NEC director on Texas flooding, trade deals, ‘big, beautiful bill’ and more
(CBS, KYMA/KECY) - Kevin Hassett, Director of the National Economic Council (NEC), spoke with Weijia Jiang on Face the Nation Sunday to offer condolences to the flood victims in Texas.
"It's an incredible, heartbreaking story, and Kristi Noem and the president have instructed the federal government to throw everything they've got at helping the survivors and helping clean up that place," Hassett expressed.
Jiang and Hassett then talked about trade deals.
A 90-day freeze on sweeping U.S. tariffs is set to expire on July 9, sowing economic uncertainty as the Trump administration works to revamp the terms of global trade.
The stakes for millions of U.S. consumers and businesses are high. Economists warn that the barrage of import duties announced on April 2, which President Trump called "Liberation Day," could trigger another bout of inflation, put smaller companies out of businesses and dent financial markets.
As next week's deadline approaches, the Trump Administration has touted new trade agreements with countries including China, the U.K. and Vietnam, while the status of other pacts remains under wraps.
President Donald Trump told reporters Friday the U.S. is likely to start informing some countries on Friday what tariffs their exports will face.
Earlier in the week, he said doesn't plan to extend the July 9 deadline, leaving little time to clinch bilateral deals with dozens of other countries.
This prompted Jiang to ask Hassett how countries can negotiate if they don't even know how much time they have left, and Hassett said:
"The rough outlines of the deals are becoming clear to everybody, because we have some deals like the UK, and the Vietnam deal that are starting to be, you know, I guess, guidelines for what might happen. But, one of the things that we're seeing that's really interesting to me, is that people are just on-shoring production of the US at a record rate. As we've had record job creation, record capital spending, and this is even ahead of the Big, Beautiful Bill. And so, I think what's happening is that people are responding to President Trump's, you know, potential threats to have high tariffs on countries by moving their activity here into the US, which is creating jobs, more than two million jobs, since he took office, and raising wages. You know, wage growth is heading up towards the really, really high pinnacles that we saw in 2017. And so, I think there's a race right now to get activity into the US. And, in part, that race has been kicked off by President Trump."
Kevin Hassett, Director of the National Economic Council
During the interview, Jiang and Hassett talked about the One Big, Beautiful Bill, which President Trump signed into law Friday.
Jiang said, "There's a consensus that this bill adds tremendously to the deficit," with the Yale Budget Lab estimating the bill will add $3 trillion to the deficit and the Tax Foundation saying the tax portion of the bill "could also add $3 trillion to the debt."
Meanwhile, the Committee for a Responsible Federal Budget says the bill could add up to $5 trillion over the next decade.
However, the Administration said the bill will actually shrink the deficit by $1.5 trillion, prompting Jiang to ask Hassett "why there is such a drastic difference between your number and all those others," to which Hassett said:
"First of all, let's remember that science is not democracy. Truth is not democracy. Our estimates are based on modeling that we used last time, when I was Chairman of the Council of Economic Advisers to say what would happen if we had a bill, how much growth we would get. And we said, and we were criticized soundly, that we would get 3% growth. And we even had the really technical macroeconomic models that said that we would get 3% growth. We run the same models through this tax bill, it's even better. And what we're seeing is that if you get 3% growth again, then that's $4 trillion more in revenue than the CBO and these other bodies are giving us credit for. They have been wrong in the past, and they're being wrong again, in our belief. But, the thing that disappoints me is that if I put out a model and I say, hey, here's what's going to happen, we're going to get 3% growth. And then it turns out it's 1.5% growth, then, as an academic economist, as a scientist, then it's my duty to say, what did I get wrong? What did my model miss? These people aren't doing that. And that's the thing that I find disappointing, because we put peer-reviewed academic stuff on the table, said we're going to get that 3% growth, and then we got it right last time, and we believe we're going to get it right this time. But, if you think that 1.8% growth is what's going to happen over the next 10 years, then you should agree with the CBO number. But, there's another part of the CBO number that you need to worry about. And that is that if we don't pass the bill, that it's the biggest tax hike in history. And with that big tax hike, that of course, we would have a recession. The CEA says that we'd have about a 4% drop in GDP and lose 9 million jobs. If we had a 4% drop in GDP and we lost 9 million jobs, what would happen to the deficit? And so, I don't think that the CBO has a very strong record. I don't think these places have a very strong record. And what they need to do is get back to the basics of looking at macroeconomic models. There's a really famous macroeconomist at Harvard named Jim Stock. They should go back and read everything Jim Stock has written for the last 15 years, and fold those into their models, and then maybe we could talk."
Later in the interview, Jiang and Hassett talked about the potential loss of Medicaid coverage to "as many as 12 million Americas" because of the bill, with Jiang asking Hassett what the NEC's estimate for how many people could lose coverage.
"On the CBO coverage, so what are we doing? So, what we're doing is we're asking for a work requirement. But, the work requirement is that you need to be looking for work, or even doing volunteer work, and you don't need to do it until your kids are 14 or older. And so, the idea that that's going to cause a massive hemorrhaging in availability of insurance, doesn't make a lot of sense to us. And then, if you look at the CBO numbers, if you look at the big numbers, they say that people are going to lose insurance. About five million of those are people who have other insurance. They're people who have two types of insurance. And so, therefore, if they lose one, they're still insured. And so, the CBO numbers on that side don't make any sense to us at all. But, on the other side, go back to 2017 when we had work requirements for Obamacare, they said that we lose about four million insured between 2017 and 2019, and about double that over the next 10 years. And, in fact, the number of insured went up. It went up quite a bit, by more than 10 million over those two years, because the bottom line is, the best way to get insurance is to get a job. And we've got a Big, Beautiful Bill that's going to create a lot of job creation and a lot of insurance, and the CBO is just not accounting for that. And again, they need to go back and look at all the things that they got wrong. You realize that they're underestimating Medicaid spending by 20%. They should look back at all the things they got wrong, and explain what they're going to do to get it right in the future, and to do a better job. And if they do that, we'll take them more seriously. But right now, I don't think any serious thinker could take them seriously, because they've done so wrong, and wrong for so long. Even if you go back to when President Obama passed Obamacare, they got every single number there wrong about how many people would get private insurance and how few people would get Medicaid, and so on. And so, their record in this modeling space is about as bad as it's possible to be. In fact, you could, kind of, roll the roulette wheel and come up with a better set of numbers, better history, track record than CBO."
Kevin Hassett, Director, National Economic Council
To watch more of Jiang's interview with Hassett, click here.
