President Trump has finally nominated a chief economist. It’s another sign the White House is getting serious about tax reform.
Trump tapped economist and tax expert Kevin Hassett to be the head of the White House Council of Economic Advisers in an announcement late Friday. The position has to go through a Senate confirmation. Hassett is a leading conservative expert on taxes. He’s advised the presidential campaigns of John McCain, George W. Bush and Mitt Romney.
“If the Trump administration does a big push on tax reform, then I would expect Kevin to play a very large role,” says Michael Strain, who has been a colleague of Hassett’s for years at the American Enterprise Institute, a right-leaning think tank in Washington.
The appointment of Hassett has been praised in D.C., on Wall Street and in academic circles. He’s seen as a moderate Republican who will align more with the Goldman Sachs crowd in the White House (Gary Cohn and Steve Mnuchin), not the hard-liners like Steve Bannon and Peter Navarro, who are known to support massive barriers on trade.
“This is starting to look like a center-right administration; the Goldman Sachs faction has won, and a pro-business climate is a good thing for the markets,” Greg Valliere, chief strategist at Horizon Investments and a frequent political commentator, wrote in his Monday note.
In addition to being a leading economic voice in D.C., Hassett is also known as a friendly guy. He loves gummy worms and chocolates. Strain, his colleague at AEI, says Hassett would often go to a chocolate shop on Connecticut Avenue and bring back chocolates for everyone on the floor.
It’s that kind of old-fashioned diplomacy that may be needed in the White House as the debate picks up over whether to put tariffs on foreign countries or companies. Hassett is seen as an advocate for free trade.
Can Trump double economic growth?
Trump has made big promises to his supporters on the economy. He’s vowed to create 25 million jobs (more than any other U.S. president) and double growth. (The U.S. averaged about 2% GDP growth a year under President Obama. Trump says he can do 4%.)
Hassett told CNNMoney in an interview in the early days of the 2016 presidential race that 4% economic growth could be achieved with the right tax and budget reforms.
“Anyone promising 4% growth would be a mistake,” Hassett said. “But it’s not impossible.”
Hassett earned his PhD in economics from the University of Pennsylvania. He’s had a long career, starting as an economics professor at Columbia University. After that, we went on to serve as an economist at the Federal Reserve, a policy adviser to political candidates and a consultant to the U.S. Treasury.
While he’s considered an expert on tax policy, he also co-authored a book in 1999 — the height of the dot-com bubble — called “Dow 36,000,” which argued stocks were cheap because the U.S. was on the verge of even more gains for the economy and markets. The Dow topped out at just over 11,700 before the bubble burst.
Hassett praised by liberal economists
Despite his ill-timed call on the stock market, Hassett is taken seriously in both the academic world and in the Washington policy world. Liberal economists like Jason Furman, Obama’s CEA chair, have praised Hassett’s appointment as an “excellent pick.”
“I think Kevin is a very talented economist, particularly given the areas the Trump administration is working on,” says Glenn Hubbard, the dean of Columbia Business School and former head of the Council of Economic Advisers under President George W. Bush.
The CEA, as its known, is basically an in house think tank for the White House. It’s been around since 1946 and is usually staffed with PhD economists who build models to try to predict how the economy is doing and what will happen if the president proposes a certain policy idea.
“Economists offer a perspective in the debate that presidents won’t always agree with, but you need to hear what economists have to say,” Hubbard told CNNMoney. The CEA also puts out the Economic Report of the President every year.