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Episode #134: Kevin Hassett
141 Plays6 years ago
Welcome back to the show. On this week’s episode, I sit down with the Chair of the Council of Economic Advisers, Kevin Hassett. Prior to his current stint at the CEA, Kevin was at the American Enterprise Institute. He was...
The post Episode #134: Kevin Hassett appeared first on PolicyViz.
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Transcript
Introduction and Guest Announcement
00:00:10
Speaker
Hi, everyone. Welcome back to the Policy of Is podcast. I'm your host, John Schwabisch. On this week's episode, I'm excited to talk with the chair of the Council of Economic Advisors, Kevin Hassett. Now, before we get into the show, just a couple of quick announcements.
Upcoming Workshops and Conferences
00:00:24
Speaker
First, if you are living in the Boston or New York City areas,
00:00:28
Speaker
I am coming to your towns with my good friend Stephanie Posovic. We are going to be putting on two data-designed workshops in December. We will be in Boston on Wednesday, December 5th. We will be in New York on Wednesday, December 6th.
00:00:45
Speaker
If you are interested in attending this full day workshop, please take a look at the registration page. We have an early bird discount that expires at the end of September, but we're also offering discounts if you're a student, if you work at a nonprofit. If you have a group that you want to send, please do so. I teach data visualization, core principles and practices in the morning, and then Stephanie talks about design and you get to do some hands-on work in the afternoon. So I hope you'll be able to make it.
00:01:14
Speaker
The other thing I wanted to let you know about is the information plus conference that's taking place in Potsdam, Germany. That's coming up in the middle of October. I will be there. I hope you will be there. It looks like a really fun time. So I hope you will be able to join me. And the third thing I wanted to make sure I highlighted was that if you are in DC.
00:01:35
Speaker
The Association of a Public Policy and Management Conference is taking place in November here in DC. The conference is officially Thursday, Friday, Saturday, November 8, 9, and 10. I, along with members of the Urban Institute's communications team, will be hosting a research to policy boot camp on November 7th. It's the official pre-conference workshop
00:02:01
Speaker
that we will be talking about data visualization. We'll be talking about how to write a blog, how to do social media, how to put together an entire comprehensive communications plan for your research and for your analysis. So if you're interested in attending that, I think you can sign up just for the pre-conference workshop. It's just gonna be a five-hour session in the afternoon on November 7th. And then you could, of course, if you're interested, sign up for the entire conference. It's a really great conference.
00:02:28
Speaker
that takes place every other year here in DC and then around the country in the in the other years.
Role and Purpose of the CEA
00:02:34
Speaker
So anyway, we're going to turn over to this week's interview I conducted with Kevin Hassett over at the old executive office building. Kevin is the chair of the Council of Economic Advisors. So I hope you will enjoy this week's episode of the policy this podcast.
00:02:55
Speaker
So I'm here with Kevin Hassett, chair of the Council of Economic Advisors. Kevin, thanks for coming on the show. It's great to be here. Great to talk with you. I think I'd like to start because I'm not sure a lot of my listeners know much about the CEA.
00:03:07
Speaker
So it would be great if you could talk a little bit about yourself and where you've been and how you got here, and then a little bit about the role of the CEA in the administration. Sure. Well, the Council of Economic Advisors was founded in 1946 in the Employment Act in 1946. And the basic idea was to hardwire an economics faculty.
00:03:27
Speaker
into the White House. And so ever since 46, there have been 29 chairman, 29 people in my job. And they've built top flight economics faculty to come. It advised the president on economic matters. And one of the things that's different about the CEA is that most people come here for a year or two. They tend to be like professors from some university who take a year's leave and then come and then go back.
00:03:56
Speaker
doesn't really have a large permanent staff like a lot of other government agencies. And I think that's one of the things that's a real asset for it because it helps sort of preserve its neutrality and professionalism. So where does the CEA fit in the larger sort of ecosystem of the administration's economic staff?
00:04:15
Speaker
Well, I think that there's, within the White House, the National Economic Council, which is chaired by Larry Kudlow, and the CEA, and then there's this other thing called the Office of Management and Budget. Those are really the three main economic arms within the White House. Mick Mulvaney is the director of the OMB, and you could think of him as being in charge of all things spending.
