agree on workshare. in that vein, dr. hassett, i would hope in your new role you would continue to promote this as an option in every state. with your help we've expanded to about 19 or 20 state. could you comment on that as an appropriate way to deal with it? >> thank you, senator. i commend the senator force leadership on this issue. if there's now an empirical literature evaluating your efforts that says rhode island outperform a lot of other states because you not only help state change unemployment insurance to help serve workers better but make sure the people of rhode island knew they could take advantage of this federal program. i know now there's hard peer-reviewed evidence that our successful. absolutely if unemployment insurance reform were to be on the agenda again the stop and large body of economic evidence

in washington, d.c.

>> okay. i think it's not a three-time excitement to start. i'm on the film, washington bureau chief of the christian science monitor. our guest is kevin hassett, chairman of the white house council of economic advisers. this is his first appearance at a monitor breakfast so welcome, chairman. first a little bit of background. like yours truly he is a native of the great commonwealth of massachusetts dopey from more rural part, greenfield. >> and it didn't get to vote for either of my home state senators. >> that's terrible. he's a graduate of swarthmore college and earned his phd in economics from university of pennsylvania. before his senate confirmation last september to his current post chairman has it was a resident scholar at the american enterprise institute here in washington. he was professor at columbia, worked at the federal reserve board of governors answer this economic advisers to three

presidential candidates, george w. bush, john mccain and mitt romney. his current job, his first in the white house. 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 on the breakfast is underway. there's no embargo in the session ends at 9:30 and we will e-mail pictures from this breakfast all the reporters here as soon as the session ends. as you know as many of you know some of your first-timers but as most of you know, if you'd like to ask a question please send me a signal and i will call on as many of you as time permits. chairman hassett if you like to make brief opening remarks for issue. >> thank you linda. what an honor it is to be your at this very well known breakfast. i'm not sure how long the breakfast has been a washington visitation but the christian science monitor has been institution since i think 1908?

>> very good. >> the thing that sticks out about love the christian science monitor compass companys first there is a prayer and often it's a nice way to start the money but also it's got an unusual level of stability just over the years i've noticed, imposed old-fashioned standards, the way we are to treat one another. i'm calling for stability today. you guys can be as aggressive as you like. >> i'm calling for stability. >> it makes it a special honor to be here. i have an additional ground rule, which i apologize about and it's actually something i should notice 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 been a few cases were some accidentally did that in the winter and got into a lot of trouble. if you specific questions about that, then see me afterwards. also had my chief of staff here for many of you know from her time at brookings. if you follow questions i'd be happy to talk to anyone on the phone after this morning and to arrange that can just reach out to tj who presumably has a lot of cards with her. without i will open up for questions. i think that would be way more opening. >> also start with a few softball questions and then moved to reporters around the room. if you do not ask a question please raise your hand. i've got a list going here. first of all the congressional

budget office is projecting next year deficit up almost $1 trillion. do you believe there any negative effects or are you okay that? >> i think the academic literature is clear that growth is impeded by higher deficits. these effects are nonlinear in the sense what's deficit to gdp ratio gets above around .9, then that leads to slower growth. i could add there's another result, government spending compared to gdp is a big negative for long-run growth as well. the intuition for that result, and in long-run growth comes from innovation and if you have 50% of the gdp devoted to government and its 50% 50% p this pilot have a lot of reach.

i've written in the past before started in the white house about how to think about the influence of spending and deficits growth and i think the literature is subtle. what it means so you can say it's a risk to the outlook for ads to the downside risk but it's also an opportunity because countries around the world that it had unsustainable trajectories like our own navigation fiscal consolidation which is a term of art have tended to see growth surge from that. with all of the growth progress we've made over the past year with deregulation and taxes, i think any medium-term called consolidation would be something that would get growth positive as well. >> okay. i will throw in one more. if deficits continue to increase

despite fast economic growth would you suggest revisiting the president pledged not to address major changes to mandatory spending programs? >> i think if we go outside of politics and look at economics, i disagree with the letter that was signed with some of my colleagues for chairman of the past like jason furman. i think most of the deficit problems in the long run i don't. in a paper that jensen and i wrote maybe have half a dozen years ago, when looked at the fiscal consolidation attempts in world history and we look at him so fiscal consolidation as congestive deficit situation out of control and the kind do something about it. countries generally adopted two approaches.

