STEVE INSKEEP, HOST:
All indications are that the economy is still strong, and unemployment is very low. But many Americans who have retirement funds are likely to see declines when they check them here at the end of the year. The stock market has had its worst year in a decade. The trade war with China is unresolved. The government is in a partial shutdown as President Trump demands money for a border wall.
How does all of this add up? Well, let's ask Kevin Hassett. He is chairman of the White House Council of Economic Advisers. Good morning.
KEVIN HASSETT: Oh, good morning, Steve. Great to be here.
INSKEEP: And Happy New Year to you. So President Trump is tweeting about the trade war, saying that there's progress in talks with China. Is that true? And what does that mean?
HASSETT: Oh, yeah. It definitely is true. You know, I think the bottom line is that China has been violating a lot of WTO rules. And then...
INSKEEP: Yeah.
HASSETT: ...You know, when we dispute it, it gets tied up with the World Trade Organization for years and years. And then we finally win. But, you know, they benefit a lot in between. And so there's a whole bunch of stuff that they need to fix and...
INSKEEP: Yeah, but what are they - what did - we've talked about that on the air, with people from the White House in fact. But what is it that China is agreeing to do? What is the progress here?
HASSETT: Well, the progress is that there's a whole list of things that they're going through one by one. And sadly, you know, the list isn't public. But they're things that they're agreeing to do or markets they're agreeing to open, tariffs they're agreeing to lower. And I think, in the end, President Trump's attitude is that, you know, their treatment of our firms should be the same as our treatment of their firms. And it seems like the Chinese are making significant moves in that direction.
INSKEEP: We had heard from Peter Navarro, the presidential adviser, about a list of something more than 140 US complaints. You're telling me the Chinese are giving good answers to some of those complaints, is that right?
HASSETT: Well, they're not - you know, I guess you could say complaints. But sometimes they're just factual statements about how, you know, our policy is nicer to them than they are to us. But there is a list of, you know - Scott, you know, exactly which list they're arguing you're talking about right now, I'm not sure yet. But there's, you know, some lists with up to a few hundred things.
SCOTT HORSLEY, BYLINE: So...
HASSETT: And they're going through point by point, the negotiators. And they're working things out.
HORSLEY: So as...
HASSETT: And both presidents have basically informed the negotiating teams to make a lot of progress on this and to do it by the deadline.
INSKEEP: So it appears that China is suffering because of the tariffs and the decrease in trade between the two countries. And we've certainly heard about the markets here, which are anxious about the future of these talks. Who in your view is suffering more?
HASSETT: Oh, China is definitely suffering more than we are because of the tariffs, you know. And the way to think about it is that - suppose you put a tariff on a product and that there's a Chinese firm, and most of their sales are in the U.S., but we have the U.S. buy it from lots of different countries. Then it doesn't really affect us much to put a tariff on China, but it really affects the firms. And so when we...
INSKEEP: Although it also - it raises the price of every item of that good in the United States - right? - if you're buying it.
HASSETT: So not - the point is that - suppose that that firm had, you know, 1 percent of the market in the U.S., and it was competitive to get the other 99 percent. Then you wouldn't expect to see much of a price move. And so what we have seen are really, really big price moves for, like, the value of Chinese stocks that are affected by tariffs, but very, very little sign that the tariffs have had a negative effect on consumers in the U.S.
INSKEEP: Even though consumers would be paying higher prices as this goes on and on.
HASSETT: Well, you know, again, if we were to put a tariff on things where the Chinese had a really large share of the market, that would be true.
INSKEEP: Oh, you think you've been a little more selective. OK.
HASSETT: We have been very selective.
INSKEEP: Let me ask you about the government shutdown. Now, is this a good time to have hundreds of thousands of people unpaid?
HASSETT: Well, what's going to happen of course is that the Congressional Research Service has told us that Congress, whenever they get around to reopening the government, they always give people their backpay. And so the way to think about this - you know, a huge share of government workers were planning to take the week off for the holidays, like, you know, many listeners probably have done. And they were going to have to use their vacation days. But, you know, what's happening now is they're getting the day off, and they're going to get paid for those days. And they don't have to use their vacation days.
INSKEEP: Although...
HASSETT: Assuming the government reopens, you know, say, this week or next, then that's really the way to think about the effect.
INSKEEP: If it's a relatively short shutdown, there would be a relatively short effect. But federal workers, if I'm not mistaken, have been given form letters to send to their landlords to try to explain why they're not paying the rent.