00:04:39
Speaker
And Larry Kudlow coordinates between the different White House segments and also the cabinet offices when there's an issue like, what do we do about ethanol? What do we do about taxes? That will require expertise from many different agencies and meetings where we talk about what we think we ought to do and so on. And the National Economic Council sort of coordinates those meetings. The CEA's job is to just analyze options and quantify what might happen if we do this or that.
Maintaining Objectivity and Communication Challenges
00:05:08
Speaker
So you mentioned how the role of the CEO is to be this neutral party. How do you, both as chair, but generally, how do you manage the neutrality?
00:05:21
Speaker
You're working for the White House in different administrations. How do you manage that objectivity? Well, the job is to just report what the modeling and the data say. And politicians might look at all of the output that you produce and decide that they really want to talk about output three, output five, and output seven, but not talk about two, four, and six.
00:05:47
Speaker
And that's their prerogative. And so I think that the CEA is most effective when it helps inform solid decisions that are backed by sound economics. And then the politicians are thrilled to report about your analysis because it supports their decision.
00:06:04
Speaker
Now we're gonna seem to be in an era where facts, truth, research in general seems to be kind of under attack from different sides. So how do you think about that when you are communicating what you guys are doing?
00:06:18
Speaker
I think that being as transparent as possible, showing how your analysis is done. If you look at the Economic Report of the President, which we helped produce, we had to produce forecasts for how the economy is going to do. And we described with great precision the models that we used and the rationale that we had for picking the number
00:06:42
Speaker
than we did. And so it'd be easy to replicate what we did for someone. And I think that that's a very important part of being convincing. So you don't just say, hey, I got this really cool black box. Trust me, it's a great black box. And it says we're going to grow 5% this year. That shouldn't convince anybody.
00:06:58
Speaker
But if you say, hey, here's the standard in the literature model, and it says we ought to do this, but it doesn't account for the effects of tax reform. And in that literature, it says you ought to get half a percent growth out of tax reform. So combining the two, here's our growth estimate, then it's something that should be convincing because it's replicable and based in science. Right. And we've seen, I think, in economics, maybe not especially economics, but certainly in economics,
00:07:26
Speaker
the attack on these assumptions that we have to make who are making these models. So how do you balance or how do you make the argument that your assumptions are better or objective relative to other people's assumptions? I mean, you're coming from the administration, you know, from the campus here. So how do you make that case, I guess, to the public and the press sort of at large?
00:07:51
Speaker
Well, you document it with, like, so it shouldn't be much about assumptions. It should be about evidence. And so as an example, during the tax debate, we put out a very detailed paper saying, you know, here's what's going to happen to the economy that's cited in millions of papers that looked at what happens if you move this or that. And some of our opponents are political opponents. So the White House is political opponents.
00:08:17
Speaker
you know, basically made assertions about what the literature says that are inconsistent with what the literature says. And that was sort of, I think, easy for people to see by just like inspecting the evidence that people point to.
00:08:33
Speaker
at the American Economic Association meetings and made a presentation that was, again, festooned with academic citations. And the people who sort of made the other side, people like Costicles B. and Jason Furman, I don't think they made a very strong case in part because they didn't have a lot of evidence to cite, because I think the literature overwhelmingly says that if you pass a tax bill like we had last year that you'd get a cap to spending boom.
00:09:01
Speaker
And sure enough, here we are half a year later, and capital spending's going up by just about what the model said. But I think that that provides some vindication for the approach, which is read the literature, see what the literature says, base your argument on that and not on what's politically convenient. So you have this AA presentation in front of economists, but you're also talking to the president, you're talking to members of Congress.
00:09:32
Speaker
economists rooted in models and details and appendices with trying to communicate with people who kind of maybe they just want the answer or they want the simple statistic that they could use.
00:09:47
Speaker
I'm on television talking about economics quite a bit, and a couple times in the last week or two, the people interviewing me said, boy, now we're really boring the audience. And I think that there are times where
00:10:03
Speaker
You're right. People want to just sort of cut to the chase. But my view is that as an economist, my job is not to help somebody's ratings, but rather to help people who want to understand where it comes from understand that. And maybe sometimes I provide too much information, but I think it's better to err on that side. Right. So when you're talking to just say numbers
00:10:23
Speaker
For example, let's go back to the tax center. How do you make the case without bringing up the hundreds of citations that this
Data Visualization and Confidentiality
00:10:32
Speaker
charge? Sure. Well, one thing that we do, and you've helped us with this at types, is data visualization that we have charts. I did the press conference with Sarah Sanders a while ago, where we presented a bunch of charts about how the economy is doing after the tax cut.
