By Trendsetter Tribune 
In a escalating conflict between the White House and the Federal Reserve, Kevin Hassett, Chairman of the Council of Economic Advisers, stated on Thursday, February 19, 2026, that Federal Reserve researchers should be “disciplined” following the publication of a report suggesting American consumers—not foreign countries—are bearing the cost of the administration’s new tariffs.
Hassett’s comments come as the administration prepares for a critical Supreme Court ruling on the legality of using the International Emergency Economic Powers Act (IEEPA) to fund the proposed $2,000 Tariff Dividend.
The “Disloyal” Data: The Fed’s Findings
The controversy stems from a working paper released by researchers at the Federal Reserve Bank of New York earlier this week. The report concluded:
- Cost Passthrough: Approximately 95% of the costs from the latest 25% across-the-board tariffs have been passed directly to U.S. retailers and consumers.
- Price Hikes: The report estimates the average American household will see an annual increase of $1,800 in the cost of goods, effectively neutralizing the proposed $2,000 dividend.
- Manufacturing Impact: Higher costs for imported raw materials have led to a “contraction” in domestic manufacturing output.
Hassett’s Rebuke: “Political Sabotage”
Appearing on Fox Business, Hassett dismissed the report as “statistically illiterate” and suggested it was an attempt by “deep state” economists to undermine the President’s agenda ahead of the 2026 midterms.
“To release a report full of debunked theories just days before a major Supreme Court ruling is a clear act of political sabotage. These researchers are supposed to be non-partisan, but this is pure activism. They should be disciplined, and the Fed’s funding for these rogue research wings needs to be looked at very closely.” — Kevin Hassett, Feb 19, 2026
Growing Tensions: White House vs. The Fed
The demand for “discipline” marks a new high in the administration’s pressure on the central bank, which remains under the leadership of Chair Jerome Powell until his term expires in May.
| Conflict Point | Administration View | Federal Reserve View |
| Tariff Burden | Foreign exporters are paying the taxes into the U.S. Treasury. | U.S. importers and consumers are paying the taxes at the border. |
| Dividend Impact | The $2,000 check is a net gain for the American middle class. | The checks are funded by what is essentially a hidden national sales tax. |
| Independence | The Fed must align its research with the President’s stated economic goals. | Researchers must remain independent to provide accurate, unbiased data. |
What’s Next?
The White House has hinted that it may use the upcoming budget reconciliation process to place stricter oversight on the Federal Reserve’s regional research departments. Meanwhile, Treasury Secretary Scott Bessent has reportedly been more measured, attempting to distance himself from calls for direct disciplinary action against individual economists.