Secretary Statements & Remarks

Remarks by Secretary of the Treasury Janet L. Yellen at the U.S. Conference of Mayors Winter Meeting

As Prepared for Delivery

Good morning and thank you, Hillary, for the introduction. I’m glad to start this new year by reflecting on the strong partnership this Administration has had with cities and states. 

But first I’d like to address what’s happening in Congress. Failing to fund the government by this Friday’s deadline would harm American families and small businesses across the country. I’m heartened there’s bipartisan agreement and urge members of Congress to meet the deadline to prevent an unnecessary shutdown and protect the critical domestic and national priorities we’ve advanced over the past three years.

In 2020 and 2021, our country faced the tail risk of an economic crisis on the scale of the Great Depression. When President Biden assumed office almost three years ago today, in January 2021, we inherited a struggling vaccine distribution program. The pandemic caused more deaths that month than in any month prior. There were nine million fewer American jobs than before the pandemic and the nation’s economic path was unclear.

We knew we needed to take decisive action to get our economy back on track. President Biden and I believed that the most dangerous risk was in going too small. Following the 2008 financial crisis, there was a lagging recovery. Workers and families faced unemployment and economic hardship for too long. And it created scarring for a generation of American workers.

So, we passed the American Rescue Plan, working with local government leaders—including many of you here today—to get shots in arms, prevent lasting harm to American families, and build our strength against future shocks. Many had argued that this Rescue Plan wasn’t needed. But I believe seeing where we are today vindicates the approach we took. GDP growth is strong and inflation has declined significantly. There are four million more jobs than before the pandemic. Unemployment is near historic lows—below 4 percent for the longest streak in 50 years. Wages are up and wage gains have been broadly shared, including by younger and less educated workers. And we’ve recovered faster than our peers around the world. The President’s and your strong leadership and our economic plan helped avoid the risk of a downturn like the Great Depression, power a fast and fair recovery, and get us to where we are now.

In my remarks today, I’ll talk about how the Administration’s partnership with cities and states helped make the American Rescue Plan successful. And I’ll also address how this partnership positioned us to build together for the long term. 

I. Partnering for Pandemic Response

This Administration recognized from day one that local government leaders are among our most important partners. State and local governments are at the heart of our economy, contributing $2.0 trillion, or 7.8 percent of GDP, in 2022. They are the third largest employment sector, providing 19.3 million jobs, or 11.7 percent of total employment. And state and local governments account for 30 percent of total government spending. This means they are not only a driving force in the economy, they’re also changing the lives of their residents. Mayors know that progress depends on action and, every day, they put in the hard work needed to get things done.

But when President Biden came into office, cities across the country were facing significant challenges. One survey found that in December of 2020, 90 percent of municipalities surveyed were experiencing declines in revenue. More recently, state and local fiscal recovery funds recipients reported losses of $300 billion in revenue due to the pandemic. Mayors across the country faced the possibility of needing to drastically cut their budgets. 

At the same time, the pandemic meant local needs were even greater than before. Americans across the country were counting on local governments to provide urgent healthcare, stable housing, and other services. According to one survey, expenditures had increased by 17 percent. 

Despite the importance of local governments, in the Great Recession, when state and local government revenues saw big hits, most local governments did not get any direct funding. The consequences were disastrous. It took 105 months—nearly nine years—for state and local employment to recover. And state and local government real output growth was negative for 14 consecutive quarters. 

This time was different. The American Rescue Plan’s $350 billion State and Local Fiscal Recovery Funds Program meant unprecedented funding for state, territorial, local, and Tribal governments. No city was too big or too small to receive funding. Some of these locales hadn’t received federal support for decades. 

And local governments—including those that you lead—stepped up, designing and implementing impactful, innovative programs. 

Cities were able to keep nurses on the frontlines to provide care. Firefighters and law enforcement could keep working, too. 

Cities also invested in housing, using funds to help people experiencing homelessness find stable housing, for rental assistance, and for new approaches to expand housing supply. In 2022, Treasury put out new guidance giving greater flexibility for funds to be used for long-term affordable housing. Communities have since increased the funds budgeted for housing stability, preservation, and construction by 59 percent. Funds have gone to programs like in Fort Worth, Texas, where investment in retail and commercial units was accompanied by investment to increase affordable housing. Total commitments to housing reached $18.5 billion as of this past September and I strongly believe housing should remain a priority for remaining funds throughout this new year.

