Trump Allies Slam Janet Yellen For Manipulating Treasury Debt Auctions To Improve Biden's Image

The U.S. Treasury Secretary, Janet Yellen, is under fire from Republican lawmakers who accuse her of manipulating Treasury debt auctions to stimulate the economy and enhance President Joe Biden‘s image.

What Happened: Sen. Bill Hagerty (R-Tenn.), a potential nominee for the Trump cabinet, reiterated the charge on Tuesday. He alleged that Yellen was artificially stimulating markets ahead of the election by structuring debt sales in a specific manner, Bloomberg reported on Friday.

"Some people, including myself, believe this is being done to artificially stimulate markets in the run-up to the election," Hagerty said.

Other Republicans, including Sen. John Kennedy (R-La.) and hedge fund manager Scott Bessent, a prominent Trump fundraiser, echoed this sentiment. They argue that Yellen engineered a decline in long-term yields to boost consumer borrowing rates and home sales, while also increasing auctions of Treasury bills at 5% yields to give investors extra purchasing power.

Yellen has refuted these allegations, stating that federal borrowing aims to issue at least cost over time, not to time the market. Despite the political controversy, bond market experts agree that the Treasury’s adjustments helped steady markets.

See Also: 60% Expect June Inflation Data Will Drop, But Most See Costs Still Rising

However, the political feud over debt management places new emphasis on the relationship between the country’s growing deficits and the economy. It also threatens to complicate the already challenging task of managing federal borrowing.

Why It Matters: The accusations against Yellen come in the wake of her public criticism of former President Donald Trump’s proposal to replace parts of the U.S. income tax with increased tariffs on imported goods.

Furthermore, Yellen has expressed confidence in the U.S. economy, predicting that inflation will reach the Federal Reserve’s 2% target by 2025 and dismissing the possibility of a U.S. recession. Her optimistic outlook contrasts with the concerns of some policymakers and economists.

Additionally, Yellen has been a vocal advocate for the Federal Reserve’s independence, defending its autonomy against attempts by Trump allies to gain more control. Her defense of the Fed’s independence is a key element in her broader economic strategy and her handling of the Treasury’s debt issuance policies.

Read Next:

• GOP Senator Tim Scott Says He Spoke To Jerome Powell And Fed Chair Foresees Inflation Coming Down: ‘Prospect Of Rate Cuts…Are Going Up’

Photo by Dustin Blitchok.

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari