Highlights Trump Accounts, Opportunity Zones and federal workforce cuts as key parts of the economic agenda
BUSINESS | U.S. NATIONAL POLICY
White House National Economic Council Director Kevin Hassett said the Trump Administration is betting that stronger capital investment, higher productivity and broader access to investment will translate into a stronger U.S. economy for the next generation, while reducing the size of government remains a priority for bringing down the federal deficit.
Speaking at the Economic Club of New York on Monday, Hassett said the administration is “really, really bullish” on the economic momentum it sees ahead, pointing to rising capital formation, productivity gains linked to artificial intelligence and an increase in hours worked.
His broader argument was that the administration’s economic policies should be judged not only by their immediate effect on government revenues or spending, but by the amount of capital they create for Americans in the future.
“When we’re thinking about what our federal government policies are doing for ordinary folks who are living in future America,” Hassett said, policymakers have to distinguish between spending that finances current consumption and policies that leave future generations with more capital.
“If you want to have higher consumption in the future,” he said, “you invest in human capital” or save and invest today so that capital can be drawn upon later.
Hassett pointed to Trump Accounts as one of the administration’s efforts to put that principle into practice. The accounts were included in the administration’s tax legislation of the Big Beautiful Bill that was passed last year and are designed to give children an early stake in the financial markets. Hassett said the administration expects tens of millions of accounts to be established and has opened the program to contributions from philanthropists and others who want to put money directly into children’s accounts.
The objective, he said, is to expose a new generation to the benefits of long-term investment and compound growth.
Hassett recalled an earlier estimate he made showing how a $1,000 investment made at birth could grow substantially over a lifetime through compounding. The point, he said, is that getting capital into an account early can make a significant difference over time. He also described the program as a different model for charitable giving, allowing donors to contribute directly to children’s investment accounts rather than relying exclusively on traditional charitable structures.
First Lady Melania Trump also had tapped into the Trump Account to expand financial opportunities from children and youth from marginalized communities who often do not have access to traditional financial supports. Through her Be Best initiative’s Fostering the Future program, children and youth in American foster care system also have access to the Trump account as a foundational capital resources and financial literacy that they otherwise wound not have.
Putting capital into communities
Hassett also returned to an idea he said grew out of his academic research into distressed American communities: Opportunity Zones.
He said his research found communities suffering from a lack of capital and argued that simply placing an individual business, such as a convenience store, into a distressed area was unlikely to transform the local economy on its own. The idea behind Opportunity Zones was to create a structure that could bring larger pools of private capital into those communities.
Hassett described the model as allowing investment funds to aggregate capital and invest in distressed communities, creating an incentive for investors to identify opportunities that might otherwise be overlooked.
The broader goal is to move capital into communities where it can finance businesses, create jobs and expand economic activity.
Hassett vies, that is part of the same capital-formation strategy as Trump Accounts: getting more investment into places and people that have historically had less access to it.
Hassett also defended the administration’s worker-focused tax policies, including the elimination of federal taxes on tips and overtime. He argued that the policies are designed not only to reduce taxes for workers but also to increase the supply of labor.
Workers who receive tips, he said, are among those working particularly hard, while workers who earn overtime are people employers have an incentive to keep on the job. Removing taxes from those forms of income, he argued, gives workers an additional incentive to work more hours.
Hassett said the administration has also taken a similar approach to Social Security, arguing that high marginal tax rates can discourage beneficiaries from returning to work because additional earnings can affect their benefits. He described the broader approach as a form of supply-side economics focused not only on businesses and investment, but also on workers.
Federal workforce cuts and deficit reduction
Hassett said the administration’s reduction of the federal workforce is another part of the economic strategy, noting that federal workforce has been reduced by more than 300,000 workers and estimated that maintaining those reductions could produce approximately $500 billion in budget savings over 10 years.
He also argued that many of those workers laid off from federal workforce could become more productive in the private sector. According to Hassett, workers who move from government workforce into private-sector employment earn, on average, about $30,000 more, while the shift also generates additional tax revenue for the government.
In his “killing two birds with one stone” view, the workforce reductions serve two purposes, on one hand, it reduces government spending while moving workers into areas of the economy, where he believes they can generate more economic output.
The federal deficit remains a significant issue, however.
Asked directly by the moderator whether the administration is on track to reach its goal of reducing the federal deficit to 3% of GDP, Hassett did not offer a direct answer or firm timetable. But said deficit reduction is “really important” to President Trump and key members of Congress and will remain a major focus, particularly over the next two years. The reduction in the federal workforce, he said, is already part of that effort.
While acknowledging the tension between the administration’s investment agenda and the government’s fiscal position, he argued that looking only at the deficit can miss the economic assets being created at the same time.
If government policy produces greater capital formation, he said, future generations inherit both the cost of government debt and the benefits of the additional capital, including higher productivity, greater wealth and potentially higher future wages and consumption.
He pointed to the rise in household net worth over the past decade as an example of why the fiscal picture needs to be viewed alongside the accumulation of private wealth. At the same time, Hassett said the government needs to get spending “more under control.”
As the administration enters the next two years of Trump’s second term, he made clear that deficit reduction will remain part of the economic agenda. The challenge, he noted, is to ensure that policies aimed at building the economy’s future productive capacity are accompanied by a government that is spending less and accumulating less debt.
The administration’s economic strategy he reiterated is built around two parallel objectives: increase the amount of capital available to the private economy while bringing government spending and the federal deficit under greater control, adding that the administration is confident about the growth outlook, citing capital investment, AI-driven productivity gains and increased labor supply as major forces supporting the economy.
He estimated that, absent major external disruptions, those supply-side forces could support growth closer to 4% rather than the roughly 3% pace that had been targeted. That balance, he stated, will be an important part of the economic record over the next two years.
“We’re really, really bullish on the momentum that we have,” Hassett underscored.
