Yellen on the Outs

The White House has sidelined the ex-Fed chair on key issues

- Cristina Lindblad and Lynn Doan

It was supposed to have been a capstone. Instead, Janet Yellen’s stint as Treasury secretary threatens to become a stain on a storied career.

The former Federal Reserve chair was recruited to help steer the US economy out of the pandemic by lending gravitas and credibility to the Biden administration’s pursuit of a robust and lasting recovery. It took some arm-twisting to persuade her to take the job.

Eighteen months later, Joe Biden’s presidency is in trouble, with inflation soaring to a 40-year high and Democrats on course for a wipeout in the midterm elections. The 75-year-old Yellen finds herself trapped in the inevitable blame game, fighting to keep her professional reputation intact.

On May 31, Yellen took matters into her own hands and did something that caught the White House by surprise. In a CNN interview, she admitted she “was wrong then about the path that inflation would take.” The administration until then had been relentlessly trying to paint the surge in consumer prices as temporary.

With her statement, Yellen broke ranks with Biden’s inner circle, which doesn’t include her, and exposed the dysfunction at the heart of an administration that’s botched its communications around the country’s economic problems. Americans haven’t felt this dismal about the nation’s—and their own—prospects since the recession of 1980, according to the latest reading of the University of Michigan’s gauge of consumer sentiment, while polls show the majority of voters disapprove of Biden’s handling of inflation.