Treasury Secretary Yellen is confident U.S. climate goals will move forward
NOEL KING, HOST:
President Biden is back from Scotland and the U.N. Climate Change Conference. Some significant agreements came out of that summit. More than a hundred world leaders committed to ending deforestation, and the Biden administration promises to cut methane emissions by 30% by the end of this decade.
Treasury Secretary Janet Yellen was part of the administration's team that traveled to Glasgow. I talked to her earlier this morning, and she told me she's been meeting with bankers and asset managers, asking them to act on climate change. I asked her what they can do that's so important.
JANET YELLEN: They provide much of the finance to companies throughout the globe. And if these financial intermediaries voluntarily commit to align their portfolios with what's required to address climate change to meet the Paris commitment, then they, in turn, are going to be making sure that the companies that they finance have credible plans to achieve net-zero themselves. That's really the only way that the banks and financial institutions, the asset managers, are going to be able to meet their net-zero commitments. And so we're really beginning to see the private sector make the commitments about their own lending that are necessary to achieve ambitious goals. And, in turn, they'll work with operating companies and make sure that they put in place the strategies that are needed.
The Treasury Department, working with the Financial Stability Oversight Council and the regulatory agencies - we want to make sure that investors have the information that they need to work with companies, to understand their emissions, understand and evaluate their carbon footprints. We're discussing, here in Glasgow, the need to make sure that the information that companies provide is comparable globally, and so disclosure is one of the topics.
KING: As you're making this case, it is notable that the Biden administration cannot convince 50 senators to approve its climate plan. Are business leaders mentioning that to you? Are you getting any sense of skepticism that the Biden administration can't get it done, even as it is telling others, get it done?
YELLEN: You know, I am confident that the Build Back Better bill, the reconciliation package and the infrastructure package will be enacted. And these two packages, jointly, will be far and away the biggest investment that America has ever made in addressing climate change. It's estimated that this deal will curb well over a gigaton - a billion metric tons of America's emissions and put us on a path to meeting our commitment to net-zero and to cutting U.S. emissions by 50 to 52% by 2030. So we use subsidies for electric vehicles. It will put in place tax rebates that will help incentivize adoption of renewables, improve the electric grid and, in the process, lower energy costs for families.
KING: We've heard this quite a bit. It may have been - the Build Back Better plan may have been scaled back, but it is still quite big. You are also in Europe to discuss a deal that would set a minimum global corporate tax rate by 2023. Now, just to explain a little for our listeners, the U.S. needs to pay for things like roads and bridges and social programs. It needs tax dollars to do that, and it certainly helps if corporations pay taxes in the United States. This also, though, needs to get through Congress. Are you confident that it will?
YELLEN: Yes. So there are two pieces to the tax deal that have been agreed to by 136 countries. A very important piece of it is that countries - these countries have agreed to adopt a minimum tax of 15% or more on the foreign earnings of their multinational corporations. And the reconciliation bill that's under consideration right now in Congress would bring the U.S. into compliance with what we need to have the appropriate minimum tax.
There is another part of the agreement that pertains to a phasing out of the array of digital service taxes that have been imposed on - primarily on American companies by many countries around the world and replacing them by a new scheme that would give countries that consume the services of multinational corporations their customers. A very highly profitable - companies give them some right to collect taxes, even if those companies have no physical presence in their economies. That portion of the agreement still requires some further work and isn't ready to be implemented. But we will certainly be pushing to ask Congress to implement so-called Pillar One on digital taxes and taxing rights when it - when it's ready for adoption.
KING: Lastly, I want to ask you about inflation, if I could. You've called it transitory. Many people have called it transitory, in fact. When do you anticipate we'll see this elevated inflation start to cool off? Are you willing to give us a month?
YELLEN: Well, I'm not going to give you a month. But I believe as the pandemic - the - its impact on our economy recedes and spending patterns shift back toward services and away from goods as the economy opens up, I expect that next year's - many of the supply bottlenecks that we're experiencing now in opening up our economy will recede. And my expectation is that sometime during the second half of the year, we'll see inflation rates moving back toward the 2% that we regard as normal.
KING: Treasury Secretary Janet Yellen in Glasgow, thank you so much for taking the time this morning. We appreciate it.
YELLEN: Thanks, Noel.
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