let's go faster. let's go further. let's go beyond. >> midco supports c-span as a public service, along with these other television providers, giving you a front row seat to democracy. >> kevin hassett has been inked by the preside to lead the national economic council after serving as chair of thcouncil of economic advisers during the first trump administration. we will show you his confirmation hearing for that position in 2017. this was before the senate banking, housing and urban affairs committee. >> this hearing will come to order and we will consider the nomination of mr. kevin hassett to be chairman of the council of economic advisers and the

honorable pamela to be deputy secretary at housing and urban development. we will begin with an opening statement by me than senator brown and then i will turn to senator workman who will introduce mr. hassett, and senator shaheen, when she arrives, who will introduce pamela. i see friends and family behind you as well and i also see my good friend bob. and we welcome him here. each of these nominees stands to impact the standard of living for americans across the country and will lay an important role in spurring economic opportunity. mr. hassett has had a distinguished career in economics that includes positions in academia, government and policy. he's a widely consulted expert on economic policy and his

contributor countless scholarly papers, commentary and testimony. his nomination has received bipartisan support from notable economists. mr. hassett's particular understanding of tax policy will be an invaluable asset to the administration. he has extensive experience with economic modeling and will be able to provide sound analysis for progrowth policies. key to economic growth is not only robust financial markets but also economic policies that will best enable all-americans to unlock their potential. i look forward to hearing from mr. hassett on how economic analysis can play a role in achieving this. leadership roles at the local and federal level. 12 years ago, she received unanimous support from this committee and was confirmed by a

voice vote to become assistant secretary for community planning and development at hud. in this role she oversaw all the department's community development operations. as a former leader in a local housing agency, she has on the ground experience and developed an important understanding of the impact hud's policies have on local partners. the nomination has been met with bipartisan support from industry leaders, housing advocates and public housing agencies alike. this speaks to her distinguished reputation and commitment to addressing important housing issues. i look forward to looking with her on opportunities to improve the efficiency of hud programs, reduce regulatory burdens on housing authorities, leverage private capital, empower local decision-making, encourage self-sufficiency and

address comprehensive reform. i ask unanimous consent to enter into the record two letters endorsing mr. hassett, one of which is signed by 44 economists from both sides of the aisle, including several top economists from the obama administration. i also ask unanimous consent to enter into the record more than 30 letters showing bipartisan support for ms. patinaud, including by bob dole in george mitchell. without objection. so ordered. congratulations to both of you on your nominations to these important offices and thank you for your willingness to serve. senator brown? >> thank you. welcome. nice to see you. thanks for holding this hearing. i look forward to hearing from the witnesses on important areas

of the committee's jurisdiction. more recently, she headed that her will agree foundation for housing america's families. a report entitled the silent housing crisis that reported that safe and affordable access to housing has been recognized as part of america's critical compact with its citizens. i look forward to hearing her views, particular since her past advocacy seems at odds with the approach hud has taken in its budget proposal. included manufacturing ohio communities and we have seen the

administration threatened reform and take away health insurance from 23 million people and 11 million renters pay over half their income and rent. one thing) their lives and they effectively and their children how to vote a different school. 500,000 people are homeless. the budget would cut $7 billion from the hud budget. it would eliminate programs like

community development block grants and cut funding for public housing repairs by 70%. we all know the condition of public housing and to cut their funding for repairs by 70%, to eliminate funding for an estimated 250,000 housing vouchers next year, reduces funding for lead housing control and healthy housing grants to protect children from lead poisoning and other health programs -- health problems. senator portman knows in cities in my state, the housing bill before we were born, the lead content, the lead exposure in those homes are overwhelming in some cases. 99% of those homes have toxic levels of lead. five months ago in this room, dr. carson scoffed at the nation at the notion he would support a 10% cut in the hud budget. he said he understood from his experience as a neurosurgeon how it was far less costly to avoid

lead poisoning than to treat it. i was one of five or six democrats that voted for his confirmation on the floor of the senate. i did that because of his personal and public promises on lead, yet this budget, which apparently he is defending, and that's one of the things we will want to hear from you about, undermines all of this. broken promises do not end there. the president promised on the campaign trail in toledo and across the country to revitalize our inner cities and rebuild infrastructure. i would hope we would be able to work with the ministries and to strengthen -- the administration to strengthen our nation and provide good jobs in ohio. the hud budget will only add to the struggles of our inner cities. i look forward to hearing from our witnesses how we tackle the many challenges that face this country from the crisis of housing affordability for our families and seniors to the

stagnant wages and employment prospects of too many of our fellow americans. >> thank you. we will now turn to senator portman to introduce mr. hazard. sen. portman: thank you, mr. chairman. it's a pleasure to introduce kevin hassett. he's being nominated to serve as chair of the council of economic advisers. delighted to see he has his own team of advisors with him today, his sons and his wife. who is the chair? >> that would be me. >> christie. kevin served in the first bush administration. he was in the treasury department. i was director of the office of legislative affairs and i got to know him and respect him and he continued to serve as a policy consultant for treasury under the clinton administration. i went on to the ways and means

committee in the house where i looked to him to provide economic council as we tried to reform the tax code. the chairman has mentioned that is one of his specialties and i'm pleased he's being nominated for this position. he has a lot of respect by economists on both sides of the aisle. his predecessor, jason furman, has called him an excellent pick. he's also been endorsed by austan goolsbee and others, all of whom i think you all know and have had before the committee. he served as a senior economist at the federal reserve board of governors, economic adviser to five major campaigns. i want to point out he's an expert on tax reform. i think this is going to be incredibly important to us. his focus has been on how to have a tax code that gets rid of some of the loopholes and preferences for special interests and a simpler tax code with lower rates and i think

that is exactly what we need to get the economy moving. he has shown you can fix the tax code in that way and the major beneficiary will be middle-class families and that wages are flat right now and the best thing to do to get wages up is reform the tax code. that's important research. too many of our constituents are feeling higher expenses and that something we can address and a number of ways and one is tax reform. his work in that area has respect on both sides of the aisle. he is the right person at the right time. i think as chairman of the council of economic visors the difficult task of tax reform will be easier with him. thank you for the opportunity to say a few words this morning about mr. hassett. i hope the committee will send him to the floor. sen. crapo: thank you. i would like to place both the

nominees under oath so would you please rise and raise your right hand? do you swear or affirm that the testimony you are about to give is the truth the whole truth and nothing but the truth so help you god? and do you agree to appear and testify before any duly constituted committee of the senate? thank you very much. you may be seated. mr. hassett, you may proceed. each of you may take a few moments to introduce any members of your family you may wish to introduce. mr. hassett: thank you for the kind introduction. i'm truly humbled and honored to be before you today as president trump's nominee to be counsel of economic advisors chair. i'm grateful to get the chance to get to know many of you throughout this process. i wish the people who worry about washington could have witnessed the private kindnesses the member of this committee and staff have extended to me over the last few weeks.

i would also like to begin, as you invited me to, senator, by introducing my college sweetheart and wife of 31 years, christie hassett, and next to her, my sons john and james. i would like to acknowledge my father, john, who was a korean war veteran but could not be here today, and my mother sylvia and sister julia, who are sadly no longer with us. i was a student of economics even before i knew it. i was raised by two public school teachers in massachusetts. my mother was a kindergarten teacher and my father taught english at greenfield high school. my town went through a very painful transition. for the longest time it was a thriving milltown with the world's largest happened i operation -- largest tap and dye

operation. as we got older, times were changing. plants closed, families started moving away, graduates started not coming home after college. i wondered what was happening to my town. when i started studying economics i came back to the example of how my town changed. why did plants move away or close, why do good jobs disappear? is there something policymakers could do to restore prosperity? economic models suggest a simple answer. workers can have high wages if they have high productivity, but going from things that work in textbook models to policy recommendations is difficult. the real world has many complications not included in the models and the data often surprise economists, especially those who have too much confidence in their theories. that observation led me over the years to focus on things that can be learned from the data. my dissertation focused on how wages move over the business cycle. what did periods when workers

prosper have in common? since then, my studies have taken me in different directions but i think my record makes clear a few things i would like to emphasize about my approach to economic. first, i believe it's essential to gather evidence and not rely on theory. the empirical literature on international taxation contain holes often because the country by country data that one would need for study were not available. my co-authors and i responded to this by building a tax database and making its data available to anyone who wanted it.

sheds light on the circumstance like those my hometown who lost their the striking geographic inequality that we see in america today. researchers worked hard to identify and measure distress and have constructed data sets that shed light on the communities around the country the most need our help. there's an interactive map even that helps people explore the room communities with a dark color red indicating extreme economic distress. one of the reddest shapes on the map in massachusetts is turners falls, the town across the river from my dads house where the paper mill closed.

the council of economic visors was created to provide the president with objective economic advice to help policymakers raft solutions for problems like those we face today. throughout history they have done so admirably during both democratic and republican administration. in 2009, a nominee told this committee that she would do her "utmost to protect the integrity of the cea." chairman crapo and members of the committee, if confirmed i pledge to you that i would do the same and enthusiastically and energetically take the helm of this great american institution. thank you. >> thank you. i would like you each to briefly, within 60 seconds, take a minute to discuss what your priorities will be as you are confirmed. mr. hassett: thank you for the question.

if confirmed, my first priority would be to recruit a lot of economists because the council of economic visors has a proud tradition of recruiting people from universities all over the country to come to washington to provide objective advice to the president, and unlike a lot of agencies, the council of economic advisers turns over a lot so there are new people coming to town to serve all the time and that would be the first-order business for me. the second thing i could say is a high-priority for me is to increase the transparency of the modeling and communication that goes on in the administration, so i would like to take the work i have done at the open-source policy center and elsewhere where we have made these interactive maps and bring that spirit of transparency to the cea . cea

