afford to take on the debt.
"At least over the span of the project that we're going to be presenting tomorrow, it remains well within and under historic norms, and I think it needs to stay that way," she said.
Biden has argued that Washington needs to spend big to both help the world's largest economy recover from the Covid-19 pandemic, and improve its competitiveness against other countries.
In March, he won passage of his $1.9 trillion American Rescue Plan to aid the recovery, but his infrastructure and social services proposals have faced opposition from Republicans who are concerned about their costs and the tax increases needed to pay for them.
In January, the Congressional Budget Office forecast the national debt will rise to $22.5 trillion, or 102.3 percent of GDP, in 2021. That estimate did not include the new spending under the American Rescue Plan.
According to the reports, Biden's spending plans would push the US debt-to-GDP ratio to 116 percent in 2027.