First on CNBC: CNBC transcript: National Economic Council Director Larry Kudlow speaks with CNBC’s “Closing Bell” today on making the stimulus about COVID only and not a wish list and reopening the economy.
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Let’s Make This Stimulus Covid Only And Not A Wish List From The Democratic Party: Larry Kudlow
Let's Open The Economy And Let It Rip: Larry Kudlow
All references must be sourced to CNBC.
SARA EISEN: 43 minutes left of trading stocks are sitting at new record highs it's been a ferocious rally back from the march lows but the US economy, still remains sluggish with big parts of the economy struggling and millions unemployed the Federal Reserve just raising the alarm itself saying that economic conditions would remain weak joining us now from the White House, National Economic Council director Larry Kudlow here for a first on CNBC interview Welcome back, Larry. Great to see you.
LARRY KUDLOW: Thanks Sara appreciate it.
EISEN: So, so you've got your V, but it's in the market, not necessarily in the economy, why do you think that is.
KUDLOW: Well I don't know if you would run down. All these, if you look at homebuilding sentiment housing starts housing permits manufacturing production auto sales consumer spending in general retail sales. I think it's, it's a very strong economy coming back, and the Fed will do what the feds going to do they've done a good job up to now seems to me. They'll probably stay on the easy side. But look, it's hard to recover.
But I think the third quarter is going to be a very high number at least 20% the Atlanta fed talking 25% that's their view not mine. And it's a great number. And its interested I think, and suspect, as some private analyrs are saying. This is self sustaining. And I say that for two reasons number one inventories, basically collapsed in the second quarter. And now here in the late spring and summer months, we've seen a huge pickup in car demand auto demand used car prices rising as a leading indicator, and in general consumer demand. So they're going to have to rebuild inventories, that's going to be great for the factory sector the manufacturing sector. After the entire economy.
EISEN: So, one of the reasons we've seen this this nice bounce off the bottom Larry is because of the stimulus your administration and Congress provided which is why I'm confused why the White House is taking such a hard line against expanding stimulus are going in the democrats version of trillions of dollars of stimulus isn't in your interest and the President's interest in trying to get reelected and trying to get this economy back on strong footing to, to keep those unemployment benefits flowing and keep money flowing to the broke, state and local governments what why are you for drawing the line here.
KUDLOW: We are providing assistance I mean look, we've been trying to negotiate with the other side for several weeks for many weeks. All right, we're in mid to late August we started this mid-July. We're not going to give up three and a half trillion dollars more we've already given three and a half trillion. The economy is in better shape than it was last winter. But on the other hand, sure, I mean the President has taken quick action on executive orders to provide Unemployment Assistance with the states, you could get seven to $800 per worker. Okay, per week. That's a very handsome and generous number.
And look, we want kids. We want schools to open. We want businesses to stay open. Also, we want jobs to be created. That's our Ask, we put on the table a number of items for schools 105. billion. We put on the table, as I said unemployment assistance, the President has a payroll tax cut as an executive order. So we're plenty willing to talk, they've come back for refund the post office, which we will discuss. But now that they're here let's be realistic about these numbers and about the ask, let's stay on track with COVID, let's make this stimulus COVID only, not a wish list from the Democratic Party.
WILFRED FROST: Larry as we get closer to the election, do you think either sides, both sides, red lines will soften or harden.
KUDLOW: Wilf I don’t want to negotiate on the air. Stephen Mnuchin and Chief Mark Meadows are doing a fine job. I will say, we've had our asks out there for quite some time and look, the President. The reason for these executive orders on unemployment assistance and payroll tax cuts and evictions, and student loans, is because we could not get a bipartisan agreement. Our asks are in that deal but the deal hasn't materialized. Sorry about the noise they're rebuilding something out there.
So, the President took matters into his own hands. I agree with Sara, we have to be very careful we want to keep the economy liquid and provide as much stimulus within reason, as we can. And look, we should open school safety, security, let's be safe and secure if you need some more money on that we have it in our ask.
