Yellen says new Biden investments can counter inflation

US Treasury Secretary Janet Yellen urged lawmakers to approve additional investments in renewable energy and higher taxes on the wealthy on Tuesday, as she defended the administration's efforts to blunt the impact of inflation.

"I believe there's lot that Congress can do to ease the cost burdens that households are experiencing," Yellen told the Senate Finance Committee in the first of two days of testimony on President Joe Biden's budget for the 2023 fiscal year.

Besides renewable energy investments -- which Yellen said could help address high gasoline prices -- the Treasury secretary backed more spending on affordable housing and efforts to rein in pharmaceutical prices.

She also highlighted the Biden administration's historically large release of oil from the Strategic Petroleum Reserve to ease prices drivers are facing at the pump, which have skyrocketed since the Russian invasion of Ukraine, hitting new records daily, with the national average at $4.92 a gallon Tuesday.

"Gas prices, while very high ... would be higher without that," Yellen said.

The hearings come as Biden contends with a low favorability rating ahead of key midterm elections, with the pain from higher gasoline and food prices outweighing a strong job market and 3.6 percent unemployment.

Yellen was warmly received by Senate Democrats, but Republicans pointed to the Biden administration's energy and climate policies as a reason for the energy crunch and characterized the Biden administration's 2021 American Rescue Plan as a main reason for inflation.

"What I heard you say is that it is okay to raise taxes right now and that it is proper to have more stimulus spending to deal with this crisis," said Senator Mike Crapo, a Republican representing Idaho.

"I just have to say I disagree with you on that."

Yellen defended the American Rescue Plan, saying the administration took action in response to forecasts that unemployment could top nine percent given the headwinds amid the Covid-19 upheaval.

At the time, she said, "The overwhelming risk was that Americans would be scarred by a deep and long recession."