Trump economic advisor Hassett: New GOP tax law will take pressure off the Fed

  • The GOP's new tax cuts will take pressure off the Fed despite skepticism from some central bankers, Trump advisor Kevin Hassett says.
  • Minutes from the Fed's December meeting on multiple occasions noted that officials remained unsure about the tax plan.

The new GOP tax law will take pressure off the Federal Reserve despite skepticism from some central bankers, the chairman of President Donald Trump's Council of Economic Advisers said Monday.

Minutes from the Fed's December meeting on multiple occasions noted that officials remained unsure over just how much of a boost in activity would come from the tax cuts.

Members were "quite uncertain" about the impact the tax plan would have on the labor supply. There also was concern that the tax windfall corporations would get would be spent on dividends and share buybacks.

Fed officials have said they view gains in coming years as muted and more in line with the post-financial crisis trend.

"I respect the independence of the Fed, but you know our modeling is the ... tax cut is going to increase supply, it's going to put downward pressure on price and it's going to actually take pressure off the Fed," Trump aide Kevin Hassett told CNBC's "Squawk Box."

He said recent announcements of minimum wage increases and one-time bonuses by U.S. companies proves the tax cuts will have a positive affect.

"We're going to get more capital formation here in the U.S.," said Hassett, a former senior economist at the Fed. "We've got more than a million people getting raises of around $1,000 just because the tax bill passed a few weeks ago."

The raises Hassett was referring to were announced by many companies in the immediate aftermath of the final GOP tax bill passing Congress. According to a list compiled by the right-leaning, anti-tax group, Americans for Tax Reform, companies employing more than 1 million Americans said they're giving their workers raises due tax reform.

Before his appointment, Hassett was an economist at the American Enterprise Institute. He had also been a consultant to the Treasury Department and an advisor on presidential campaigns, including Republican Mitt Romney's unsuccessful run in 2012.

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