-- to the cea . chair crapo: is 3% growth a reasonable target in your opinion and if so explain what policies would be needed to reach that goal >> thank you. the 3% growth is something that americans used to be used to. that was the rule rather than the exception. but growth comes, basically if you want more output, ultimately for more inputs -- from more inputs, and historically we have had a lot of growth and innovation that have driven growth to 3%. all three of those factors have been very disappointing for some time now. we had the computer revolution in the 1990's but that seems to have slowed down. capital formation in the late 1990's was contribute in about 1.2% per year for growth. and labor force growth of course

has been disappointing as well. if we want to go from the 2% growth we have been experiencing to 3% then we will have to get those things moving and the thing i have researched most throughout my career is capital, capital investment, how it affects workers and how to get it going, and i think it's possible to return to a place where you could get 3% growth if we do -- if we design policies in a way that would encourage capital formation in the united states. chair crapo: i would assume that would include some comprehensive tax reform. mr. hassett: that's correct. there was a survey of the national bureau of economic research and number of your -- of years ago where economists were surveyed about the 1986 tax act and they said that the medium estimate that median estimate of economic growth from that was about 1% per year so tax reform is one of the tools we would want to use.

chair crapo: thank you. >> a little over a decade ago there was a debate whether the growth rate assumed was too pessimistic. you co-authored a paper that defended that rate over the more optimistic 3% growth rate we had experienced over the previous four decades. i believe that was rather prescient of you. part of your reasoning was that prudent planning for the future should place more weight on the downside risk than on the upside potential. now it is conservatives who want to assume their way to balance. do you believe he 3% growth rate over the next decade is warranted? i heard your comments but when the consensus among the fed and the kevin hassett of 2006 is on the order of 1.9%. mr. hassett: i do not want to take up too much time but for sure if we don't change policy we can expect to stay around 2%.

if you look at the blue-chip forecasts, they don't envision the kind of sweeping tax changes that we experienced in a bipartisan fashion in 1986. sen. brown: so that 3% is contingent on getting real tax reform, not just a tax cut. you know that two significant tax cuts went overwhelmingly to the wealthy and there was literally zero private sector net job growth in those eight years so you are arguing that only if we do real tax or firm -- tax reform, not just tax cuts but reform, can we get close to that? mr. hassett: i think that's fair. >> your wonderful family is here and i know you are one of the nicest people i have met coming through and i know that when we met, by the time the meeting was over, my temperature was about

to take my head off as i thought about the fact that think tanks that you have been part of, of course, but so many think tanks in our community make the perfect the enemy of the good and can be very destructive. very destructive as we discussed as we try to move ahead and actually passed legislation that accommodates some commonality on both republican and the democratic side. and actually the think tank that you have been part of has played a big role in trying to undermine bipartisan efforts that we have put together here on the committee. you and i discussed that fully and as i thought about it i thought about a person coming into the white house that had been writing perfect things in a perfect world and being in --

and began to question whether someone like you would be good in this position. let me say is my temperature cool down and i thought more about your past, obviously you are qualified for this job but can you talk with me about the role you will be playing there and hopefully share understanding about the fact that we live in a world where we represent 320 million people and sometimes economists sitting over in a think tank that have nothing in the world to consider but perfect do not always help us in a constructive way as we try to move the country ahead. mr. hassett: thank you, senator, and thank you for your time. i think a hallmark of my career is that i have never been that person who says that the perfect is the only thing that you should do and if you do not do that you are someone who is a traitor to economics.

i think i have worked collegially with people on all sides on pretty much every issue that i have ever been involved in. i think at the council of economic advisors in particular the role of the cea is to provide objective advice about what decision-makers do. i think that the problem of governing is often won that there are a lot of decisions that have to be made and have to be made urgently and we need expert analysis to inform those decisions and someone who says in a perfect world with perfect markets here's what you want to do -- sen. corker: that is not what people say. they just say this is the only way for it to occur because the perfect is the enemy of the good. they are not saying in a perfect world. they are actually undermining legislative processes that have to take into account different temperaments, if you will, different values that are part of a democracy, so it was not really that, it was just the

straight undermining a bipartisan efforts on the committee. mr. hassett: there are people with strong opinions at the american enterprise institute but i can assure you that's not the way i would be. sen. corker: who would you report to there? mr. hassett: the president. sen. corker: sinnott to gary cohen -- so not to gary cohen? mr. hassett: by statute it is clear, yes. sen. corker: you wrote a book about dow 36,000 by 2009. i notice it was at 10,428. what happened? mr. hassett: one critic of mine once looked at that book and called it a youthful indiscretion and i think as indiscretions go it was not such a bad one. the motivation of the book then was to make sure the motivation of the book was to think about equity and they are a good

investment in the long run but not the short run. i think looking back people that bought and held were glad that they did. sen. corker: another president has said some things about trade. you are a full-blown free-trader. mr. hassett: historically yes. sen. corker: he's also mentioned some things about hedge fund taxation. you are a low carried rate person on hedge funds. i wonder if you might expand on that. mr. hassett: i have written one piece on carried interest in the journal of tax notes co-authored by a fellow economist and we analyzed the law of carried interest taxation and how it relates to partnership taxation that i think one of the main points of the piece, written many years ago, was that partnership law is what is applied to carried interest taxation and soda change that would require writing a new special provision. sen. corker: thank you for your

desire to serve. >> i did not want you thinking that i was trying to ignore you. i wanted to ask you about the desire to see financial deregulation and the concerns i have about all that. i was serving on the financial services committee during -- i will have to ask this quick -- during the most difficult and challenging times we had, 2008, 2009 and 2010. dodd frank was put in place to ensure safety and soundness. when we saw the.com bubble occur and then collateralized debt obligations and similar things, i would love to hear from you. do you see any bubble on the horizon that should concern policymakers and what is your biggest concern? i always try after that experience to look at worst-case scenarios so that it never

happens again because it destroyed my state in terms of employment and other areas. what do you see is the biggest challenge? >> financial regulation is not my immediate area of expertise. sen. donnelly: you have written books -- mr. hassett: not on regulation, but the financial markets are very complex. they are what economists call incomplete which means they can act at times into -- in both idling ways -- in befuddling ways. sen. donnelly: what i was asking was if there was one thing to keep an eye on? mr. hassett: i think that we have a recovery that is long in the tooth.

it is something we need to be attentive to and think about policies we could adopt that would extend recovery. sen. scott: thank you for your work at aei. long tooth recovery, interesting. you have said well certain areas of the country are doing remarkably well, the recovery has been profoundly and even, with large swaths of the country facing chronic long-term unemployment and low levels of new investment. can you elaborate on the social and economic costs of this uneven economic recovery and what could we do to bring more resources in to distressed communities? >> thank you. one of the things that economists have learned in the

last decade of research that was startling to me how extreme it was was that there are so many people that if they lose their job and don't get a job back in the little while -- in a little wild and they start to despair and have personal problems and often it can turn into a spiral that takes them to a very bad place. we know there are pockets of our country where, because a mill closed like in my hometown, that there are a number of people who end up having substance abuse and so on. a nobel prize-winning economist just wrote a very moving piece on this. if you ask americans about this problem they recognize it. and something i have noticed is that everyone wants to do something about it but they don't know what to do about it, especially the really concentrated geographic inequality, so we need to think of ways not only with policies to make a difference because i

know americans want to. sen. scott: i know there are two individuals who have been working on this, myself and cory booker. we have legislation called the investing and opportunity act that seeks to defer the capital gains tax for seven years if people are willing to reinvest those into distressed communities using the new market tax credit designation. i would love for you to take a look at that and come back with some thoughts on how we might have some success impacting long-term poverty and unemployment in those communities. mr. hassett: if confirmed i would love to look -- look forward to working with you on that. sen. scott: the question i have is on the whole notion of the workforce participation rate as you described the impact of long-term unemployment makes it difficult to return to the

workforce, hence our workforce participation rate has been declining for the last eight or nine years. i think about the economy to come, the gig economy or the shared economy, the technology economy. it seems like our focus on workforce and investment will be a very important part of how to navigate the future challenges that will displace millions of workers in a way that we have not seen in the past. how do you factor that into the goal we have of growing our economy? mr. hassett: it is urgent for us to address the problem that the share of our population working is something like 27 out of 35 oecd countries. i think the sharing economy can be part of hitting people that -- getting people back to work. sen. cortez masto: thank you. welcome and thank you for the

time you spent with me in my office talking about the issues that were important to so many of us and it's nice to see your family here. welcome and we appreciate your commitment to public service. we had this conversation. in 2013 you said in a written research piece, with lackluster gdp becoming the new normal, allowing immigrants to enter for the sake of employment is one of the few policies that i think would restore our new normal. the u.s. could add more than half a percentage point a year to expected gdp growth. despite the clear evidence indicating that you are correct, here we are in 2017 with the administration pursuing precisely the opposite policies. the president's policy of mass deportation is sparking panic

and fear in many latino unities, causing consumer spending to fall by double digits. this is threatening these communities confidence in the economy just it was starting to be restored after the financial crisis, a financial crisis that was hardest hit in nevada. so the question i have for you is what you said in 2013 still true about immigration and economic growth? >> thank you. i think that there are a lot of policy angles on immigration. one of them is border security. i'm not a border security expert but economists are good at mapping inputs and outputs and if we have more input of labor we will get more output. my ancestors are irish immigrants. they were not allowed in the country because they had a computer degree i presume. immigrants in this country have been an important source of growth. entrepreneurship is flailing but immigrants are about twice as

likely to be entrepreneurs. and so i think the naming immigration -- think that any immigration policy would have to acknowledge the challenges and the simple economics of inputs and outputs. sen. cortez masto: so what you said in 2013 still holds true? dr. hassett: i don't know if i advocate specifically a number of how much immigration should go up or anything, but if there were more workers we would have more outputs. sen. cortez masto: in the past you have characterized wall street reform as the worst piece of legislation i have seen in my entire life and that the law needs to be repealed as soon as possible. is it still your view that wall street reform should be repealed? dr. hassett: i would have to look back at -- i don't recall -- i would have to look back at what i was talking about and get back to you on that. it would take more to review what i was talking about and why i was so adamant. i am not usually so strident.