00:10:53
Speaker
And I think that the charts are, I don't know if the word's convincing, but they stimulate a lot of thought that there's something going on that's interesting and maybe consistent with economic theory. But those same slides, I also went to the Senate and presented those slides to the Senate Steering Committee. And so I think the slides, well-chosen slides could be helpful, but often just talking things through is useful as well.
00:11:22
Speaker
So what other big communication challenges do you think the CEA has?
00:11:29
Speaker
You know, I think that it's not really a communications challenge, but it is, maybe it's like the opposite of a communications challenge, but I'll describe it as being something that is important to me and will be important to future CA chairs, and that is that suppose that you have five ideas about how we might make the economy better, and then you ask me to analyze them,
00:11:55
Speaker
and then I analyze them and one of them, according to our models, would destroy the economy. Well then, if somebody leaks our analysis and then tries to plant a story about what a kook, a shwabish is, then you won't want to ask us the next time. So that most of the product that we produce
00:12:24
Speaker
is confidential, protected by executive privilege. And the reason is that since it's for deliberation, then we just tell the truth. We don't pull punches. And so people who want to not have analysis around will tend to sort of want to leak it so that people become reluctant to ask the CEA what to do.
00:12:46
Speaker
And so that's not really a communications problem, right? It's like protection from unintended communications. But I would say protection from unintended communications is a key challenge in every way. Right. So do you have an example that maybe is generic or maybe something you've actually heard publicly, but something that you've put out where members of the administration have said,
00:13:08
Speaker
We don't believe you, or we're going to go ahead anyways. I'm sure you had those discussions. Yeah, I can't talk about those discussions. But there have been numerous times since I've been here, and I can't confirm or deny their accuracy, where there have been big news stories about what CEA may or may not have said. And so it's clear that in this political arena that control of the release of information is something that the CEA charities to pay attention to.
00:13:37
Speaker
So as the head, as a manager of a team, the CEA is about 30, 35? Maybe up to 50. 50 people. So as the manager of a team of 50 people working in a political climate, most of the people here are economists. Not very political. Right. They're not very political. So how do you manage that? How do you direct that?
00:13:58
Speaker
I think that basically our team is filled with people who love economics and who especially love their field in economics, which is why they chose to be a labor economist, a macro economist, or a regulatory economist, trade economist, whatever. And so mostly the requests for CEA input are easy to allocate to someone who has a specific expertise in that area.
00:14:24
Speaker
And when they get the assignment, they're really thrilled to basically produce a memo that says, hey, if we do this or that, here's what happens. Because that's, you know, in the first place why they studied that thing is that they want to try to make the world a better place. So it's not a very difficult management problem at all.
00:14:44
Speaker
Yeah, we will, depending on who the audience is, that sometimes that my chief of staff, DJ Norquist, is a brilliant communicator and she'll very often sort of try to make it easier for people to understand. Another thing that we'll have to pull back sometimes given that it's, you know,
00:15:03
Speaker
that anyone who's listening who's ever presented at a seminar understands that economists tend to be pretty frank. So if somebody thinks that your model has a problem, then they might say, well, that assumption is the stupidest thing I ever saw or whatever it is. And it's pretty much how we interact with each other because it's pretty efficient too. If you're in a seminar, then prefacing every criticism with 10 moments of praise and just waste everybody's time. You should just get right to the criticism.
00:15:30
Speaker
Well, one of the issues is that everything that goes through the White House goes to all the different agencies for comment. And then if it's this area or that area, we might give it to an economist to comment on what some other part of the White House is doing. And very often, we have to sort of go in and make it less snarky and less mean because economists tend to be that way to each other. But we really can't have that be our face to the rest of the team here.
00:15:59
Speaker
So have you had to change your approach to talking about economics? You mentioned going on TV a lot. You've been doing this a long time, been out there writing for the Wall Street Journal for certain organizations. Have you had to change the way you present in different places? No, I think I'm pretty much doing it the way I've always done it. I think that it's a difference between having been a think tanker at the American Enterprise Institute and having, if I had been,
00:16:27
Speaker
you know, earlier I was a professor at Columbia. If I'd spent all my time at Columbia, then I probably would have had a lot less experience doing TV and communicating with not economists. But, you know, the think tank world is one where you have to kind of do both. And so, in fact,
00:16:43
Speaker
If you're at Brookings or AEI, one way to think about the job and how it would differ from being at an academic department is that at Columbia you're teaching students in a class, but at Brookings you're basically teaching
00:16:59
Speaker
the public. And so therefore the skills of a Brookings scholar are a little bit different, but they're similar. You're trying to help people understand what it is economists think about things, but the audience is a little bit different. You can't use equations quite so much when you're on TV and such. So is your development into that area, was that just experience or did you, how did you develop the skills that made you effective?