HASSETT: Well, I guess, you know, that there is some evidence that when people miss a check, which haven't happened - that's not happened yet - that, you know, there are definitely some government workers that have trouble meeting their bills that - yeah, so the form letter, I - I've not seen the form letter. But there are about 50 folks that work at the Council of Economic Advisers, and we didn't get such a thing.
But, you know, we did have a long email from the HR department that gave people instructions about it. But one thing I have been assuring all the people that work, you know, in our department - and I'm sure it's true across government - is that when we reopen, that they're going to get their backpay.
INSKEEP: Of course, some people are working, the people in essential jobs. And we heard from one of those...
HASSETT: Yeah, like me. Here I am (laughter).
INSKEEP: There you go.
HASSETT: Yeah (laughter).
INSKEEP: There you go. And thank you for spending some of your workday with us. We really appreciate that.
HASSETT: It's weird, right? That a government shutdown means I have to work more. I'm not quite sure how that happened.
INSKEEP: There you go.
HASSETT: It's like "Princess Bride." I'm not sure that word means what you think it means, kind of.
INSKEEP: (Laughter).
HASSETT: Why am I going to work every day? As my wife is saying, here's - take some time off (laughter).
INSKEEP: Well, Ray Coleman Jr. is also working. He's an employee of the Federal Bureau of Prisons in Tallahassee, Fla., and president of his union local. And we spoke with him recently. Let's hear some of what he has to say.
(SOUNDBITE OF ARCHIVED BROADCAST)
RAY COLEMAN JR: Morale's already low. For us in the Federal Bureau of Prisons, back in January, we lost 6,000 positions. So we've already been understaffed. And now you're understaffed as well as being required to work not knowing when you're going to get paid.
INSKEEP: I'll just notice, Mr. Hassett, this is a guy in the Florida Panhandle, which is very much Trump country. I don't know how this guy voted. But there's a lot of Trump voters out there. Should people in that area of the country be hurt?
HASSETT: Well, again, this is a relatively short-term thing. And hopefully it resolves soon. You know, we made an (laughter) extremely reasonable offer to Congress more than a week ago. And it looks like what's going on is that Schumer, Chuck Schumer, has decided not to allow anything through the Senate as a final deal until Nancy Pelosi is speaker. And so right now, everybody's on hold because we're waiting for Nancy to take over.
INSKEEP: Well, just very briefly, there was also a deal on the table in the spring which Senator Lindsey Graham has brought up again. And that is trading some wall funding for some help for DACA recipients. Is the president likely to go for that?
HASSETT: You know, I don't know what the final deal is that - that's going to happen. And that's, you know, not part - something that CEA is - negotiates. But I do know that we made a very reasonable offer to them more than a week ago, and they just never got back to us. And the word that I'm hearing is that Democrats have decided to wait until Nancy's speaker to do anything.
INSKEEP: Kevin Hassett, thanks very much for the time. Really appreciate it.
HASSETT: Great to be here. Thank you.
INSKEEP: He is chairman of the White House Council of Economic Advisers. NPR White House correspondent Scott Horsley has been listening along with us. Scott, what did you hear there?
HORSLEY: Well I heard the chairman of the Council of Economic Advisers say that the government shutdown won't have any lasting effects on the U.S. economy, and that's probably true. I think private economists agree with that if, in fact, it is resolved quickly. The longer it goes on, of course, the more those effects might pile up.
He is correct that in past shutdowns, government workers have ultimately received backpay for the time they either worked without pay or were furloughed. And that really shows what a - kind of a waste this is. I mean, it's a particularly kind of brain-dead policy to furlough workers and then pay them for the work that they didn't do.
He is correct that the economic fallout hasn't been felt yet. The first time that government workers would have to go without a paycheck if this continues is the 11 of January. But I was out with a couple of federal workers over the weekend, and they were certainly concerned about what that was going to mean for their household budgets.
INSKEEP: Scott, very briefly, the Democratic House takes over in a couple of days. They could quickly pass this resolution that already passed the Senate one time 100 to nothing or unopposed, if I'm not mistaken. Could that just be passed again and sent to the president?
HORSLEY: It would have to pass the Senate again. And it's not clear that the Republican-controlled Senate would pass something that they didn't think President Trump was going to sign. They might hold out till the president is able to negotiate something with the Democrats. And so far, we haven't seen a breakthrough there.
INSKEEP: OK, we'll see what happens. Scott, thanks very much. Really appreciate it.
HORSLEY: Good to be with you, Steve.
INSKEEP: That is NPR White House correspondent Scott Horsley. Transcript provided by NPR, Copyright NPR.