i will look forward to getting that. sen. cortez masto: we had just come out of the worst financial crisis since the great depression and if we are going to continue to make economic progress we cannot eviscerate the rules we put in place after the collapse so i hope you would consider that and take that into consideration. chair crapo: senator tillis. sen. tillis: thank you both for being here and congratulations on your nominations. i want to go back briefly to the discussion about immigration. the point of your report has to do with i would assume legal immigration, guestworker programs, h1 to h2 a and b because they create an economic multiplier and some would argue that even create american jobs as a result of that reliable, predictable guestworker program that ebbs and flows in this

country and it's something we need to get fixed. was that the essence of urinalysis? dr. hassett: yes. sen. tillis: i'm looking forward to support your nomination but now it's with an asterisk following your report on deflategate because i'm not a patriots fan. i thought it was remarkable. it will have to make me go back and change my smack talk but i will not use the hearing to drill into that. i did want to talk about a report -- you are very well published. one that i want you to spend maybe a minute or two on is the spending taxes. how would you cut through all the noise that we have right now and emphasize what we think we have to do to build the momentum to actually get to a sustainable 4% gdp growth?

dr. hassett: i think it's essential if we are to move forward and make the policy changes we need to get higher growth, we have to build consensus by having rigorous modeling that draws on empirical evidence it is replicable. sen. tillis: is it purely based on tax policy? is it regulatory policy? what are the topline issues that people can understand but do not necessarily have your expertise that we should focus on? dr. hassett: thank you for referencing the specific article. there are a number of challenges. one is tax policy and one is regulation to make sure they pass cost-benefit tests. another is to look at the long run budget balance and remove uncertainty about what the future holds because we have not fully funded the promises that we have made. if you look back at each of those, the countries that have sort of gotten their act together on those things have experienced surges in growth and i think there's every reason to expect that could be an opportunity for the united states. >> dr. hassett and i had the

opportunity to collaborate together on the workshare program. i am impressed with his knowledge and analytical skills. we don't always agree but we do agree on workshare and in that vein, dr. hassett, i would hope that in your new role you would continue to promote this as an option in every state. could you comment on that as an appropriate way to deal with -- dr. hassett: thank you. in fact i commend the senator for his leadership on this issue. if there's now an empirical literature evaluating your efforts that says that rhode island really outperformed a lot of other states because you not only helped change their unemployment insurance to serve workers better but make sure the people of rhode island new they could take advantage of those programs and i know that now there is hard evidence that that

was successful. i think absolutely that if unemployment insurance reform were to be on the agenda again that there is now a large body of economic evidence that would support extendg efforts in that direction. >> our marathon of trout nominees in their own words continues now with more of kevin hassett, who has been picked to lead the national economic council in the new trump administration in 2018, he spoke about the economy and the impact of tax reform legislation at a breakfast hosted by the christian science monitor in washington, d.c.

>> i think it is now 8:30 so we will start. good morning. i am linda feldman. our guest is kevin hassett, chair of the white house counsel council of economic advisors. this is his first appearance at a monitor breakfast so welcome. like yours truly, chairman hassett is a native of the great commonwealth of massachusetts, though he's from a more rural part, greenfield. dr. hassett: and i did not get the vote of either of my home state senators. linda: he's a graduate of swarthmore college and earned his phd in economics from the university of pennsylvania. he was a resident scholar at the american enterprise institute in washington.

it was also a professor at columbia university, worked at the federal reserve board of governors, and served as economic adviser to three present for candidates, george w. bush -- presidential candidates, george w. bush, john mccain and mitt romney. now for the ground rules. we are on the record here so please no live blogging or tweeting. in short, no filing of any kind while the breakfast is underway. there's no embargo when the session ends at 9:30. we will email pictures from this breakfast to all the reporters here as soon as the session ends. as you know, as many of you know, i think some of you are first timers, but as most of you know, if you would like to ask a question, send me a signal and i will call on as many of you as time permits. now, chairman hassett, if you would like to make brief opening remarks, the floors you. dr. hassett: thank you. what an honor it is to be at

this very well-known breakfast. i am not sure how long it has been a washington institution -- 52 years -- and the christian science monitor has been an institution since i think 1908. i have always loved the christian science monitor. the thing that sticks out about it is first the prayer but also it's got an unusual level of civility that i have over the years noticed. you kind of impose old-fashioned standards of the way we treat one another. i am not calling for civility today. you can be as aggressive as you'd like but it's made me a fan of the christian science monitor. it makes it a special honor to be here. i have an additional ground rule, which i apologize about, and it's actually something that i should have noticed on the schedule, but it's the law that

the white house is not allowed to comment on today's data until 9:30, and so there are a couple of releases that came out at 8:30, and i'm just not allowed to discuss them. so you might have noticed there have been a few cases where someone accidentally did that and then got in a lot of trouble. i don't think you can go to jail or anything for it but if you have specific questions about the initial data, you know, see me afterwards. i also have my chief of staff here, who many of you know from her time at brookings, and if you have follow-up questions i would be happy to talk to anyone, you know, on the phone after this morning and to arrange that just reach out to dj, who has a lot of cards. with that i will just open it up to questions. i think it will be more interesting than me speaking. linda: i will start with a few

softball questions and then we will move to reporters around the room. as i said, if you do want to ask questions, raise your hand. first of all, the congressional budget office is projecting next year's deficit at almost $1 trillion. do you believe there are any negative effects to these deficits or are you ok with this? dr. hassett: i think the academic literature is clear that long-run growth is impeded by higher deficits and that these affect dishes these effects are -- these effects are nonlinear in the sense that once the debt to gdp ratio gets to around .9 that leads to slower growth. the long-run literature has another result i am pretty convinced of. it makes intuitive sense that government spending is a negative for long-run growth as well and the intuition for

that result is that in the end long-run growth comes from innovation and if you have 50% of your gdp devoted to government than that's 50% that will probably not have a lot of innovation. and so i have written in the past, before i joined the white house, about how to think about the influence of spending and deficits on growth, and i think at the literature there is reasonably settled. so you could say that it's a risk to the outlook or a downside risk but it's also an opportunity because countries around the world that have had done sustainable -- have had unsustainable debt trajectories like a row and and have engaged in fiscal consolidation have tended to see growth search from that so the progress we have made in the last year, i think in the medium-term fiscal consolidation could be positive

as well. linda: ok. i will throw in one more. if deficits continue to increase despite faster economic growth, would you suggest revisiting the president's pledge not to address major changes to mandatory spending programs? dr. hassett: i think that if we go outside of politics and look at the economics that i disagree with a letter that was signed by some of my former colleagues or cea chairmen of the past. i think most of the deficit problem in the long run is entitlements and in the paper that matt jensen and i wrote may be about half a dozen years ago we looked at all the fiscal consolidation attempts in world history that we could get data on.

again, fiscal consolidation is a country that has a deficit situation that is out of control and they are trying to do something about it, and countries generally adopt one of two approaches. one is that they divided the sort of pain 50-50 where they would have 50% tax increases and 50% spending cuts. there was another bunch of countries that tended to be mostly spending cuts. what matt and i found was that the countries that accomplished fiscal consolidation with spending cuts achieved their own objectives, so they would have an objective of reducing the deficit and the people or the countries that used the 50-50 approach did not achieve their objectives. my speculation at the time was that if you increase tax revenues, it basically gives a release valve to fiscal discipline for the future, and politicians tend to spend money

that they have, but if you make difficult choices to spending, maybe you have a conversation that works -- a professor at harvard university has done work to estimate the growth of such a thing. my job at the cea is not to give anyone economic advice, but to be a conduit to people in the white house. of course, this kind of analysis would be something we could talk about. linda: how often do you talk to the president? dr. hassett: i am not supposed to talk about that, but i have spoken to him many times and enjoy doing so. he really likes to be in meetings where there are a lot of different points of view. very often, i think that the cea in a setting like that is a referee. our job is to provide objective analysis, to talk about the data .

that is kind of the role i will have. there was even one occasion where there was a meeting going on and they called me over, and the president told everybody in the room to shut up and don't talk to kevin before he asked the question, because clearly there was some dispute going on, and they are hoping the cea guys would come over and tell him what the facts were. i think that is the primary role of the cea. we are a staff of about 50, if we count interns, 50 people with academic backgrounds. many of them, probably 3/4 of them, i don't know their political party. they are professors on leave from around the country, and if people want to know what happens if we do this or that, we give them the estimate of the economics literature for that effect.