Communication Skills and Reporting
00:17:25
Speaker
I don't know if I'm an effective communicator, but I just started working at AEI and then at some point somebody asked me to come on TV and talk about whatever it was. After doing that, some other guy, some other time asked me. Over time, I'm now an old man, so I've done this many times. I want to turn back to the policy side.
00:17:50
Speaker
looking forward at least the next few months until November elections, what do you think are the big policy challenges or things that you and the CEO will be working on?
00:18:01
Speaker
I think that the biggest thing that we're working out at the CEA right now is that, as you know, that we have to produce the annual report of the Council of Economic Advisors and the Economic Report of the President. And we have to pretty much nail that shut in December. And it's, what, about a 500-page book. And so we have to get that baby going. Can you talk a little bit about that? I mean, I don't think it's like, and I'll thank most people sit down and read.
00:18:28
Speaker
You know, it's interesting how many people do read it, but I think that it's a document that we're requiring by law to produce, according to the 46th Employment Act, that establishes both the sort of state of the economy, documents it, but also looks out at what's right and what's wrong in the economy and proposes policies to fix the things that are wrong. And so in last year's Academic Report of the President, we had a
00:18:57
Speaker
Chapter on infrastructure because infrastructure in America is really in deep trouble and you know, we need to do it better and There are all sorts of problems in infrastructure. For example that it's financed a lot with a gasoline tax but You know fuel economy is approved so much and we're even switching to electric cars, you know Imagine if everybody's driving around electric car then how is the gasoline tax gonna fund the highways at that point, right? I
00:19:23
Speaker
And so issues like that, we addressed. On infrastructure, we had a chapter on cybersecurity, where we talked about what's going on. On cybersecurity, what a significant negative effect cybercrime is having on the economy, some of the first estimates, really.
00:19:38
Speaker
that have been put out by a government agency, that topic came out of the economic report. And so we have to sort of both look at what's going on now and think ahead to the problems that future policymakers are going to have to think about. And so anyway, so it's a heavy responsibility, a weighty responsibility. These documents live forever, and often they're very influential. And our job is to go from zero to one between now and December. And it's a really big job for the CEA staff.
00:20:05
Speaker
Do you get to choose those chapters of cybersecurity infrastructure? We collectively as a staff will have meetings and say, here's what we think we're going to do. After we do that, then we'll send it around to the other corners of the White House and say, here's what we think we ought to do. Is there something you'd like us to look at that we didn't list here? Or is there some reason why you think that
00:20:28
Speaker
Chapter 3 might be a bad thing to go into this year because of whatever. But as a practical matter, I think that at least for the first one, pretty much our outline was what we pursued. Anything else I missed that we should cover about how the CEAs
00:20:48
Speaker
No, I think that the one thing that's a little bit different for the CEA now as opposed to the past is that we actually tweet. And so when we see a chart that we think is really interesting to people who are following the economy and then we'll throw it out there on the
00:21:05
Speaker
Twitter. There is a little bit of a revolution going on. We're probably like 50 years behind the times, but compared to the 1946 CEA, where the communications were really just the economic port of the president and then memos to the president and so on, that we are a little bit more participating in the 21st century in terms of communication.
00:21:25
Speaker
How do you and the staff think about using Twitter versus waiting for the big ERP report or a 30-page PDF report? How does that strategy work? I think the Twitter stuff tends to be about the news of the day. Today, there were three data releases that were all pretty good, pretty interesting, reflect that the economy has got a lot of positive momentum. At the morning meeting,
00:21:53
Speaker
I said to the staffers who follow those data, hey, why don't you look at what came out today and propose some tweets that we might make about those. I haven't received proposed tweets yet, but we'll look at them and then as a team decide whether they're high value enough to merit tweeting. Well, thanks so much for having me. It's an honor to be here. Thanks a lot. Thanks.
00:22:20
Speaker
Well, thanks for tuning into this week's episode. So until next time, this has been the Policy Viz Podcast. Thanks so much for listening.