Backlash over Trump comments a 'nightmare' for Gary Cohn, says former Obama advisor

Key Points
  • Austan Goolsbee, chairman of the Council of Economic Advisers under the Obama administration, said the last few days of political chaos is a "basic nightmare" for the White House's chief economic advisor, Gary Cohn.
  • "I think they're going to have a hard time getting things done," Goolsbee said.
  • Cohn, a former Goldman Sachs executive, reiterated the administration's focus on tax reform Tuesday, amid the resignation of several business leaders from advisory positions.
Austan Goolsbee: Trump's a bad smell that you can't get rid of

The latest political turmoil is spelling trouble for accomplishing anything on the Trump administration's agenda, such as tax reform, a former national economic advisor said.

"I think this is your basic nightmare for a guy like Gary Cohn or any of the 'get things done' caucus if you want to call [them] that within the White House," Austan Goolsbee, chairman of the Council of Economic Advisers under the Obama Administration, said Wednesday on CNBC's "Power Lunch." "They can't go out of their house to a restaurant without the press getting in their face and asking them, 'Why are you still serving the administration? Do you disagree with what the president just said?'"

"I think they're going to have a hard time getting things done," Goolsbee said.

Stocks have rallied on hopes for pro-growth policies from the Trump administration, and could take a hit if the White House strays away from tax reform, deregulation or other pro-growth measures.

Earlier on Wednesday, a group of top business leaders in Trump's Strategic and Policy Forum decided to disband the group following the president's combative news conference Tuesday. Trump defended his comments that "both sides" were to blame for the deadly white nationalist rally in Virginia over the weekend.

Following the forum's disbandment, Trump announced plans to also dissolve the Manufacturing Jobs Initiative council. Several executives had already resigned from the council.

If former Goldman Sachs president and Trump chief economic advisor Cohn was to ever resign, as many of his executive friends are apparently urging him to do so now, the markets could finally get seriously worried about the Trump agenda. On Wednesday, The New York Times' Andrew Ross Sorkin reported on CNBC that "a number of people" on Wall Street and at Goldman Sachs have called Cohn to suggest that he resign from the administration.

However, Cohn has maintained the White House is still focused on stimulative policies. Even after Trump's fiery news conference Tuesday Cohn told reporters that the administration worked on tax reform that "morning" and he expected a new policy by the end of the year.

Goolsbee said many in the business community initially thought Trump would focus on deregulation, cutting taxes and implementing other business-friendly policies.

"I think what they're slowly realizing is Donald Trump's not doing anything that he doesn't want to do. And the campaign was a perfectly good indicator of what he wanted to do," Goolsbee said.

Stocks lost nearly all their gains for the day and closed mildly higher Wednesday after minutes from the Federal Reserve showed policymakers were split over future rate hikes and indicated inflation may remain below the 2 percent target longer than expected.

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