linda: let's see, jonathan, remind me who you are with? the new jersey star-ledger. you might get a new jersey question. linda: i was born there. but i was a massachusetts guy. >> my son goes to umass. the report last week talks about how most middle-class households will not be able to claim the state-level tax deduction anymore because they cannot and because of the highest end deduction, and some states, including new jersey and new york, are trying to find ways around the cap eye setting up charity funds. early you stand on that, and will be trump administration oppose those efforts? dr. hassett: the economics of the idea is that by allowing it -- the federal government puts

his finger on the scale in favor of high tax states. whether the first laws of obstacle tax is the government should avoid favoring one thing over the other. when i taught it in public finance class at columbia, that i would always just give these examples. suppose we have to raise money to make an earning that is going to protect ourselves, and we are going to do it with a tax, should we tax only apples or apples and oranges at the same rate, and everybody intuitively says let's tax them both, because if we tax only apples, there will be green houses in new england growing oranges. i think the basic principle that if you are trying to raise navy new amount of revenue -- raise a new amount of revenue, you do it not in a way that favors one over the other. in the previous code, what we

did was because the state and local deduction was much more valuable for people from some states than from others, then in some sense, the federal government was taking money from a resident of mississippi and getting into a resident of connecticut to compensate the connecticut person for the fact that they potentially have a luxurious or inefficient government. the theory of getting government out of the way there is pretty sound. i know it is putting pressure on states that in the past have been pretty inefficient and have high taxes. but it is not always just a deficiency. if you are in a state with really high incomes, think about it as a town, if you're a town with a really high income and will have lots of leisure time, so they want to invest in expensive things, that is not an inefficiency, it is a choice that they make. it could be a poor town that does not have the money for the fancy jungle gyms and things like that.

we don't think we should take money from the poor town and give it to the fancy village. we support that part of the code . i have seen some legal attempts to relabel things. i think everybody believes in the economics of the analysis that i just gave, on our team, at least. i would guess that if there is some clever thing the lawyers came up with that made it so the code once again plays favorites, that we would not support it. linda: thank you. john from nhk. >> i was wondering if you could give us a general update on phase two of the tax reform, timeline and specifically making permanent the individual tax cuts. dr. hassett: i give a talk at the new york fed, which we would be happy to email to anyone who wants to see a geeky economics lecture, but we just sort of went over everything that has

been happening with the forecast from nonpartisan, often international agencies, of the outlook from the u.s.. it is pretty stunning how i think the average outlook now counting the imf, and we also have wall street firms, blue-chip, that this average forecast have gone up around 3%, which the cea was saying during the tax debate that if we passed the tax bill, we would probably get around 3%, then was ridiculed by partisan opponents of the bill, but now most everybody looking ahead to this year is saying you are going to get both like that. we think it is not just serendipitous. it is complete we that growth would grow up -- go up about that much because of the tax bill, and without referencing

today's durable goods release, which is a key source of capital spending data, if you look at q4 , the fourth quarter had capital spending advance 11%, so an enormous spike in capital spending. our models predicted a spike around that scale because the technical term is the user cost of capital. depending on the type of capital we were looking at, it was 10% to 15%, and we expected the level of that would rise about one for one. we would guess the road be about a 10% to 15% increase in capital spending. in the fourth quarter, it was already at 11%. we expect we will continue that this year. if it does, then if it is september and the growth is coming in at about what we said, then if people think back to the fact that when the president

took office, that the storyline was we were stuck in 1% growth land forever, that relatively clip of the -- relatively quickly with a few changes in policy focus, we were able to move people to a better place, and a better place with a pattern that is consistent with our models that say how that should happen. it's not just like all of a sudden manna from heaven came down at 3%. it is the things we said were going up were going up. with that kind of evidence, i would hope that people on a bipartisan basis would say how can we move to make our country better off, and there would be a second bite of the apple on taxes. i know the president is serious about that. the first target would be to make the things that expire permanent. reporter: a follow-up question? linda: sure. reporter: last week, the imf meetings, chris taylor guard --

christine lagarde cited record high public debt is one of her biggest concerns. did that cause you to re-think any elements of the tax plan? dr. hassett: the public debt being high is something economists agree is a downside risk for growth and that it's an upside opportunity, because if you have a smart fiscal consolidation, you can get ahead of the curve on that and increase growth significantly. some places in literature suggest you can have as much as a percent to expected growth in the medium-term through fiscal consolidation. the politics of how that might work, that's outside of my lane. but in terms of the facts of how the models work and what they say, what i said before and what i just said are the best characterization. >> jerry from the buffalo news. reporter: another question about

state and local tax deduction. governor cuomo has said for months now curtailing the deduction could absolutely devastate the state's economy. the high income people could flee the state. and it is a blow to new york's economy. from your point of view, as an economist, is the governor exaggerating? why or why not? mr. hassett: the question is, does the state and local deduction destroy the new york economy? under the null, which is kind of empirically relevant that the governor is unable to make policy changes that seem informed. because if we did have a policy change in response, you can imagine cutting government spending and cutting taxes and making government more efficient, whatever impact the models was for out from -- would

spit out from the state and local deduction would not be there. i think economics, if we impose a tax on something, if the thing that is going to change a lot because of the tax, you can expect that tax to cause a lot of harm or deadweight loss or distortion. and if you are taxing something that is not really elastic, you don't cause much harm. if you think of the state and local problem that we have people -- i know what property taxes look like in upstate new york. it is very high tax. if you have people in those places, then the question is, what are they going to change? for moderate and low income people, it won't affect them. everyone will take the standard deduction.

but for high income people, maybe some will move. but right now mobility in the u.s. is about the lowest it has been in modern times. seeing a big spike in people moving out of the state is something inconsistent with the latest data. the most likely outcome is that high income people are the ones affected by this and will have a bigger tax break. their state has chosen to give it to them. the question is, if that happens, what happens to the economy? if the tax bite affected moderate income people, we would be concerned that would reduce consumption and cause local economic problems. but for high income people, there -- their consumption does not respond much to changes of this scale. my guess it is not going to cause a calamity. linda: bloomberg.

reporter: i would like to ask about the bond market. we are having to issue a lot more debt. treasury has seen issuing $1 trillion this year depending on how you slice the pie. that is going to cause oversupply, and there are questions about the global central banks reigning in monetary policy mechanisms. who is going to stop up the treasuries that are out there? i know the u.s. has a top-notch rating. it has been reaffirmed. but is there any concern you have for oversupply in the market and the underlying reason for that oversupply? soning for that? >> my job as chairman is to mr. hassett: my job as chairman is to respect the independence of the federal reserve. i look at forward guidance, and my job is not to look at forward guidance and then give them advice.

as far as the cea is concerned, the fed is independent and we have great faith in them, especially now that there is appointees there and more to be confirmed. an anecdote. the level of collegiality amongst ch'ers is very high. it's a difficult job. there are things that come up that nobody thought of and you can call somebody up. i won't say which one but i asked a former ch'er. it might have been you that wrote the story. i was at an event and someone asked about the full employment. the question was about, hey, you are saying we will have lots of growth this year. but where is the growth going to come from? we are at full employment. i talked about i wonder about the models, how useful they are. then speculated maybe it was lower than you think. then there was i think a bloomberg news story, but someone wrote a story, something

like "white house attacks the fed." i was not attacking the fed. if they have their own views about nehru, they have their own views about monetary policy. my former friend told me one of the things you are not allowed to talk about because you have to respect the independence of the fed. if my question is not spot on what the economists think about the bond market, i apologize but that is my role. linda: "the los angeles times." reporter: i want to see if you can get ahead a little bit more -- we will get the gdp number for the first quarter. all the estimates are it will be significantly lower than what we have in the fourth quarter. how can that be with the stimulus of the tax cuts? and what does that bode for the rest of the year? dr. hassett: i look forward to seeing the number, the standard error is pretty high.

the mean revision is pretty darn high. it's important not to overreact to the first one. the final one could be a percent different. there are special factors. looking to see how the end up affecting the bottom line number. one is that because of the tax bill being retroactive to september, and it was retroactive to september effectively in the house bill that passed at the beginning of the quarter. there was this period within an usually strong tax incentive to locate capital spending in the fourth quarter. i talked about the capital spending jumping a lot in the fourth quarter. you got to expense but expensed at a higher tax rate. if you take a deduction at 39% instead of 21%, that is

attractive. there was a lot of moving stuff from the first quarter to the fourth quarter and things like that that could put downward pressure on q1. because they loaded up and took -- loaded up into q4. the other thing we looked at and probably the agency i respect the most until someone could give me a counterexample is the bureau of economic analysis. they are politically unbiased. they are career professionals. they know the data better than anybody. if you have a question, they always take your call and explain why it is like this or that. one thing i have seen in the gdp data lately, which you can make a chart yourself of, is that there appears to be some residual seasonality in the first quarter. if you look at first quarter gdp for a number of years, it has tended to be the lowest quarter of the year. exactly what that residual seasonality is, the cause of

academic debate. one simple back of the envelope method i use to think about it suggested it might be as high as 0.8%. i will pick a number outside the range complete lease so it's not forecasting. if you saw a five, it is really 5.8. if you believe in the residual seasonality story. but when we get the details that we think we understand where the seasonality comes from, we will see if those are the parts that have the pattern consistent with this view. it could be the number -- there is a wide range of down casting models now. my favorite is the atlanta fed gdp now. i think atlanta fed gdp now is two-ish. 1.9 or 2. there is a lot of data coming in. they might have changed in response to today's data.

imagine if that were the number, it could be the way we think about what that does for our outlook for the year is nothing, because the residual seasonality is right on forecast. reporter: in terms of 3% growth, you said close to 3% growth. the bar the president set was 3% or over. the forecast for this year, the fed and imf are for less than 3% and going down afterwards. how do you account for that? why do you think the tax bill will get us over 3% when in the first year it is not going to get us to 3%? mr. hassett: we will see what happens this year. we think we will get to the 3% this year. the average for the cbo -- if i state a number and you want to write it, double check. i'm averaging numbers in my head. but i think the average cbo for this year and next is 3.1%.

