×

Trump's 'distractions' aren't going to help tax reform, says ex-White House economist

  • President Donald Trump needs to be the "biggest educator in chief" on tax reform if he wants it to happen, Douglas Holtz-Eakin told CNBC.
  • Republicans are expected to release an outline of their tax reform plan this week, yet Trump has spent the last few days taking on the National Football League.
  • "Distractions aren't going to be helpful, Holtz-Eakin said.

President Donald Trump needs to focus on tax reform and become the "biggest educator in chief" if he wants it to happen, American Action Forum President Douglas Holtz-Eakin told CNBC on Monday.

"Tax reform is really hard. It requires an all-in investment by the White House and the House and the Senate," the former chief economist of the president's Council of Economic Advisers under George W. Bush said.

"Distractions aren't going to be helpful," he told "Power Lunch."

Republicans are expected to release an outline of their tax reform plan this week, yet Trump has spent the last few days taking on the National Football League.

President Donald Trump
Brendan Smialowski | AFP | Getty Images
President Donald Trump

On Monday, he said the NFL "must respect" the U.S. flag and national anthem at its games, a day after his earlier comments on the controversial issue triggered protests at the league's games around the country.

On Sunday, NFL coaches, staff and some owners joined players in a show of silent solidarity at their games, after repeated comments by Trump that the league should fire any players who have knelt in protest during the anthem. Some chose to kneel on Sunday, while others linked arms.

Meanwhile, the GOP is expected to release the framework of its tax reform plan on Wednesday. It will likely feature dramatically lower rates for most — if not all — households and businesses, according to several people familiar with the plans.

While Trump has been advocating for a 15 percent corporate tax rate, a Republican familiar with the plans confirmed negotiators are pursuing a rate of 20 percent.

Mark Zandi, chief economist at Moody's Analytics, said the plan has to be revenue neutral in order to boost economic growth.

And a 20 percent corporate tax rate will cost $1.8 trillion to $1.9 trillion over the next 10 years, he noted.

"The arithmetic here is pretty daunting, particularly when you are talking about those kinds of reductions in corporate tax rates," Zandi told "Power Lunch."

As to whether Republicans ultimately have a chance of passing reform, Holtz-Eakin said it all depends on what is unveiled Wednesday.

However, the bottom line is that the country needs economic growth, said

"We need better productivity growth and the real wages that will come with it. That's the promise the president made to the American people," said Hotlz-Eakin, who was also chief economic policy advisor to Sen. John McCain's 2008 presidential campaign.

"The tax bill is an important part of that. We'll have to see what it looks like."

— CNBC's Jacob Pramuk, Ylan Mui, and Reuters contributed to this report.