Joint Economic Committee Chairman Pat Tiberi (R-OH) led a committee hearing entitled “The Economic Outlook with CEA Chair Kevin Hassett” on October 25, 2017. Kevin Hassett, chairman of the Council of Economic Advisers, discussed the U.S. economic outlook from the Trump Administration’s perspective.

 

 

Chairman Tiberi pointed out that the Congressional Budget Office (CBO)’s steady downgrade of real potential GDP was indicative of years of anti-growth policies championed by the Obama Administration, which constrained the U.S. economy’s potential.

 

 

Chairman Tiberi explained that continuing with the status quo isn’t an option:

 

…we so urgently need both tax and regulatory reform. We must restore a more highly functioning market economy that offers hope and opportunity for entrepreneurs, investors and workers, and that removes the artificial constraints on faster economic growth.

 

 

Chairman Hassett acknowledged that the administration was not satisfied with the growth rate:

 

It is time to turn our attention to building a plan for boosting the rate of growth in the long-run ... The administration’s plan for tax reform will have an important role in improving the rate of productivity growth, in combination with its plan to stabilize the regulatory environment.

 

In response to a question about the impact of Obama era policies on growth, Chairman Hassett responded:

 

It’s not necessarily our actions on tax policy [in recent years] that have harmed us; it is our inaction. What happened is the rest of the world cut their corporate taxes. That made their countries much more attractive for the location of multinational plants than our country and we saw the activity move overseas … that means lower demand for workers and lower wages, as well.

 

Vice Chairman Mike Lee (R-UT) described the burden of overregulation, with a cost of over $2 trillion to the American economy a year, and asked how regulatory reform efforts could increase GDP and benefit America’s poor and middle-class.:

 

I keep two stacks of documents in my office here in Washington. One stack is a few inches tall; it's a few thousand pages long I think for last year it was three thousand pages long. It's the laws passed by Congress last year. The other stack is 13 feet tall. For last year it was about 96 thousand pages long, and it's last year's Federal Register, the annual cumulative indexes of federal regulations as they're released and later finalized. Those regulations end up costing the American economy about two trillion dollars a year. This is up from just three hundred billion dollars a year twenty years ago when I first started tracking this problem. So it's increased roughly seven-fold.

 

Congresswoman Barbara Comstock (R-VA) asked what policies can help increase growth rates for the American economy at a time when international competition is strong and when business leaders are deciding where to invest:

 

I'm in Virginia with a lot of the technology sector and in my district and I often hear from them about they're just sort of waiting whether they can invest here or invest somewhere else.

Chairman Hassett suggested the upcoming tax reform would spur the much needed growth for both labor and capital:

 

I think that the tax reform that has been negotiated with the White House and Congress is designed optimally to help both [individual and capital]. On the individual side, by reducing marginal tax rates, it'll encourage higher labor supply, and on the corporate side by making the U.S. a place where plants want to locate again.

 

Watch the entire hearing here.

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