By Kate Davidson 

WASHINGTON -- Janet Yellen, President-elect Joe Biden's choice for Treasury secretary, plans to tell lawmakers that the U.S. risks a longer, more painful recession unless Congress approves more aid and urge them to "act big" to shore up the recovery.

Ms. Yellen is set to testify Tuesday before the Senate Finance Committee, which is considering her nomination, according to a copy of her prepared remarks that was viewed by The Wall Street Journal.

"Economists don't always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now -- and long-term scarring of the economy later," Ms. Yellen will say. "Over the next few months, we are going to need more aid to distribute the vaccine; to reopen schools; to help states keep firefighters and teachers on the job."

Mr. Biden's nomination of Ms. Yellen positions the 74-year-old labor economist to lead his administration's efforts to advance the recovery from the destruction caused by the coronavirus pandemic and related shutdowns. She will also play a key role in pushing the administration's economic agenda on Capitol Hill, a job that will start in earnest Tuesday, said Tony Fratto, a senior Treasury and White House aide in the George W. Bush administration.

Mr. Biden's $1.9 trillion coronavirus relief package, unveiled last week, provides for another round of direct stimulus payments, extended and enhanced jobless benefits, funding for schools and first responders and the creation of a nationwide vaccination program. It also includes longstanding Democratic priorities, such as raising the federal minimum wage to $15 an hour and expanding paid leave for workers.

Republicans have decried the size and scope of the measure, arguing it would spend more than the economy needs. Some Republicans and Democrats have also expressed concern about the growing national debt, which at $21.6 trillion exceeds the annual output of the U.S. economy.

Ms. Yellen aims to address those concerns in her testimony: "Neither the President-elect, nor I, propose this relief package without an appreciation for the country's debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big."

The hearing comes at a time of growing uncertainty over the progress of the pandemic, which has killed close to 400,000 people in the U.S., as well as the state of the economy. Retail sales fell for the third straight month in December and employers cut jobs, ending seven months of employment gains.

Mr. Biden's economic advisers have argued that the low cost of borrowing and weak state of the economy call for larger short-term deficits to shore up the recovery. But it isn't clear how much of their broader agenda -- which includes investments in infrastructure, health care and green energy -- they intend to finance through borrowing and how much they would offset with new revenue, such as tax increases on the wealthy.

In her remarks to senators, Ms. Yellen will say that she would face a "dual mission" as Treasury secretary. Her first task is to see Americans through the pandemic, she says in her prepared testimony. "But then there is the longer-term project. We have to rebuild our economy so that it creates more prosperity for more people and ensures that American workers can compete in an increasingly competitive global economy."

Ms. Yellen will likely face questions at Tuesday's hearing about whether and when she would agree to establish new emergency-lending programs with the Federal Reserve should the economy need them.

Outgoing Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell set up several such programs during the early months of the pandemic to keep credit flowing to small and mid-size businesses and states. But Mr. Mnuchin said he couldn't extend them beyond their Dec. 31 expiration, drawing criticism from Democrats who accused him of trying to hamstring the incoming administration.

Republicans argued that the programs are no longer needed and pushed to include language in the latest stimulus bill that curtails the Fed and Treasury's ability to resurrect them. They could press Ms. Yellen for her views on the Treasury's authority to establish similar programs and the conditions under which she might take such action.

As Treasury secretary, Ms. Yellen would chair the Financial Stability Oversight Council, the panel of regulators charged with monitoring risks in the financial system. Democrats and Republicans might press her on whether the Treasury would incorporate climate change into the broader financial regulatory framework, and whether she sees a more active role for the FSOC in the Biden administration.

Write to Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

January 18, 2021 16:37 ET (21:37 GMT)