i looked at the 10 years thing. i'm just sort of remembering it in my head. but in my new york fed lecture, i went through the forecast revisions for folks all around the world. there are lots of people that moved up around 3%. i think that given we were in a world where we were thinking we would be stuck in the ones, that is quite an impressive movement. if it ended up being a 2.9% year, a 10th off of 3%, that would be a good year. linda: paul from "the washington examiner." reporter: two unrelated questions. having worked with so many politicians, how is trump different being a businessman? how does he approach your information differently than they would? and the other is, what are the chances for a dow at 36,000

under trump? dr. hassett: president trump -- each person you work with has their own style and so on. but i think that for the most part president trump's style is similar to that of romney's and a little bit of mccain and terms -- in terms of the way he runs the meetings. even just going back to teaching governance in graduate school, the problem with governments is you have a lot of decisions to make with a very high-frequency. you have to accumulate -- first recruit experts who will not be lying to you. and then construct a process so that you can figure stuff out and make decisions in a timely fashion. each person has their own style for that a little bit. president trump is really good at that.

i have seen long meetings move towards positive outcomes in front of him in a way that is similar to the kind of thing that would happen with mitt romney. he disagrees with that guy and knows those two guys disagree and asks them to disagree with each other in front of him. the basic problem he is solving is solving assemblies of the problem presidential candidates have to solve -- is the same as the problems presidential candidates have to solve. they get asked for their opinion about many things, and for the president, it matters what the decision is. it is a high-stakes process where you have together experts and decide what to do. do you have a second? yes, i think that the equity premium now is about 3%. if you look at -- you should expect a real return going forward of whatever your favorite gas for the real 10 year bond yield is at 3%. that is what that model is.

you can go back and read the book. but you would use the equity premium to think about with the return on equities is. but as numbers get larger, it takes smaller percentage changes to get to bigger numbers. sure. >> i will throw one in here. talking about people disagreeing with each other. earlier this month, you told the wall street journal robert lighthizer has everyone , meaning -- everyone's trust, meaning everyone at the white house, regardless of their views on trade. given your views on trade versus the president's, explain what that means. how does that work in the white house with a president with such strong views on trade and his trade advisor and having economic advisors, chief economist larry kudlow on the other side of that question? mr. hassett: i don't know that we are always on the other side of the question. so i don't really accept the

premise of the question. i don't mean to be disrespectful. but as an example, the 301 action on china is based in part on work the cea did estimating the cost to the u.s. economy and intellectual property theft from china. i think that -- i have said in previous events if china will be the largest economy on earth, they need to start to act like it. they need to respect things like intellectual property rules and not require people to joint venture if they will operate in the country and transfer their technology to the chinese. the cost of those actions to our companies is north of $100 billion a year by some estimates. the idea that everything that everybody in the trade space wants to do is hated by a subset of the team is not accurate. we have other things we debate.

in the end, i think that the president's agenda, the trade agenda, which is described to -- in the economic report of the president, it's interesting that chapter has not been attacked by economists left and right. the objective of the president is a worthy one, which is that we need to move towards a world where trade barriers around the world come down. not just for us but for trading partners. if you look at the asymmetry of the global structure, they are notable. at times disturbing. i have a speculation. speculation is always dangerous. when i say i have a speculation, my my chief of staff gives me a nasty look. "don't do that." i have a speculation we are in the process that president trump is beginning the process of moving us to a 21st century trading structure. the story of the 20th century was there was a conflict between

the soviet union and the united states. we were each recruiting countries to be under our umbrellas. one thing we did was set up this global trading system where we unilaterally disarmed, set our tariffs out almost nothing. our non-tariff barriers practically don't exist. there are things we could do better. countries joined our system and kept their tariffs up and their barriers up, and it was a deal to get them to embrace capitalism and become a liberal democracy. i think now that the world is more mature, we have trading partners with per capita incomes north of ours. the idea that we should tolerate that kind of asymmetry which disadvantages blue-collar workers in the u.s. is one that i think we should all revisit. i know that the purpose of all of the trade policy instituted towards a more reciprocal move

to a more reciprocal world where the asymmetry that exists in the data is carefully and extensively documented. the report to the president is fixed more towards low tariff, low nontariff barrier free trade around the world kind of model. if you were to take the imf's models where they estimate the impacts on the u.s. global gdp of such a policy, it is quite an opportunity for improving welfare around the world. it would reduce their trade barriers and make the economy more efficient. linda: thank you. mark trumbull of "christian science monitor." reporter: in the economic report there is quite a bit about labor participation. how to improve it. the need to improve it. now we have senator sanders and others on the left saying let's get a job for everyone.

maybe a government-provided job. the economic report talks about work requirements. those are two different approaches to the problem. i wonder if you could comment on, is there some common ground? do both sides see a big need? some of the same solutions around, whether it is job training or the opioid crisis, is there an opportunity? and how much could you maybe bend the curve of declining labor participation? mr. hassett: i think the curve you are referencing, virtually everyone here with a slightly different angle could write an interesting piece on what is happening to labor force participation now. if you look at the chart, it was basically headed straight down. if i look at the outlook in

previous economic reports to the president, it was inspected to continue. one reason we were in the new normal is we did not have the workers. labor force for to sufficient was continuing in a downward trend. i think i'm remembering that right. the obama administration's estimate at the end was that we would be dropping .4% a year. i apologize if i got that wrong. now it is maybe even heading up. the charge is quite striking. i think that is because the stronger economy, the tight labor market and the increasing wage growth is attracting people back into the labor force. the news is spreading. we are on a couple of tv shows now. i'm sure people got discouraged applying for jobs because they

kept applying for jobs. you can decide i will stop doing that because it's an emotional strain on me to apply and not get a job. you should try again right now. labor markets are tight. there has been an enormous amount of success for people reattaching to the labor force. i think the sanders people are right to emphasize that is important. i think the great recession has some policies that separated people from the labor force in a way that did not make much sense. the unappointed insurance extension made people into long-term unemployed people that were hard to reattach. the affordable care act raised the margin. they did a lot of stuff to drive it down. but we are reversing it now, and it is clear in the data that is going to continue. i'm quite hopeful. i am hopeful by the time we write the economic report to the president and release it next february, we will have a significantly more optimistic

forecast for labor force participation than we had in this economic report. whatever you are suggesting that something will break off a trend, that is a risky forecast. it seems like that is the deal -- that is in the data right now. one last thing about that. the increase in labor force participation makes digesting the wage data a little bit challenging for economists. when people join the workforce after being out for a while, they tend to be low wage people. they have to reskill. when you look at wage measures, you are averaging over a different sample. sample -- the sample includes more low-wage people. as we think about the wage effects of the tax bill, we are watching closely. keeping track of what is happening to the median person as opposed to the average.

linda: we have 20 minutes to go. i think i have eight or nine people. mr. hassett: i will try to answer quicker. linda: the gentleman in the glasses. i'm sorry i don't know your name. >> simon from "the financial times." i want to ask about capital gains and the prospects for indexing to inflation. there's been speculation about the revival of larry kudlow and the nec. how big a priority should this be, if at all? is it something that can be executed via regulatory action? mr. hassett: i have seen speculation about that but i have not participated in discussions on that matter. i'm not informed on that matter. if there is something cooking or not cooking, i can't say. i'm not dodging your question, it's just that there are a lot of things going on, and a rule writing thing is something that i'm not informed. reporter: what about your views

on capital gains tax and whether it makes -- dr. hassett: as a public finance economist indexing capital gains for inflation is a where the cachet worthy -- is a worthy idea. it is probably not nearly the big deal now that it was back when inflation was at a big number. if tax is supposed to be on real income, you should index capital gains for inflation. it is not uncommon around the world to do so. if someone told me the u.s. had decided they had figured out a way to do that, i would think that would be a positive outlook. linda: inside u.s. trade. reporter: thank you, sir. i want to ask about trade. there's a lot of concern about the administration's trade policy on capitol hill and the business community. the downstream effect is the steel and aluminum tariffs and potential retaliation from china and other countries that has gone into effect and the

general uncertainty with ongoing renegotiation of nafta. some groups said this could undo some of the benefits of the tax reform, the growth we talked about. does cea share that assessment? that these trade actions could undermine the growth effects? mr. hassett: there are a lot of negotiations and discussions underway. it was not until i joined government that someone explained to me the discussions and negotiations are different. i cannot comment on those. but i think that it is underappreciated that the global effects of barriers around the world coming down to the u.s. level would be really quite positive. if you are only thinking about the worst thing that can happen, you are not accurately balancing the risks. reporter: the president talked about getting back into tpp.

most recently. do you think the u.s. should get back into tpp? have you shared that with the president? mr. hassett: that is a question for ambassador lighthizer. as a global issue outside that question, i was on a panel along time ago. i was a mccain advisor. 's singles be was advising president obama. -- austin goolsbee. we were talking about trade. austin, as he often does, said something really brilliant about the role of the economists in the trade debate. it would be one sentence. it would say free-trade. the trade deals are thousands and thousands of lines written by lawyers. when we as economist talk about trade, we can talk about what trade looks like in our model. that can be interesting for academic purposes. when you think about what we should do with this, the deal has thousands of pages.

he was then being humble about his ability to discuss the -- i think at that time, the question was nafta that he was asked. maybe it was something else. when you ask about a trade deal , there are so many things going on in trade deals. there are things that we have agreed to that make no sense. the negotiators are competent. you quoted my coat lighthizer is -- you quoted my quote from lighthizer, that he is really good at this. really mindful of economics. i talked with him all the time. what he thinks about the economic impact on this or that, we communicate about it. i have promised that he can deliver what the president has promised which is better trade deals. linda: george from national journal. reporter: you asked about phase two of tax cuts. in your answer, you talked about the wisdom, the second bite at the apple. i don't think you answered the question about the timetable.

