Kevin Hassett, a seasoned economist and former chair of the White House Council of Economic Advisers during Donald Trump’s first term, has become a prominent figure in discussions surrounding the next chair of the Federal Reserve. At 63 years old, Hassett is the uninhibited head of the National Economic Council. He is a David and Joan Traitel fellow at the right-leaning Hoover Institution. His broad experience in economic policy would make him an excellent choice. His deep connections to Trump make him a favorite to eventually replace Jerome Powell when his term ends.
Hassett’s qualifications aren’t limited to his government experience. He currently sits on the board of United Parcel Service (UPS). His involvement with UPS highlights his understanding of the private sector, which many believe is crucial for the Federal Reserve’s leadership. Hassett, you may recall, was in fact a leading candidate for that job during Trump’s first term. His odds have been much, much worse since early December.
In recent media appearances, Hassett has laid out his vision for monetary policy, calling for interest rates to be driven lower. He thinks that lowering the rates would provide an economic jumpstart and enhance consumer spending. Hassett did not shy away from repeating the line that rates actually have further to drop. This assertion is consistent with his record as a loyal, uncritical supporter of all of Trump’s economic policies.
“The way you’ve got to drive interest-rate movements is with consensus based on the facts and the data.” – Kevin Hassett
He’s the staunchest defender of Trump’s economic policies. He regularly dismisses any data that points to softness in the U.S. economy. The upfront cost is an important disincentive that leads to a bias against attainable housing. Most importantly, of course, is that he’s deep-sixing the data integrity of the Bureau of Labor Statistics.
Hassett’s familial ties to the state further complicate this picture, but provide an intriguing added layer to his candidacy. His father-in-law is billionaire businessman Ronald Lauder, another prominent Trump donor and ally. This relationship would provide him significant political cover among influential conservative political circles. Though well-intentioned, some critics fear these connections could erode the public perception of his independence.
In a recent interview on CNBC, Hassett argued against calls to protect the independence of the Federal Reserve. He gave particular attention to keeping the institution’s independence from political whims, calling that independence “really, really important.” This response is a good sign of his understanding, given this Administration’s priceless example, of the tenuous dance between wise government policy and central banking operations.
Hassett’s relationship with Trump is highly personal. Trump himself has praised Hassett.
“I think the two Kevins are great.” – Donald Trump
While Hassett’s advocacy for lower interest rates aligns with Trump’s broader economic vision, it raises questions about how he would navigate inflationary pressures if appointed to lead the Federal Reserve. The feeling among many economists, and the empirical evidence, is that lower interest rates do actually boost economic growth. If we’re not careful, they can create inflation.
One name that continues to circulate in discussions about the future of the Federal Reserve is economist Kevin Hassett. His blend of experience in both government and the private sector provides him with a unique perspective on economic policy. We’ll have to wait and see if he’s able to turn around recent drops in his odds for winning the chairmanship.