one is they divided the pain 50-50 with a with a 50% tax 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 the countries that accomplish the fiscal consolidation with spending cuts achieve their own objectives. they would have an objective of reducing the deficit and the people or the countries that use the 50-50 approach did not achieve their objectives. my speculation at the time was that when you increase tax revenues that it basically gives release to fiscal discipline in the future and the politicians tended to spend the money that they had but if you make difficult choices to spending giving a consolidation that works. alberto at harvard university has done some work to estimate

growth. my job as a -- to give anyone political device, but to be a conduit, literature to people at the white house, and so of course that kind of an atlas will be something we could talk about. >> how often do you talk to the president? >> i'm not supposed to talk about that. i've spoken with in many, many times at a much enjoy doing so. he really likes to be in the meetings where there are a lot of different viewpoints and very often in a setting like that is serving as a referee. our job is to provide objective analysis to talk about the data and so very often that's the role i will have. not always but there've even been one occasion with 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 for he asked the question because clearly there was some dispute going on and are hoping that the cpa gaza's come over and tell them what the facts are. that's the primary role is to give vision of the 1946 employment act. there was a staff of around 50 if you can't interns, 50 people with academic backgrounds, many of them i would say probably three-quarters of them, i don't know their political parties, they are professors on leave from around the country and with people want to know what happens if we do this for what happens if we do that, then we give them an estimate of economic literature. >> all right. jonathan from -- remind me who you are with. the new jersey star ledger.

i think you might get a new jersey question. [inaudible] >> taxation report last week that come in and talks about most middle-class households will not be able to claim the state and local tax deduction anymore because of the high standard deduction. some states including new jersey, new york are trying to find ways around by setting a charitable funds. with will the trump administn oppose those efforts? >> thanks. the state and local deduction, the idea, the economics of the idea is that by allowing it, the federal, puts its finger on the scale in favor of high tax states. one of the first laws is the county should try to avoid favoring one thing or another.

when i taught it in public finance class at columbia that i would always get example, so supposed to raise some money that will protect ourselves and were going to do with a tax, should we tax only apples or apples and oranges at the same rate? everybody says let's tax in both. we tax only apples then there will be green houses in oranges. i think the basic principle if you're trying to raise a given amount of money which is a way we find a problem for southcom given amount of revenue with a tax is to not do it in a way that favors one thing over another. previously did was because state or local deduction was much more valuable for people from some states and from others, in some sense the federal government was taking money from a resident in mississippi and giving it to

resident of say connecticut to compensate the connecticut person for the fact they had potentially luxurious or inefficient government. and so i think the theory is getting out of the way is pretty sound and i know that it's putting pressure on states that in the past have been pretty inefficient and have high taxes but not always in efficiency. if your state with high income, think about the counter if you're in town with a really high income and the people of lots of leisure time and so they want to invest a really expensive parks, right? that's not in efficiency. it's just a choice that they make. they could be a poor town that didn't have the money for fancy jungle gyms and stuff like that. we'll think we should take money from the poor town and give it to the fancy village and so support that part of the code. i have seen some legal attempts

to relabel things and everybody believes in the economics of the analysis i just gave on her team, at least. [inaudible question] >> i think i give a talk at the new york fed which we would be happy to e-mail to anyone, but we just went over everything that's been happening with the forecast from nonpartisan international agencies of the outlook for the u.s.

it's 30 stunning how i think the average output now counting the imf and the oecd and we also have wall street firms, that those average forecast have all got up around 3% which the cea was saying during the tax debate we passed the tax bill should probably get about 3%, then was ridiculed by partisans opposed to the bill. if you look most everybody looking at it is a you would get growth like that. we think it's not just serendipitous but it's completely sensible that growth would go up about that much because of the tax bill and they can without referencing today's durable goods release which is the key capital spending source of capital spending data, if you look at 24, the fourth quarter that capital spending advanced