along those lines, is there any sense of urgency about getting that done while republicans still control the house? mr. hassett: i am not mark short. i only have a little more hair than he does. mark -- that is out of my lane to discuss the timetables. i think that a second bite could make sense and make things permanent. removing uncertainty could make sense. when it happens, i'm not sure. i know that one of mark's top priorities, something i encourage you to think about and write about, is we have these nominees whose confirmations are being held up. it is unacceptable to those of us that are working in government that very often when we want to have a topic to address there are these appointees that have not been confirmed and have been in the process for more than a year,

some of them. as we look forward to the legislative calendar, we are extremely helpful the senate will get around to confirming people, but we do have about 180 that any other previous administration would have been confirmed by now. reporter: so there is no commitment to doing it this year. dr. hassett: i am not the person who sets the schedule. i know the president thinks it is a good idea and would celebrate it happening. whether that can be done given the limited number of days available to the senate is something you should ask mitch mcconnell. linda: jeff mason from reuters. reporter: good to see you. follow-up on georgia's question , what about infrastructure? is that something you are advising the president and team to push this year? what kind of an economic impact would that have? secondly, on the trade issue, have you put together numbers or

advised the president or anyone else at the white house about the economic impact of a trade war if some of these issues are not resolved with regard to tariffs? mr. hassett: for infrastructure, we have a chapter on if a that on infrastructure in the economic report to the president. i recommend it to you. i think it is a lot of interesting food for thought, like the idea of if everybody is driving around electric car, how was the gas tax is paying to fix the bubbles? the upper structure team that is on leave at cea, including the economist paul worthington, did a fantastic job going to the president's infrastructure policy and how it relates to

economic growth. would you get a tenth or two out of infrastructure. smart infrastructure spending. the president's approach is a sound one. i know that legislation -- one big bill is something that everybody hopes for and it might still happen. our infrastructure plans are so detailed and nuanced that i think one could expect infrastructure components every time it is possible until the big bill comes, because that is so much work to do in the space that is important to the president. one of the biggest opticals we think to the attraction of private capital into the infrastructure space is the government uncertainty introduced the fact that nine cabinet agencies have to say it is ok before you can do a project, and it can often take a decade. i have not found out which one

it is, but i have been a meeting where people say there is one project awaiting approval that was submitted in the 30's. we have to find that project. there are things we can do by managing government better to get the permit delays down and get projects a concierge to make sure the other agencies are cooperating. we want to protect endangered species and all that, but we need to make decisions in a timely fashion. if we can get that down to two years, private capital would come in and be a force multiplier for government. i think everybody agrees infrastructure in the u.s. needs a lot of work. it is not up to international standards and it's causing serious economic harm because of congestion. it is something we need to focus on. if we don't get a big bill, we will put part of our plan in every bill we can.

we should watch for that because i think it will happen. linda: second question? mr. hassett: the trade work. -- the trade war and the implications economically. mr. hassett: the trade team is in active negotiations and active discussions. they are doing that because they are hopeful they can reach agreements that are good for our trading partners and ourselves. i think that is the intent, to move the world towards that better place i described. reporter: have you put together forecasts for the scenario in which that does not happen? mr. hassett: my work product has two different classifications. one is the things we make public and the other are things we provide to the executive as an internal document. internal documents are privileged and i'm not allowed to discuss them.

whether they exist or not is something that -- yeah. white house counsel has coached us all on when we can talk about things and when we can't. do i send a memo to the president on this is a bait -- if it is not a public document is one of those i'm not allowed to answer. linda: did you have your hand up? reporter: are you concerned about the impact of the trade war on long-term economic growth? could we sustain a 3% economic growth with a real trade war with china? are those two things compatible? mr. hassett: i think trade is an upside opportunity. china specifically has 25% tariffs on cars sold there. they require people locating in china to get access to their markets, a joint venture with chinese companies and that slows

the activity between our countries in a way that is bad for the global economy. the objectives are sometimes lost as people think about the worst that can possibly happen. the objectives are were the ones. there are negotiations going on now that i don't participate in and i cannot comment on. but everyone is hopeful it will reach a positive outcome. reporter: have you made any projections about the impact if the u.s. were to pull out of nafta? or what a renegotiated nafta -- the impact it might have? dr. hassett: that's another one of those questions. linda: are you harriet? harriet tori from "wall street journal." reporter: i wanted to ask a question about the american consumer and tax reform. this year was the first time people saw more money coming into their bank accounts due to lower withholding, and yet

consumer spending has been rather weak. mr. hassett: in the first quarter. reporter: i wanted to ask about that and any concerns about whether tax reform is giving people impetus to spend. you mentioned businesses earlier. a quick follow-up question as well. you said you wondered about neru models. can you go into details? mr. hassett: that is the thing i'm not supposed to talk about according to my friend out of respect -- they have a specific estimate and i respect that. let me start with the consumer and then we will come back to the second try at that for you. consumer spending in the first quarter, after a blowout fourth-quarter, is a positive for gdp. we will find out tomorrow how positive. but if you look at the retail sales data, the retail control,

it suggests it has gone down a little bit from the fourth quarter. which is one reason why the atlanta fed's gdp now is suggesting a number in the lower twos is a thing we can expect. i think consumer spending is projected by everybody i cited in my federal reserve lecture on monday to be pretty high this year and healthy and consistent with the other data we have seen. we expect incomes will rise sharper this year, which will support consumer spending. the second question is, is the policy in the first quarter related to the tax cuts in any way? i think that probably the main driving force is just that since there was some much consumption in the second half of last year people were looking at their savings account and rebalancing. but don't forget that the withholding was only changed in february. the wage effects, the bonuses --

5.5 million people got bonuses and presumably they will spend those in the coming months. but consumers would start to see it in march. we were having this old-timers versus youngsters discussion at the cea. i can remember when i got my first job and my first check. i was scrutinizing every line, like, why did they take this much social security? now everybody gets direct deposit. they are not necessarily scrutinizing their checks right away. it could be the eyeball demonstration effect of withholding changes has changed over time. people are not necessarily checking their direct deposit receipt to see how it changed. there is some speculation the extra money, which is definitely there, might take a little bit longer for people to turn to consumption. i would expect march-april we

would see those effects on consumption. reporter: since you can't talk about neru, your points about labor force participation. one interesting fact is that the u.s. is the only western big economy where labor -- female labor force participation has been in decline for the past 20 years. what do you think is going on there? dr. hassett: i would have to get back to you on that. it would really just be speculation. we have a labor economist who knows everything about that. i would be happy to set up a call to go through what we know about it. i can speculate, but it would not be as good. linda: the gentleman to your right. brian bennett. reporter: thanks a lot for doing this. dr. hassett: thanks for being here. reporter: my question is about fiscal consolidation.

you looked at the record and saw a preference for spending cuts and tax increases. my question is looking forward, would there be some spending cuts that look better than others? is there a way to tackle these large projected deficits without touching entitlements? can you talk to that menu of options? mr. hassett: again, i'm referencing my paper before i join the white house. not speaking to white house policy. in the u.s., the problem -- probably outside the next 10 years and past that, the problem is one that looks like an entitlement-driven problem. although the high debt is also an issue. if interest rates were to go

back to normal, that contributes as well. hi think that getting ahead of the curve on that would require basically getting ahead of the curve on all types of spending. if you did not make progress on entitlements, you would not be able to solve the problem. that's my believe. reporter: in the 10-year timeframe, can you make a dent on non-entitlement spending? mr. hassett: as an economist, if we accept the fact the long-run thing would be entitlement-based, then the important thing is that you give people to the extent you change them lots and lots of time. think back to the greenspan commission on social security, a very successful reform on social security. they did not change much for 20 years. they gave people 20 years notice that they would increase the retirement age. the reason you do that is that you are a pretty young fellow. if we were going to do anything that affected your thinking about retirement, we should give

you plenty of time to adjust your saving patterns so you still have the healthly retirement you deserve. as an economist from that literature it is clear. alan our back and bill gail had a piece on the long-run budget deficit. it is clear that moving earlier is better than moving later. but it does not mean you affect current retirees. it is like giving people a chance to plan to minimize the impact from reforms you might make. linda: you have survived your hour. thank you for coming, and i hope you will join us again. dr. hassett: of course. thank you. >> more from the c-span archives now of ken hassett, the presidenelect's pk to chair the national economic council. in 2019, he joined the national

review institute's idea summit in washington, d.c., to discuss the trump administration's economic policies. >> ladies and gentlemen, please welcome chairman kevin hassett and ramesh ponnuru. [applause] >> brooke is so inspirational. listening to her reminded me of that speech john belushi gave an "animal house." i was ready to charge out here. ramesh: good morning. kevin is a longtime friend of the national review. i have noticed your contributions have fallen off lately. >> they have. romanceramesh: cash --

ramesh: we should work on that. the cea is described as an in-house think tank for the white house. dr. hassett: that is right. i was humbled by it. i went to swarthmore college and i was very liberal. i came from massachusetts and my college roommate subscribed to "national review." back then, there was no internet, no nothing, so if you're roommate had a magazine, you read it. i started reading "national review" and it fundamentally changed my life. fast forward a decade and rich lowry called me up and said buckley has this view that the review should start with this cool chart. he never did it because he could not find anyone that did cool charts. he thought there was a chance i could make a cool chart and would i write the first piece he had. i was so humbled they thought i might be able to do it. i did it for about 20 years. we shared that spot, me and jonah. all that time.

