Janet Yellen proved her bona fides as a political deal-maker by leading the world’s richest economies to an agreement on global taxes that had eluded negotiators for nearly a decade.
Yet what was hailed as a victory at the Group of Seven for President Joe Biden’s Treasury secretary may not carry far in Washington, where winning lawmakers’ support for the administration’s vast plans for tax and spending increases will be a far tougher challenge.
The G-7 finance ministers on Saturday sealed a landmark deal in London, paving the way to help countries collect more taxes from big companies and setting a minimum global corporate tax rate of at least 15%. That would signal an end to decades of nations racing each other to lower levies, eroding their collective revenues.
Yellen’s role was “crucial” and “decisive,” European Union economy chief Paolo Gentiloni said at a press conference at the conclusion of the G-7 meeting. He said that “six months ago, we were in the middle of nowhere.”
A final, global deal is a still a long way off, however. Talks will continue next month, when Italy hosts Yellen and colleagues for a Group of 20 meeting. Any accord must also have support from a majority of about 140 nations involved in negotiations under the Organization for Economic Cooperation and Development.
Then, Yellen needs to pitch it to Congress—and Republicans are already signaling that they will be difficult to persuade.
The G-7 deal could “adversely” impact and “ultimately harm” American workers and businesses, Senator Mike Crapo and Representative Kevin Brady said in a statement released Saturday. They are the senior Republicans on the congressional tax-writing committees.
Still, the accord shows that Yellen is making the transition from monetary policy chief to international financial diplomat. The 74-year-old former Federal Reserve chair provided a jolt to global tax talks that had plodded on since 2013.
“We reinvigorated these tax negotiations by really listening to the concern that they had about digital taxes,” Yellen said, referring to G-7 counterparts who had been pushing levies on mainly American technology giants.
The second key was “trying to craft a creative” strategy and new alternatives “that could get us beyond an impasse and find something that is fair on all sides,” she said Sunday in an interview during her flight back from London.
At little more than five feet tall, Yellen’s personal demeanor is self-effacing. She disregards the pomp that comes with being a cabinet secretary; many of her new aides at Treasury refer to her simply as “Janet.”
On the way to and from the G-7 she was seen towing her own bright red suitcase.
Her more than two decades of experience at the Fed have given Yellen the kind of intellectual heft that’s valued on both sides of the political aisle. Still, the Brooklyn native came to her new job as Biden’s top economic policy maker with little practice generating consensus in the public eye.