11%. so building an enormous spike in capital spending. our models predicted a spike about that scale because the technical term, dependent which type of u-uppercase-letter looking at we were expecting ten to 50% of expected level of debt would rise about one for one. i think we would guess there's a ten or 15% increase in capital spending and in the fourth quarter was already 11. we expected that will continue in this year. so, therefore, if it does then the growth comes in about what we said, then if people think back to the fact when the president took office that the storyline was we were stuck in 1% growth land forever, then relatively quickly with a few changes in policies we were able to move people to a better

place, a better place with a pattern that is consistent with our models to say how should that happen? it's not just all of a sudden manna from heaven came down. it's precisely the things we said would go up we are going up. with that type of that it i would hope people on a bipartisan basis would say how could we move next to make a country that often you will be a second bite of the apple on taxes i know the president is serious about that. the first target of that would be to make it permanent. >> so last week the world bank meeting, a record high as one of her biggest concerns. is that something caused you to rethink the tax plan? >> the public that goes back to my fiscal consolidation point that the public debt being high

is something that economists unanimously agree is a downside. the risk for growth, and that it's also like an upside opportunity. because if you have a smart fiscal consolidation you can get ahead of the curve on that. increase growth significantly. some places in literature suggests you could add as much as a percent to expect growth from fiscal consolidation. the politics of how that might work, that's outside of my lane but in terms of the facts about the models were and what they say i think what i said before and what i just said of the best characterizations of the literature. >> jerry from the buffalo news. >> another question about tax deduction. governor cuomo of new york has said for months curtailing the deduction could absolutely

devastate the states economy, the high income people would leave the state and there's a real blow to new york's economy. from her point of view it as an economist, is of the governor exaggerating? why or why not? >> so the question is, does the state and local deduction destroy the new york economy under the null hypothesis that, which is kind of empirically relevant that the government is unable to make policy changes by economic reasoning. because if we did have a policy change in response to this you can imagine like cutting government spending and cutting taxes, making government more efficient, then whatever impact our models would spit out would be there. in economics, if we impose a tax on something, then if the thing

is going to change a lot because of the tax, or say it's the last, and you can can expect that tax to cause harm or a lot of deadweight loss or a lot of distortion. if you are taxing something that isn't really elastic then you don't cost much harm. if you think of the state and local problem that we've got people, i know what property taxes look like in upstate new york in the state income taxes, very high taxed place, and if your people in those places, then the question is what are they going to change? and for moderate and low income people it doesn't affect them because they take the standard deductions. but for higher income people, then maybe some will move but right now mobility in the u.s. is about the lowest it's been in modern times.

seeing a big spike in people moving out of the state is something it would be inconsistent with the latest david. the most likely outcome is high income people who are the ones that will be affected by this policy will have a bit of a bigger tax bite because her state is choosing to give it to them. the question is, the last question is if that happens what happens to the economy? if it affects moderate income people then that would reduce consumption and maybe cause local economic problems. but fry income people their consumption doesn't respond much to changes of the scale and my guess is it certainly will not cause a calamity. >> all right, bloomberg. >> i would ask about the bond market, if to asia live more debt, try dressing issuing $1 trillion this year depending on how you slice the pie.

that's going to cause oversupply and there's questions with global central banks reining in extraordinary monetary policy. who's going to stop the treasury that are out there? i know the u.s. has top-notch rating, it's been reaffirmed but is any concern you have for oversupply in the market and just the underlying reasoning for that? >> my job as chairman is to 100% respect the independents of the federal reserve. i look at their forward guidance and my job is not to look at guidance and then give them advice. so as far as the cha is concerned, the bond market is always right and we have great faith in them especially now that there's some appointees there and more is waiting to be confirmed. an anecdote, the love of

collegiality among the cha is a special kind the scene is very high. a lot of things come up every day you never thought of and that you can call summit. i asked, i won't say which one but it asked a former chair because, it might've been -- [inaudible] i was at an event last week and some asked me about full employment and the question was about hey, you are saying we're going to have -- [inaudible] but where's the growth could come from? with full employment. i talked about its true as an academic i went about the models come how useful they are and then spake you did the navy it was lower than you think. then there was i think a bloomberg news story, celebrity news resulted white house attacks the fed. of course i i wasn't attackine fed. my former cea chair friend told

me one of the things you not love to talk with his nehru. you have to respect the independents of the fed. so if my question is a spot on, think about everything that's going on so i apologize but that is my role. >> jen from the "los angeles times." [inaudible] all investment arts going to be lower, significantly lower than what we have in the fourth quarter. how can that be with the tax cut and what does that bode for the rest of your? >> i i look forward to seeing te numbers come sort of standard error of the number that is pretty darn high. they mean revision is pretty darn high and so it's important not to overreact to the first one because the final one could be different.