ramesh: i am so glad your roommate did not subscribe to "the nation." [laughter] history could be very different. dr. hassett: my roommate became a white house press corps member. we keep that secret. ramesh: i will not ask you for stock tips, at least not in public. what is your assessment of where we are with this economy? chair hassett: i think when people, historians look back at 2016, then they will see they were two candidates out there that had a message for basically blue-collar america. there was one message that was basically, sure, you lost your job. sure, your factory is closed, and sure, there is a loving disparity in your town and f

olks are addicted to opioids, but that is just the new normal. that is what you can expect. it is not our policies. president obama's policies were awesome and had nothing to do with this. it is like this exogenous thing that affects the whole world. then there was this other candidate that said, hey, if we change policy, there is hope. let's work on this together. i know he said a lot of other things, that candidate. but that message of hope which, you know, he delivered on in the sense that president trump went into office. he stayed focus on the policies that would revive those places. if you look at the data, there is something going on here that everybody thought was impossible. we can go through the

manufacturing jobs, down a couple of hundred in the previous eight years. up about 500 now. blue-collar wages growing the fastest we have seen in 20 years. my favorite fact is that the bottom 10% of the wage distribution -- the people that are lowest skill and most response to favorable news in the manufacturing sector. they are good paying jobs. the bottom 10%, their wages last year grew 6.5 percentage points. there is no decile that grew faster than the bottom 10%. when i think about where we are as an economy, there's an enormous amount of momentum from the incoming growth. -- the income growth. just like historically, it is the kind of big satellite view historical perspective the national review is always focused on, going back to the beginning with a discussion of socialism and capitalism. it is a big story of the last two years. the story they will write for 50

years is that president trump offered hope to people that were told to be hopeless and he delivered. the momentum from that is still carrying forward. ramesh: how much does the tax cut have to do with economics? if you read the critics, it was basically a transfer from the treasury to rich people and large corporations. i take it that is not your view. dr. hassett: it is the case that people use the word science denial a lot. if there is anyone out there that is willing to go to the blackboard or sit in a seminar room and try to make the case that the tax cuts have had no positive effect on the economy, i'm happy to face off with them in front of whatever audience they are willing to face off in front of. there is this massive literature reviewed in a long and boring

lecture in the american economic association meetings in january that shows tax cuts designed the way ours were designed should increase gdp growth by about a percent. at the beginning of the year, our forecast started with a baseline forecast of about 2%. then we got to 3.1% for 2018 based on massive peer-reviewed literature that showed with careful mathematical modeling of the tax cuts that showed we would get to 3.1% in 2018 if the tax cuts were passed. the advanced gdp release had 2018 at 3.1%. the number we got this week revised down to 3%. i am off my attempt. that is not a statistically significant error. sure, maybe the tax cuts will affect gdp.

you got lucky, gdp is 3%, but the effect of the model tells you the effect is that this thing will go up by this much. that will go up by that much. capital spending should go up by 9%. capital spending went up 9%. the model actually got the economy right. it is not because the cea is brilliant. economics has become a science. there is all this work that allowed us to model the tax cuts. it gets the backdrop of what would be going on the economists would be celebrating this victory of their science. instead it seems like, at least in the media, a lot of discussion is people who are in science denial trying to come up with an illiterate discussion and statements that are inconsistent with modern literature about how the tax cuts failed. literature have tax cuts failed. the fact that we have offshore

and people brought home but there is a shift for people contrary it's really not. >> if you eat a lot of sugar, you're not going to die. [laughter] you spend your money on twinkies and money is gone and your fat and your pretty upset and you're sorry you did it and don't

forget people are saying no effect but it's not a sugar head because we build factories so sound like we bought twinkies, we've got genes and buildings and other factors are turning on so it's exercise indictments with the sugar highs kind of hysterical. >> so what you see as a threat that's in that i have one serious threat of europe is

close and southern europe is sketchy and out of control so we are watching closely you are building effective and rebuilding it ten years.

challenges respond to the left and policy problems to. there's a 50% also feels and

children that is what america going start without a couple of years ago on going back in those controversial make among the large. >> i know you read it already

but it's a 700 page book with put out a week ago. anyone goes, who's counting? it, i did so at a crucial time that i know was studied carefully and the time was this one by centralizing what exactly specials what about roman view

will have a stable and productive economy spurred you petition between people and firms and everybody understood the great decision to make so they created the council of economic the staff of about the pope on the for a year to advise the president but they were brought in to tell the resident about what they thought so if

you look at it mentioned it's basically washington craft is that enterprise so if you got people in washington going back proposals and massive literature that leads to abnormal disparate and you don't, you're not doing your job so they are revealing

to literacy because the one topic i will continue to discuss what happens you want to be upset about that, god bless them. see all kinds of academic work be no good scholarship we have 11 pages about what happened i

went to them as a rule of thumb an organized it with the government and it drops to 2% and it's almost like the capture special venezuela 50%. >> this kind of emotional, by the way. [laughter]

is a something that concerns you? >> i want to go back a little bit. the about us advisor that forget exactly what we're talking about economic plans. he said in economist model trade is like the feature of the model

you look at free trade deals, there's thousands of the actual trade that exists is way different than what economists think it is something i grew to appreciate comp inherited trade deals are thousands of pages negotiated by people less capable than the guys who negotiated the deal with obama so it's crazy what we agreed to and open up our market. we put in a. that made it impossible for

president trump inherited all of the new doesn't feel right so he was serious we are going to take strong action got great we negotiated deal and significant that. right now and they advance endlessly and it is a disadvantage our partners focus

on the you can already see you with the korea how does the boat property. middle negotiated. intellectual property theft

think about it like this is the best of all time and it turns out there's a lot of people in china. or, you can have your widgets chinese and they are you look at the total amount, it's not that

is a lot. the chinese so a lot and then they sell to us and a lot of stuff the $15 minimum wage at

upset asian the economic with advice the old-fashioned way. there's a very famous paper that shows this effect and other papers dispute that and it is at

the forefront that led to that and i think i lean more toward people disagree with that but what i can say is wage growth is so high this employment affects our smaller than they would be. people would lose their jobs but at the wage distribution continues to grow capital

spending the minimum wage with the weight of $15 would be way up. >> what you say to people who are concerned? >> they should be concerned. the president's budget for 5% across the board i think that would be a good next step. when president trump came in looking at the challenges ahead we have to have some tax cuts. you look at the data

p-uppercase-letter think it the productivity goes up like you make more money. it is a way and productivity growth negative for the first time since world war ii because it's from so much and everything else never goes negative and they are problems we.

they were essential from both numeral two a new normal. not having enough spare parts, wiping out military spending a lot of those problems have been addressed the president has serious plans. i think we all wish we could balance it sooner than that but you get 5% across the board. >> what about the entitlement side. >> your comments would tell you you have to go and no way of

getting it through. bill taken over and was nominated head of the element he was confirmed yesterday. thank god he's confirmed but the patient guy. pretty far-fetched. >> us a call, yes. >> one and a half minutes left. something else he written about do not like hearing it's gone

and the right direction but the last generation or so. >> is one of the things i found interesting. lyndon johnson care about poverty and wrote very informed, smart things about it and then come up with a scorecard, they are not much help and haven't made any progress federal. and this was our study.

the war on self-sufficiency the next thing to focus on. to let them be self-sufficient and something lyndon johnson to focus our ellipses on and we are not doing a good job of that for right now they are this requirement so the welfare goes to all who are able-bodied and they are more fulfilling for

them in the independent to self-sufficient. any a humane way. >> there is misery everywhere and seems to be high demand but is not what we see in the data biden's economic agenda.

[laughter] >> i hope everyone is good so far. here with kevin hasek. kevin was an advisor more in due

course. and it was so many things and they are for limbaugh. teacher and he was remarkable and will teach until the day he dies. in a remarkable man for free

market so out to kick off talking kevin and the state of play today, what you think the service can be doing to carry that forward? >> i think we have to face up to the fact that premarket are the result in a way we've never experienced before. in the system that has delivered so much, it's the highest it's ever been. if you want to understand free markets and politics, graduate students.

it's taken long boat and two cans of socialist, there are socialist be well, feel bad for the little guy. the problem with that is they are incredibly ineffective. by far, it is the road to serfdom.

it's the type that we see now. it's a person who doesn't care about other than their own power and has to go to hunter biden. they will not be any more effective but they are brutal because the voters would vote them out voter fraud or they stop having elections.

i think we are where the ones who don't care what we talked about last night last night are in control and how we stop them in the existential threat. you remember when trump to office? the democrat party and obama administration and it was really terrible between 2016 wage growth and it was zero and the

policies together, but obama people told us normal. in the wrote lower regulation. and 2016, $6000 a family. they actually care about bars. and you saw the wages didn't grow and than they did what it

reversed everything? if you really want to, they didn't even care that the little guy was federal vehicle into all the things he said. they care so much about the little guy so we'll hourly wages have declined in the u.s. for 22 months in a row. that's the longest streak on record u.s. history. we never had 22 in a row until we get to joe biden. these people who could in the rule of law and all these things destroy the economy like this.

and biden was bragging that this happened on watch. anyway, people who are apparently different ineffective are control right now and a real threat to the future of our country. >> i promise positive what you think we are on stagflation and how you see it laying over the next ten years may be?

>> a lot of regard to programs and got to admit about the biden administration is step one, admitting have a problem. you get an inflation shock and it can happen printing money. sound familiar? you get an inflation shock. and it goes down. in less divisive the end of the recession.

and it hurts acting and they get inflation down the process until they are equal to each other. then the fed has a problem cut of the price. and raising interest rates trying to get it so price inflation can go with it.

and has to be well above the inflation rate to. you're still not there until unemployment goes way up and wage inflation and price inflation will stay around five. ... there would be a little bit of negative effect on the economy, small recession or something and then the fed would say inflation is 7% but i don't want to hurt people anymore so i'm going to stop tightening. if you do that for a few years in a row then you end up with

double-digit inflation. my final thought about inflation, we will find lots of upbeat things to talk about, is not to bring bad memories but we need to think about what's going on with economy and inflation is it's going to be just like covid in the sense there's going to be waves, you will think like retina we had a mild winter winter so energy prices are low and used-car prices -- inflation is going be down but it's going to go right back up. this bank bailout is $2 trillion of new money. how are you going to that and not make inflation go up? the waves will get worse and worse if the fed acts like the fed active in the '70s. i'm pleased they lifted rates even with the bank crisis going on but i'm anxious they're not going to give us more rate increases we need to get inflation under control.

