Eggs, Lies and Gasoline

The unbearable lightweightness of being Kevin Hassett

Last Sunday Kevin Hassett — chair of the National Economic Council, effectively the Trump administration’s chief economist — was interviewed by Nancy Cordes for CBS’s Face the Nation. Most observers expect Hassett to be appointed as the next chair of the Federal Reserve. Prediction markets give him a virtual lock:

So CBS was probably hoping that he would say something newsworthy. He didn’t.

But he did, in just a few sentences, make it clear that he is absolutely unqualified — intellectually and morally — to be Fed chair. And the fact that nobody took notice, that his ignorance and mendacity were accepted as par for the course, demonstrated just how far our standards for public service have been degraded.

Here’s the exchange that caught my eye:

NANCY CORDES: What’s your advice to holiday shoppers who don’t want to spend more this year than they did last year, or can’t afford to spend more?

HASSETT: Right. Well, as you know, it depends on what you’re looking at. Like egg prices are down. Gasoline prices drop below $2 a gallon in a lot of places, mortgage rates are down—

NANCY CORDES: --you mean below- gas prices on average are still at $3 a gallon.

HASSETT: Yeah that’s right for a few states they got below two.

Given the timidity of legacy media these days, Trump officials need to be really out there to get fact-checked in real time. But Cordes was right: average national gas prices are around $3 a gallon. And contra Hassett, there are no states in which gas prices are below $2, or even close:

Was Hassett lying, or just unaware of basic facts? Neither is what you want to see in a man who may soon be overseeing monetary policy.

Furthermore, if you’re trying to assess economic policy, it’s hard to come up with worse indicators than the prices of eggs and gasoline. Egg prices fluctuate wildly, not in response to policy changes, but because of the coming and going of bird flu. Gasoline prices mainly reflect the global price of crude oil, a price on which U.S. policy has at most a marginal influence.

So what are we to make of Hassett boasting about prices he should be ignoring if he becomes Fed chair?

Look, I’m not naïve. I understand that when you work for the president — any president — you’re expected to make the best case you honestly can for his policies. But “honestly” is the key word. Sycophancy toward a president who refuses to acknowledge reality, who insists that affordability is a “con job,” crosses that line.

It’s especially important that public officials not tarnish their reputations if they’re going to be moving on to jobs that are supposed to be apolitical — jobs like chairing the Federal Reserve.

The truth is that if Hassett becomes Fed chair, he’s likely to face some very hard choices. How will the Fed deal with the conundrum of weak labor markets combined with stubbornly elevated inflation? How will it respond to soaring electricity prices? If AI is a bubble, what will the Fed do when it bursts? If geopolitical conflict erupts, disrupting supply chains, how will the Fed react?

And the next Fed chair won’t just have to deal with these hard choices. He’ll have to build consensus among his colleagues. For crucial decisions about interest rates aren’t made by the chair, they’re made by committee.

To lead the Fed, then, requires both good judgment and gravitas. For the past two decades we’ve been blessed with chairs who possessed both. Ben Bernanke and Janet Yellen were both highly regarded researchers who were able to combine intellectual excellence with strong management skills and a firm grasp on real-world concerns. Jerome Powell came from the world of investment banking — and is a lifelong Republican — but has earned widespread respect for his open-mindedness and willingness to learn from experts.

Hassett has none of these strengths. I won’t bore you with a review of his research career, from Dow 36,000 to his “cubic model” that predicted very few deaths from Covid, except to say that few would describe it with the words “highly regarded.”

My guess is that few economists will be willing to say this openly, but basically everyone understands that Hassett is an ideological DEI hire. That is, his career has depended not on getting things right but on displaying unswerving loyalty to conservative causes — and, latterly, on saying whatever Donald Trump wants to hear.

Some observers are consoling themselves with the thought that since interest rate decisions are made by committee, Hassett can’t do too much harm. But we expect more from Fed chairs than for them to be mostly harmless. We expect and need them to be effective leaders.

That’s not what we’re going to get.

MUSICAL CODA

After my navel-gazing post Tuesday, some readers asked how I come up with these musical codas. Robin proposes some of them, like the John Lee Hooker coda yesterday. Mostly, however, the secret is how I decompress at the end of the day.

I hate working after dinner, which I find depressing. Instead, I usually spend an hour or two listening to and watching musical performances. My tastes, it turns out, are very eclectic, so I consume a wide range of genres. And I’ve mostly disciplined the YouTube algorithm by rigorously refusing to click on anything involving (a) politics or (b) cute animals.

So I have a large mental library of music to draw on. It’s not inexhaustible. Sooner or later I’ll be doing repeats. But not yet.

For today: For whatever reason, Haim isn’t near the top of my rotation. But they’re definitely the real thing, and this is somewhat on point.