but there are some special factors affecting the first quarter that i'm looking to see how the in-depth affecting the bottom line number. one of them is that because of the tax bill being retroactive to september, and it was retroactive to september kind of effectively in the house bill which passed at the beginning of the quarter. there was this time where there was an unusually strong tax incentive locate your capital spending in the fourth quarter. i talked about the capital spending jumping a lot in the fourth quarter. the reason is you got to expense but you expense at a higher tax rate. and so if you get to take a deduction at 35% instead of 21% that's pretty attractive. i think it 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

he loaded it up. the other thing we looked at, and again probably the agency that i respect the most until someone can give me a counterexample, the bureau of economic analysis, that 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 this or that. one of the things i've seen in the gdp data lately which you can make a chart yourself is if there appears to be some residual in the first quarter, that if you look at first quarter gdp just for a number of years it tends to be the lowest quarter of the year, and exactly what that residual is about is a cause of academic debate from one simple back of the envelope message and that is i use think about it, suggested that it might be as high as .8.

if you saw, i'll pick a number that's range completely, so if you saw five, that would mean it's 5.8. if you believe there was -- [inaudible] with that said when you get the details, we think we understand where the seasonality comes from and you can look at the parts that have the patterns and it could be the number, there's a wide range of out casting models now that people use. my favorite is -- [inaudible] it was 1.9. there's a lot of data coming in and they might have changed it to today's data added don't want to get into until 9:30. so imagine it's that number then it could be we should think about what that does for outlook for the year.

>> a a follow-up. in terms of 3% growth, use close to 3% growth. the bar the president set was three percenter over and the forecast for this year, the fed and imf are for less than 3% and going out after words. how do you account for that what you think the tax bill will get us over 3% when even the first year it's not going to get as to 3%? >> we will see what actually this year we think will get to 3% this year. the average for the cbo, and if i state in them and you want to write, please double check would be because i'm averaging numbers that we have but i think the average cbo this euronext is like 3.1. i'm sort of remembering that in my head. in my new york fed lecture which we do for you to again, i went to basically the forecast

revisions both all around the world and lots of people have moved up right around three. given that we are in a world where we were thinking we might be stuck in the ones, that's quite impressive movement. if it ended up being 2.9, attempt off of three, then that would still be a good year. >> paul from the "washington examiner" ." >> kind of unrelated question. having worked with politicians, how is trump different being a businessman? how does the approach your information differently than say others? what are your chances for the tao under 36,000 and trump? >> president trump, i'm each person you work with has their own style and so on but i think for the most part president

trump's style is similar to that of mitt romney. a little bit of romney, a little bit of mccain. even going back to teaching governments in batch of school come the problem is you've got a lot of decisions to make. you have to make them at a very high frequency and so you have to accumulate, recruit experts you trust and then construct a process to figure stuff out. and make decisions in a timely fashion and an accurate fashion. each person has their own style for that a little bit. president trump is good at it. seen a group long meetings towards positive outcomes in front of him in a way that summer to to the kind of thing that would happen with mitt romney where he disagrees with

that guy in those two guys discreet and asked him to disagree with each other in front of them and so on. the basic problem he's solving is so much of the problem president to candidates have salt which is they get asked have an an opinion that many, many things and for present those matters for the future of our country. so very high-stakes. >> second question? >> the equity premium right that was about 3%. so, so if you look at, say should expect a real return going forward like whatever your favorite guess for the real ten year bond yield is plus 3%. that's what that model is. you use the equity premiums to look at the return. if you run for the obvious as numbers get larger, and it takes smaller percentage changes to

get to bigger numbers. >> i'm going to throw one in here. talking about people disagreeing with each other. earlier this month he told the "wall street journal" robert lighthizer pesco everyone's trust meeting everyone at the white house, regardless of the views on trade here so given your views on trade versus the president views on trade explain what that means. how does it work in the white house with the president with such strong views on trade and is his trade advisor and then having economic advisers or chief economist larry kudlow on the other side of that question? >> well, i don't know that we are on the other side of the question. i don't accept the premise of the question. i don't mean to be disrespectful. but as an example the 301 action with china is based in part on work best cda did, estimating