>> there's a lot of positive history in our country's economic history. one of the things alan was talking about yesterday was about how much economic growth has improved people's lives over the last say 100, 150 years in way that is unprecedented in human history. for thousands of years people live at basically the same level of subsistence and it was a handful of wealthy people we read about in history books and things like that but the vast majority were poor and there was nothing they could do about it because we didn't have modern economic growth. now we have had that, and for the first time in human history we have had huge weights the people all around the world being able to come out of extreme poverty, being able to provide for the families and make a better life for their

children. in the united states the last 20 years or so we have been stuck around low 1%, 2% economic growth after being able to have four or 5% in previous decades. that solves a lot of problems. it solves the recession problem by definition but also solves problems like the national debt because if you have faster growing economy you can bring that debt burden down. it solves problems with defense spending because wealthier country that's growing faster can afford to spend more on national security. it helps with poverty alleviation. it helps welfare, bring it on welfare costs your people can support themselves. how do we get back to that history we know we have in us but all too often it seems like government is standing in the way? >> first of all i'll remind the history when i started the white

house right after president trump took office, and we put out as the chairman of the council of economic advisers that the head of something that sounds really cool and science fiction, called the troy comes like this romulan thing that's going to harm us but in charge of the government forecast. we went back and said to the president and to the cabinet members that we know the president has made a promise of 3% growth. we know everybody thinks it's a new norm and when we came out without their appointed people say you're just putting out a political document. what we did is we challenged everybody to get as policies that could take you from 1% growth to 3% of growth. we designed the tax cuts exactly

the way we did to go after the business sector which is the highest tax place on earth, and we use really hard science to estimate what would happen to growth if we had those tax cuts and if we did that deregulation and if we did aggressively push energy exploration and help pipelines form and stuff like that. if you go back and look at the first economic report of the present book is laid out where 3% growth comes from then we built it up piece by piece with sound policies and then we got 3% growth. if you ever zoom with me when i'm in my office one of my favorite possessions which it did make for myself but a d gave to me was after you'd end of the trump administration the "wall street journal" editorial board went back and look at what i said about what would happen to growth if we passed the policies come this was pre-covid covid, and the road a long

unsigned editorial picture and said he was right about every single thing. in a marriage where i'm not write about anything -- [laughing] it was really refreshing. it's funny how like we get the "wall street journal" delivered but i couldn't find the journal that day. we were right within one-tenth or two and that's the other thing i want to say is why were we right? it's not that we are geniuses. it's just that we thought about it a little bit. what's going on now is so detestable to me because it's obvious. i'll give you an example. so suppose you increase government spending relative to gdp about 5% relative to what we thought. suppose you don't do anything to make supply up. in fact, you attack supply.

supply doesn't go down, supply stays the same. you've got 5% more gpo nominal demand but you don't have any more supply and so what has to happen by construction is inflation has to be 5%. it's the only way could happen because you're going to spin the government. the government will spend but they don't have more stuff to buy. so inflation goes to 5%. i don't know if rich is in the room but rich interviewed me right after we were the first ones on the internet is a inflation is coming. i said i'm 100% this year will be 7%. i said that in april, i think. why was i 100% sure? you guys now know if you lift gdp 5% nominally but you don't do anything to make supply go then you have 5% inflation. it's so obvious. and yet we have an entire administration and entire party that is in science denial about

this. i think the good news is this is easy to fix. maybe we can start to move towards the happy ending out our talk. we have done before. it's a roadmap that's easy to follow, and the biden administration has messed stuff up so much it would be really easy to give you 4% growth really, really fast just by reversing really stupid stuff they've done like the global minimum tax, wimberley the tax benefit for research and development, spending a trillion dollars on green energy to subsidize green energy. if you are subsidizing green energy with a trillion dollars, you were doing that because green energy is less efficient so you are by construction making the economy less efficient. i know how to make the economy more efficient. if you do that then things can boom. that's what were talking about just about every day, that when the biden administration comes

out and sell says stuff ths patently wrong, then we call it out but we are also building an agenda for the next person who cares about the economy, be they a democrat or republican to make the economy better. the good news again is it's not that complicated. it's not rocket science. >> earlier you mentioned why we write about this. it's not because we are geniuses. i think that's the right attitude and more politician need to have because we are not geniuses but there's lots of people out there who are and if great ideas and want to invent stuff insert copies compl the stuff. that's who the american people are. that's our strength. that's the big one. what you need to be able to do is be allowed in be permitted to be able to do that. like you said that's what we're

arguing at capital matters because there's an attitude sometimes among conservatives to be sort of apologetic about free markets and sort of there have been an attitude recently that you may have detected that's like welcome free markets are good when times are nice but when times are tough whether because of an outside threat or because of a domestic economic problems, that's when we need government to step in a make things right. that's the complete backwards to of how this is supposed to work, right? free markets are not just the thing that's nice to have. they are a necessary ingredient to our flourishing and to economic growth. i guess said to all the things that come off of that, the ability to spend more on defense, the ability to solve the debt problem, the ability to get people off of welfare. that is something that's been missing from the conversation, what would been trying to get capital batteries is bringing back. >> i think that's right. again, the fact is that one of

the things the left does is first they control a lot of immediate but not as an we will never be canceled, never. then they attribute authority to the people that spout the socialist claptrap that they like. tribute respectability, handout nobel prizes to paul krugman. and then when paul krugman says something that makes no sense at all, like you go back to the 5% example, of course you're going to 5% inflation but he will say no. actually you a 5% inflation and then what will happen will be, on cnn or in the post or the times they will say well, nobel prize winner paul krugman says

we won't have inflation. the partisan right-wing kevin hassett says we will. >> unfortunately we do have nobel prizes friedman and hayek out of their. >> it's hard to find, undershoot the will ever be another conservative nobel prize winner. my point is we are actually right. we document every day and that's why traffic is skyrocketing to capital matters. in the end the people who write this is what america is great, the people who are right on the ones who truly control respectability and can dish it out. that's what we've built at capital matters. >> we get so many great contributions from outside people that don't normally write for "national review" and a good expertise on specific areas. that's one of the ways we can add value to we had a piece yesterday ran from an israeli economist talk about israel's

test israel's and social policy and white did work for the country and have success been able to have has been giving the government out of the financial sector especially when the argument he made. it's really great to be able to have all those different perspectives who don't work for "national review" who would write for us everyday but have a really good take on one specific issue and can write that for us. capital matters is a platform in a place that can happen. >> we built an arena, one of the things i've done in my career collectively, because what the left wants to do is they want to make it so you are a fundamentally discredited person. you are a conspiracy theorist if you support and defend free enterprise. what we've done, but in this room knows what's going on and they are mad about it, you want to do something about it that we

believe if we made a place with a bunch of us started writing, that there would be people from all over the world that would be sending unsolicited manuscript to a saint i want to be part of that conversation, too. that's the thing that's happened. we talked about big things but i also like the little important things that we do. one of my favorite ones is the work dominic has done on the panic of gas stoves. like, just really quickly, if you than gas stoves, then gas consumption in the u.s. goes up because it's efficient to bring the gas to a house and the new lighted up and energy is right there. if you don't let the guy have a gas stove then you've got to generate the electricity 100 miles from his house and then you had to send it in wires where they lose a lot of electricity along the way. the reason i love this is we are

fighting an opponent that doesn't care about what the truth is. they just care about like the posture that they are able to make when they say they are for this or for that. it's been fun to watch us expose things like that. the big things in the little things. the little things for me have often been more entertaining. >> definitely. it's a great illustration of the mindset we can't trust people make decisions for themselves. have to make decisions for them. we know what's best for we're going to impose it and i think it's so contrary to our spirit of the country come to the things we've done. up until this come in our history we are unusual among western democracies in that we do not have an explicitly name socialist party. that's a major player in elections. obviously certain parties have taken hits and pieces of it along the way. biden administration is especially bad on that now but

we've never had that because the something in our national character that we are repulsed by that, that doesn't like being told by planners and government bureaucrats that this is way you have to do things. we have seen in our history government tries to do things, doesn't work, and we see in all the different ways the private sector has been able to innovate and make our lives better in ways government can never do. >> right. in my book, the drift, which you guys have probably seen mentioned a lot on tv, it's all about what's happening to free enterprise in our country. the subtitle is stopping america's slide to socialism. it's a guide to stop it and we can pick . we can do it. we have almost run out of time but there is a deep, firmly

rooted in the great writings of the past of hayek in friedman, there's a deeper reason for optimism and a belief that if people like us stand up to defend the enterprise been able when. so capital matters, i'm just thrilled "national review" came to me and we formed this place were free enterprise could be defended. because it's really like almost step one of the how do we stop socialism in my book cover is you have to recapture respectability. take it away from the idiots socialist who claim their respectable and are always -- have to create a place where people defend free enterprise are celebrated and not intimidated. >> definitely. "national review," we are not moving on this. this is where we stand. standing before history is kind of our thing and this one is

definitely an issue where we know that this is right thing to do and we're not budging on it no matter what. politicians but say about it. the editor of the section, he will talk about, get, we get these big pieces sometimes that are 3000 words. we just ran one from a guy houston work for blackrock and knows a lot about esp's as result of that. he's become skeptical of it and wrote a big peace force, 3000 word sort of walking through i know this better than anyone is is and what it's not working. this is why it's not effective. that is the kind of peace, who else is going to run that come 3000 words about that? you can't fit that, "wall street journal" my degree but they can't fit that in there. what mainstream publication, "new york times" will never

touch that, right? that's the advantage we have in terms of spots to be able to run the things the fault of the planks and all different arguments come from different perspectives but all united around that idea about the importance of free markets and standing firm on that. thank you so much for your time. >> thank you. [applause]