But what does this new development do to the whole
race?
Joining me now, Wall Street Journal chief economics commentator Greg
IP.
Greg, did the president just effectively remove Hassett as the
front runner?
You know, he certainly raised the odds that it will
not be Hassett.
But Liz, you know, I'm old enough to remember way
back in no December when Hassett was had supposedly had
a lock on the job.
Long way of saying is that nothing's over till it's
over, especially with this president.
It certainly sounds like from the way he's talking today
that he would prefer Wash to Hassett.
But I would say watch this face because next week
that could change.
I wonder how much weight Scott Besson, the Treasury Secretary,
who is a Treasury yield watcher, might have with the
President when choosing this because he's been the one who
conducted the initial interviews with the potential candidates.
Let's look at the 10 year yield.
And by the way, what I thought was interesting was
yesterday the 10 year yield closed at 4.16% and you
could see today that right now it has a jump
5 basis points to 4.229%.
The two year I believe, which had been yesterday at
a five week high started to climb once again.
What can you interpret from the bond yield moves about
how bond investors feel about Kevin Hassett taking a step
back and Kevin Walsh jumping forward, perhaps in the race?
Well, I'd make a couple of comments, Liz.
So what we've heard is that with respect to Treasury
Secretary Scott Besant, he is running the search, but he's
being very neutral in his advice to the president.
He is not putting his thumb on scale for any
candidate.
I think that partly reflects the lessons of the first
term when Treasury Secretary Steve Mnuchin strongly pushed for Jay
Powell and President Trump regretted picking Jay Powell and he
blames Mnuchin for that decision.
So Besson doesn't want to be in the situation of
saying Mr.
President pick X and then the president blaming him when
he's not happy with X.
Now, the second point I'd make is that the market
had a knee jerk reaction of saying, well, if it's
worse, worse has this reputation of being more hawkish, so
interest rates will be higher.
I would caution against jumping to that conclusion.
We know that the president has made it clear throughout
this process that he wants the next Fed chair to
cut rates a lot.
And publicly at least, both Hassett and Worship said that
they will.
So the choice here isn't so much between a hawk
and a dove.
It's going to be between two doves, at least two
people who are going to be more dovish than the
current Fed chair there, Jay Powell.
And the second, the other point I'd make, Liz, is
that even once this person is confirmed, whether it's worse
or whether it's Hassid, do not expect the president to
quietly step back and never comment on interest rates again.
And in fact, you know, if you think about this
investigation, if you think about this DOJ investigation into Chair
Powell, I personally think that this is as much a
message to the next Fed chair as it is to
the current Fed chair.
It's basically if you start doing things that the president
doesn't like, start expecting the entire Armory of the federal
government to make life difficult for you.
Well, let's just put a finer point on this.
The president has been very clear he wants interest rates
to go lower.
Now, the Federal Reserve has in the past been independent,
or at least has said that they are independent of
what's going on within the White House or inside the
Beltway.
But yesterday you had Kevin Hassett on Larry Kudlow's show.
He also appeared on on Charles Payne's, too, but he
said something about Fed independence.
I'm just wondering if President Trump got wind of it,
didn't like it, and then that's what led to what
happened today.
Listen to how Kevin Hassett put it.
I could say that the Fed needs to be very
transparent at all times and it needs to be independent.
We know that when Federal Reserve's lose their independence, that
inflation gets out of control and it hurts ordinary folks.
We can't ever let that happen.
What do you think, Greg?
I think that anybody who wants to be Fed chairman
is going to say something exactly like what Kevin Hassett
said on Larry's show yesterday.
Liz, I think the important thing for all of us
to keep in mind is that independence, it's not like
01 you got it or you don't.
It's kind of a continuum from not very independent to
like extremely independent.
I would expect that a Kevin Wash or a Kevin
Hassett to be at least aspire towards independence.
And by the way, I think that if inflation is
really ripping out of control, even Trump will basically let
them do what they have to do.
But within the, you know, outside in those extreme situations,
I think that the Fed chair, he has a lot
of influence in guiding the discussion and so forth.
And if he's always looking over his shoulder, careful about
what the president will say, nervous about his own standing,
he will shade those decisions in a direction to make
interest rates more dovish.
So I think that almost irrespective of what the candidates
say or even what the president says, it will be
difficult for the next Fed chair to behave in a
truly independent.
Way of course, especially when they see that there is
now a criminal investment investigation launched by the Department of
Justice into the Federal Reserve chair Jay Powell specifically and
and your colleagues at the Journal had this article talking
about this.
They've launched that investigation into the renovations the renovations that
have gone over budget of the Federal Reserve headquarters and
the Journal had this headline today.
Powell investigation up ends final stretch of the Fed chair
contest because now you have some senators led by Tom
Tillis who say forget it.
We are not going to vote for any nominee until
the criminal probe is resolved.
And Lisa Murkowski of Alaska joint Tillis Susan Collins John
Kennedy John Thune the speaker of the the Senate leader
has said has has said there better be some some
real meat to this this investigation because he was he
seemed to be taken by surprise by it as well.
So what does that do to the entire naming of
a new head of the Federal Reserve?
You know, I'm not actually sure that it does a
lot.
Now, you might say, well, this hurts.
Kevin has his chances because it makes senators more wary
of appointing someone who's perceived as too close to the
president.
I honestly think that one, once Trump picks his person
and assuming that that person is a reputable person, as
both the Kevins are, then Senate Republicans will be OK
with that choice.
They will allow the president the prerogative of naming his
preference.
What you're seeing from the senators this week, I think
less has to do with who he's choosing as the
nominee and seeking for some leverage point with the president
to stop what they perceive to be as deeply political
attacks on the Fed.
But to be honest, from where I sit, the fact
that only two senators, Murkowski and literally said that their
vote would depend on the outcome of this, that's not
a very big number.
And it's, by the way, not enough to actually block
the next nominee.
The other senators, as you say, they did raise concerns
about this.
But from where I sit, I only see 2 who
are actually at this point ready to put their vote
on the line.
What are your sources telling you?
Our sources at the Clayman Countdown are saying it's wash.
You know I check back with me in 5 minutes
because this doesn't this thing seem to like not about
you, but I find it hard to keep track from
one hour to the next.
Greg, thank you.
We appreciate you taking time during your busy hours to
come on.