the costs to use economy of intellectual property theft from china. i think that i have said in previous public events what is china is going to be the largest economy on earth than in the district to act like it. they need to respect things like intellectual property rules and that require people to join ventures and then transfer the technology to a chinese company. on the cusp of those actions to our companies, north of 100 billion a year by some estimates. so the idea that everything that everybody in it trade space wants to do is hated by a subset of the team is not accurate. we have other things to debate but in the end i think the president's agenda, his trade agenda which is extensively described it's interesting that

chapter has not been attacked by economist left or right but the objective of the present is a worthy one, which is we need to move towards a world where trade barriers around the world come down, not just for us but for our trading partners. if you look at the asymmetry of the global trading structure they are really notable and at times disturbing. i have a speculation, speculation is dangerous when i say i have a speculation. my chief of staff disney and nasty look, don't do that. but i have a speculation where in the process trump is beginning the process of moving as to a 21st century trading structure, that what happened with the story of the 20th century was there was a conflict between soviet union and the united states and we were each recruiting countries and one of things we did was set up this global trading system where we unilaterally decided to send our

nontariff barriers that practically don't exist. countries joined our system and they kept their tariffs up and kept the nontariff up. kind of a deal get them to embrace capitalism and become a liberal democracy. i think now that the world is more mature we cut trading partners per capita income that are north of hours than the idea that we should tolerate that kind of asymmetry, special with blue-collar workers. that is one i think we should always -- [inaudible] i know the purpose of all of the trade policy is to move towards a more come president used the word reciprocal, where this asymmetry that exists in the data has carefully and extensively and economic report of the present it was kind of --

[inaudible] more towards the low tariffs, low nontariff barrier, , free trade around the world kind of model. if you were to take the imf model where the estimate the impact on u.s. global gdp of such a policy that it's quite an opportunity for the welfare around the world. it would reduce trade barriers and increase and make global economy more efficient. >> mike trumbull, christian science monitor. >> in economic growth, there's quite a bit of labor participation of how to improve it. the need to improve it and now we have senator sanders and others on the left saying let's get a job for everyone come maybe government provide a job. the economic report talks about work requirements so those are

two very different approaches to the problem. but i wonder if you could comment on sort of is or at least some common ground? some of the same solutions around whether it's job training or the opioid crisis, is her an opportunity and how much could you may be banned that curve of declining labor participation? >> i think the curve you're referencing probably look at, virtually everyone here i'm sure with a slightly different angle could write an interesting piece on what's happened to the labor force participation right now. if you look at the chart it was basically headed straight down, and if i look at the outlook in previous economics, then it was expected that would continue. one of the reasons why we were in the new normal with low

growth was we didn't have the workers because the labor fe participation was changing on a downward trend. i think i'm remembering the number right that the obama administration estimate for that at the end was it would be dropping four-tenths a year. i apologize if i don't. now it may be even heading up. that charge is quite striking. that's because the stronger economy, the tight labor market and increasing wage growth is attracting people back into the labor force. the news is spreading. i know we were on a couple tv shows right now but there are i'm sure people viewing who got discouraged applying for jobs because they kept applying for jobs and that getting a job. you can decide i'm going to stop doing that because it's such an emotional strain on me.

you should try to it again rt now. labor markets are tight and there's been an enormous amount of success for people to reattach to the labor force. i i think desantis people are like to say that's an important policy. i think the great recession had some policies that separated people from the labor force in a way that didn't make much sense. the unemployment insurance extension make people long-term unemployed. i think the affordable care act, they did a lot of stuff to drive it down but we're reversing it now. i'm quite hopeful, i mean i'm hopeful that by the time we release it next february that we will have a significantly more optimistic forecast for the labor force participation them get in this economic report. it was because whenever you're suggesting something will break off of a trend, that is somewhat

of a risky forecast, right? it seems like that has been the data. one last thing about that which is that the increase in labor force participation makes digesting the wager data although that challenging for economists. because when people join the workforce after being out for a while they tend to be low-wage people. because they've got to be rescaled before the wages can grow again. when you look at average wage measures in your averaging over a different sample, and the sample includes more low-wage people. so as we are thinking aboute the facts of the tax bill, we are watching that closely so we can be keeping track of what's happening to the median person as opposed to the average. >> we've got 20 minutes to go at a think i've got eight or nine people. >> alt-right interest -- >> no no, no. i'm not trying to tell you to speed up.

