Poised to Be the Most Influential Treasury Secretary in Decades.

• Author: Posen, Adam

Janet Yellen is set to be the most influential Secretary of the Treasury in decades. Her unmatched qualifications and personal gifts make that attainable, but it is the circumstances in which she takes office which make that outcome likely. Between the Republican control of the Senate and the constellation of other nominations that President-elect Biden has made, she will be the administration's dominant voice of macroeconomics and finance both internally and externally.

The Senate Republicans' highly partisan approach to appointments and to the federal budget means that other Biden cabinet officials with economic portfolios will be limited in their ambitions--both ideologically and in expenditure. There will be important extensions of regulations through executive orders and administrative actions, particularly in the areas of energy and environment, antitrust, and health and labor protections. But there will be no grand spending programs and no large-scale tax reforms.

As a result, the U.S. Treasury's international agenda--on taxation of the digital economy, funding of vaccine distribution, convening the G20 around and endorsing the new activist fiscal orthodoxy, fighting tax evasion, profit-shifting and corruption, and potentially climate change via carbon taxation and financial supervision--will be one of the few places for positive economic initiatives, at least through the 2022 congressional elections.

Yellen's...