Trump advisor Kevin Hassett: President is 'very serious' about tax plan 'phase two'

  • Rep. Kevin Brady is now talking to the White House about a "phase two" of the tax plan, which Trump has repeatedly hinted about.
  • "This is not just posturing. This is not just politics," says Kevin Hassett, chairman of the Council of Economic Advisors.
  • If individual tax cuts become permanent, Americans' pay hike will even be bigger, he says.

President Donald Trump and the House Ways and Means Committee chair, Rep. Kevin Brady of Texas, are "very serious" about implementing a second phase of the Republican tax plan, a top economic advisor to Trump told CNBC on Friday.

Brady is now talking to the White House about a "phase two" plan, which Trump has repeatedly hinted about.

"This is not just posturing. This is not just politics," Kevin Hassett, chairman of the Council of Economic Advisors, said on "Closing Bell."

Possible revisions include making individual tax cuts permanent. The GOP made individual tax cuts temporary in order to reduce the amount by which the plan was estimated to increase budget deficits.

Hassett said his position from the beginning was that everything should be permanent but he respected the legislative process.

"America's workers are going to get that $4,000 pay hike because we passed a tax cut, and the pay hike will even be bigger if we can extend it and make it permanent," he said.

Critics of the plan have pointed to the fact that it will increase the deficit by an estimated $1 trillion. Proponents have argued that the tax cuts will help pay for themselves by stimulating economic growth.

Hassett emphasized that fixing the broken tax code has always been the priority.

"In the medium and long term, economists always say that deficits matter and that we've got to turn our eyes towards that after we fix our really big problems," he said. "But starting and prioritizing tax cuts and defense, that was the president's decision, and I 100 percent concur with that judgment."

Larry Kudlow, recently named director of the National Economic Council, told CNBC earlier this week that there will be a deficit in the short run. However, he compared it to a company making new investments to grow its business.

"If you are borrowing to have greater investment — literally we are investing in America with these lower tax rates and sound money and making sure we look after our interests overseas — that's the best possible thing," he said in an interview Wednesday on "Closing Bell."

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