The fate of the ambitious economic policy plans of President Trump will be determined in part by the people who appoint for critical positions. With a debt of more than $ 36 billion (which are directed towards $ 59 billion in 2035 for some estimates), unresolved inflation, a law of law and the need for extend The tax cuts of the President 2017, it is better that we hope that the coolest and most experienced heads prevail.
It turns out that Kevin Hassett, who during the first Trump administration was president of the Council of Economic Advisors and then the main advisor of the president, was appointed to direct the National Economic Council of the White House. Clearly, one of the economists Trump trusts more, Hasset could only be the person capable of drawing a fiscally responsible path through challenging circumstances.
“Personnel is politics” is not just a situation; It is a fact that has the form of past administrations. The key advisors have long played main papers by preparing monumental economic policies.
It is a long list that includes Arthur Laffer during the years of Reagan, whose theories about tax cuts and economy on the side of the offer fundamentally remodeled fiscal policy and stimulated growth. Ezequiel Emanuel has been called the architect of the Law of Health Care at Low Price of the Obama Administration, with lasting impacts on the medical care of the United States.
Hasset could play an equally important role. Take the debate on extending Trump's tax cuts in 2017. Letting everyone expires is not really an option, but extending them all is controversial: tax cuts are expensive. How to pay for the cuts is crucial. Unfortunately, at this populist era, corporations are often cheads for everything that is wrong with the world, and some voices demand higher corporate tax rates to pay individual cuts.
Here, the Hasset scholarship will be invaluable. In 2006, he and economist Aparna Mathur are co -authors of the first empirical study Examining the link between corporate taxes and manufacturing salaries. Analyzing data from 72 countries for 22 years, they found that the burden of corporate income taxes is largely assuming workers through lower salaries.
This conclusion has been reinforced by many studies. In a recent review of academic literature, the economist of the Cato Adam Michel Institute writing: “The best economic evidence suggests that workers pay more than half and probably three quarters of the corporate tax cost. Therefore, cutting commercial taxes is a tax reduction for Americans who work. ”
While there are still debates about the details, it is now well established that corporate tax cuts are not simply gifts for the rich capitalists. Having someone within the administration that is so authoritarian on this issue will be essential if we should avoid the error of corporate tax increases.
In fact, Hassett's work will be important to assess which tax provisions that expire should be extended absolutely based on the ability to trigger investment, productivity and economic growth. Your recent article In the 2017 corporate fiscal reforms, with Jon Hartley and Josh Rauh of the Hoover institution, it demonstrates the importance of continuing a specific form of fiscal relief, known as total expenditure, which allows companies to completely deduct their investments from their tax bills . That leads to productivity, growth and a more prosperous workforce.
Beyond fiscal reform work, Hasset has been a key researcher on the best way to reduce debt. In 2010, he and co -authors Andrew Biggs and Matthew Jensen published a paper Covering more than 100 cases in which countries tried to reduce budget gaps. Governments that “addressed their budget deficit through a reduced expenses load were much more likely to reduce their debt than countries whose budget equilibrium strategies depended on higher taxes.”
In addition, “the typical failed fiscal consolidation consisted of tax increases of 53 percent and 47 percent expense cuts. On the contrary, the typical successful fiscal consolidation consisted of 85 percent expense cuts. “
As Hasset, Biggs and Jensen made clear, a large majority of countries that have tried to reduce debt / GDP proportions have failed precisely by trusting too much in higher tax rates. Taking into account that the debt and deficit of the United States are so out of control that we must implement austerity measures later than later, it is more a matter of “when” yes “, having someone who understands the importance of Carefully design fiscal adjustments is, once again, essential.
There are many other areas in which Hasset could be influential.
While might believe that Trump's tariffs can be used to obtain concessions from other countries, he understands that these are taxes imposed on Americans who do not discuss their way to prosperity. Perhaps Hasset will moderate the enthusiasm of the administration by the tariffs.
Similarly, taking advantage of his experience, Hasset knows that immigration is essential for economic growth, a position that Trump's campaign and administration have not emphasized.
A lot of attention has been paid to Trump's appointed in areas such as medical care and defense. Hasset's appointment should not be overlooked. Point out an focus on growth, job creation and even dodge fiscal responsibility – Not only Populist measures in the short term.
Veronique de Rugy He is a senior research member at the Mercatus Center of the George Mason University. This article was produced in collaboration with the creators Syndicate.