>> want as to the capital gains and the prospects for investing to inflation. there's been speculation about this with larry kudlow. how big a priority should this be if at all? is a something that could be executed by regulatory action rather than by full-blown legislation? >> i seen speculation but have not participated in discussions of that matter sunk just not -- on that matter. if something is going cannot, i can't say and i'm not trying to dodge your question. there are a lot of things going on government. i'm just not important to what's going on. >> what about your views on capital gains tax on with it makes sense? >> public finance economists is a worthy idea because it's probably not nearly as a big deal that is was back when inflation was a really big

number. if tax is supposed to be a a l income that we should index the capital gains privilege. i think, and is not in, around the world. if someone told in the u.s. i decided they figured out a way to do that come then i would think that would be a negative. >> i i also want ask about trad. i think there's concern about the united states trade policy on capitol hill. the downstream effects on steel and aluminum tariffs, potential retaliation. also the general uncertainty with negotiation of nafta. some in this group of said this could potential unto some benefits of the tax reform and

growth you've talked about. does cea sure that assessment that these trade action could undermine some of the other growth? >> there's a lot of negotiations and discussions underway and it wasn't until i joined government that summit explained to me that discussions and negotiations are different. discussions and negotiations are underway. i can't comment on those, but i think it's underappreciated that the global effects of barriers around the world coming down to the u.s. level would be really quite positive, and if you're only think about the worst that can happen, then you're not accurately balancing the risks. >> the president has talked about getting back into tpp. most recently a couple reskill charge ambassador lighthizer to take a look at that. do you think the u.s. should get back into tpp and to show that with the present? >> that's a question for ambassador lighthizer. i can say about trade, i was on

a panel long time ago, i think i was a mccain adviser and also advising president obama and talking about trade. often as he often does, says something really, really brilliant about the role of the economist and the trade debate. because he said an economist wrote a free trade deal would be one sentence. it would say free trade. but trade deals have thousands and thousands of lines that are written by lawyers. so when we, as they can't talk about trade, the big talk about what trade looks like in our model. that can be interesting for academic purposes. ..

about the impact that he can deliver. >> george from national journal. >> you are asked about phase two of tax cuts. he talked about the wisdom but i don't think you answered about the timetable and is there any sense of urgency getting that done while republicans still control the house?

>> i have only a little bit more hair than he does. let's just not my lane. it could make sense. i know it's something i would encourage you will nominees the working government where we have one topic and the process are more than a year. we are extremely hopeful the senate will, around.

this is something you advise the president and the team to push this year? what economic impact.have? on the trade issue, happy particular numbers were advised the president about the economic impact if the issues are not

resolved? a whole chapter on infrastructure there's a lot of interesting insight everybody is driving around gas taxes and infrastructure team did a fantastic job about how it relates, we could get a child out of growth researcher spending approach is a sound

one. it might still happen infrastructure plans are still one could component because there is so much work to do. by the fact from a they project and which one it is.

the position of the term the permanent down in private capital but coming in that needs a lot of work. focus on the trade work

agreements for our trade partners and my work product executive and the document in the white house counsel has

sold. >> generally, are you concerned about the trademark of long-term economic growth? the opportunity there are 25% tariffs and they require people to get it to market.

in the package for re- negotiate. and the differences.

and what you said, and i respect that and the first quarter and the positive will find out tomorrow but if you look at the retail control and i suggest a little bit from fourth quarter.

and to be pretty high in the data goes sharper the question on the first quarter and the driving forcesyoungsters

because i can remember when i got his first job. i did they take this social security tax and it has changed over time minor direct deposit receipt. >> if i can follow the word

interesting facts for in going on? >> i would have to get back to you, we have labor economist. but it wouldn't be as nearly. >> he mentioned recordin the

white house policy and u.s. outside of the next. in the entitlements. straits go back to normal and get ahead of the curve on the all things.

>> on non- settlement spending? a lot of times on social retirement age and the reason you are. in the promised from that.

the regular piece for both of the minimize the impact. >> well from what you survived. 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]