State and local recovery funds helped cites meet needs beyond housing, too. In Louisville, Kentucky, they helped 4,000 households pay utility expenses. In Mesa, Arizona, they helped 20,000 households receive energy credits. 

And support to households has been complemented by support to workers and to small businesses, from workforce training development programs that connect individuals to education and apprenticeships in Bridgeport, Connecticut, to a Multicultural Business and Entrepreneurship Center in Fort Collins, Colorado. State and local funds commitments for workforce investments are now at nearly $13 billion. I believe that workforce development should also remain a priority for our recipients this year.

As cities invested, you exchanged information with each other on what worked and what didn’t. And Treasury has continued to provide guidance and support so that remaining funds can be spent to meet key needs, from housing to workforce development.

These funds and your work made a tremendous difference. Had the Administration’s response been much smaller, less flexible, less supportive of cities and states, we might have seen the same outcomes that we saw after the Global Financial Crisis. Instead, as of last month, state and local government employment has fully recovered—in less than half the time it took in the Great Recession. And state and local government real output growth recovered within only six quarters—also less than half the time.

II. Partnering for the Medium and Long Term 

The funds we provided and the work cities did also positions us to be partners as we look to the medium and long term. This is what I’ll turn to now.

Mayors have been asking for investment in infrastructure for decades. Now, the Bipartisan Infrastructure Law is meeting that ask. As of the second anniversary of its passage last November, the Administration had announced nearly $400 billion in funding to over 4,500 communities. 

This includes the largest investment in America’s roads and bridges since President Eisenhower built the interstate highway system. Funding is going to projects like the Brent Spence Bridge project in Cincinnati, Ohio and Covington, Kentucky. It includes awards to over 190 airport terminal projects. Over a third of these projects are already in construction, such as the Hartsfield-Jackson Atlanta International Airport. It also includes the largest ever investment in public transit, such as for the Phoenix Northwest Light Rail Extension, which pairs new stations with new housing and retail along the way. 

Like American Rescue Plan funding, Bipartisan Infrastructure Law funding is reaching cities across the country, including those most in need, where infrastructure is weaker. It’s also being widely distributed. In 2019, only five states accounted for two-thirds of all investment in public transit. Those five states account for only 40 percent of Bipartisan Infrastructure Law funding.

We’re also working with cities to reinvigorate American manufacturing. The Inflation Reduction Act is incentivizing unprecedented investment in clean energy. It will change the cars we drive, how we heat and cool our homes, and the goods we manufacture. And it’s creating well-paying jobs in new industries. The investments cities made during the pandemic, thanks in part to state and local recovery funds, mean you’re ready to be part of this. For example, your smart investments in workforce development began equipping your residents to fill the jobs now being created.

The Inflation Reduction Act is also empowering local governments directly. A novel mechanism called elective or direct pay allows governmental entities to receive payments equal to the full value of tax credits for building clean energy projects or making clean energy investments. For example, your city government could use the tax credits to convert your fleet to electric vehicles or to support the development of solar projects. Like the state and local recovery funds, you don’t have to apply for or win competitive grants. If you meet the criteria for a qualifying tax credit, you can claim it using elective pay. You’ll be able to invest in clean energy better and faster, helping lead the transition to clean energy while creating jobs and saving money. I’m excited to share that last month we launched the portal that allows your local governments to register for elective pay in advance of claiming tax credits. 

The IRA was also designed to reach the communities that need it. Since the IRA was passed, 70 percent of IRA-related investments have been in counties where the employment rate is below the national average and 86 percent have been in counties where the college graduation rate is below it. As we continue to advance President Biden’s economic agenda, we’ll remain committed to ensuring that every city benefits, transforming America’s forgotten cities into comeback cities that will drive our collective future.

With this Administration’s agenda, we’re giving mayors and cities resources and flexibility they haven’t had before. The federal government can provide funding, but for the hard work of implementation, we depend on your commitment and innovation. We know you hear every day from your residents about what they need, and that these needs vary tremendously from city to city. To mayors here today and local government leaders across the country, thank you for all you’re doing to support your residents and contribute to our country’s strength. I look forward to the work we’ll continue to do together going forward.