FROST: Larry as for after the election, I know you are a low tax man indeed this has been a low tax administration but Sara mentioned at the top of the V we've seen in the, in the stock market clearly more pronounced than any recovery, even if it's heading in the right direction in the economy highlighted again today by a $2 trillion market cap for Apple and the fact that Elon Musk has gained $10 billion in wealth in just the last week. Would you consider increasing capital gains tax, just on stock market holdings which have so clearly benefited from this loose policy from the Fed, and so clearly benefited the haves in society more than the have nots
KUDLOW: look whether it's financial assets, or real assets machinery office buildings, whatever, why would we want to create or block investments or investment incentives. I mean, the President when he announced the executive orders. He not only put in the payroll tax cut payroll tax holiday, but he also mentioned, lower income taxes and tax reform, and he also mentioned lower capital gains taxes. We want to be growth here. That's the whole point. Trump economics has always been growth here. We don't want to put barriers up, we don't want to reduce incentives we want to generate incentives, we want to make it as easy as possible for people to succeed.
So no I don't anticipate look. Those are post-election questions you'll have President Trump weigh in on that, but I can tell you from our conversations so far. He'd rather have low tax and reforms than higher taxes we'll leave the high taxes, I guess three or 4 trillion to the, the other party's ticket.
EISEN: You mentioned the executive orders on unemployment claims. As far as I can tell, Larry, only Arizona is set to pass out those additional funds. Only eight states have been approved for those grant loans from FEMA. So, it's not clear how quickly, though, that money is reaching unemployed Americans across the states or whether it's even going to reach them at all.
KUDLOW: Well I think it will reach them. And we've made it as easy as possible for the states, because they can use prior unemployment benefits of $100 so we've made it very easy. And we'll give the federal plus up of $300. Look, I guess, eight or nine states have applied. I can assure you, those applications will be granted by the Department of Labor. We're accustomed to working with the governors on COVID matters and, of course, unemployment insurance matters.
Labor Secretary has been very good at that. I think really the next week or two, you're going to see a lot of checks minted to unemployed people at the federal level and the state level. Now, the states do put the federal money in. I want to be clear about that. But I think it's in place, the applications are flowing in very fast. So, I'm optimistic on that. And again, I want to keep this V-shaped recovery going.
This is a moment when liquidity is absolutely essential. We have much more work to do. I mean, unemployment claims are starting to go back down. The case rate, the COVID case rate is now going back down nationally. It's actually off about 35% from the mid-July peaks, that's a good sign. The claims are falling, but we have work to do. We have work to do. There about 140 million people employed.
There about 14 million people unemployed, there's still a lot of hardship out there. That's why, part of the mantra here is kids and jobs. Open the schools, and let's do what we can to get them back to work. One of them – in our ask by the way, is reemployment bonus, which makes so much sense. If you go back to work, we give you a very handsome bonus. So that is even better I think than the unemployment. But let's just open the economy and let her rip.
FROST: Larry, want to ask you about TikTok. Is the President really serious about getting a fee if the deal goes ahead? Is that realistic?
KUDLOW: Well, he said that, and he has repeated that. I don't know whether that will end up being the case when the Treasury gets its bids in from potential bidders. But the President has said that. I think he probably would like to deny China some of the proceeds of the TikTok sale. It's not something that's been done in the past, but that doesn't mean it can't be done now. I’ll leave it to Secretary Mnuchin, who will be running the books on that deal. So, we'll see. I don't know, we'll see.
EISEN: Really? I mean, isn't that a dangerous precedent Larry? A government taking an investment banking – to me that's like what Venezuela does when it comes to foreign assets.
KUDLOW: I'm sorry, I didn't hear that last sentence. I have a train in my ear.
EISEN: It sounds like something a country like Venezuela would do when it comes to making foreign deals and foreign assets. It seems like a dangerous precedent for the United States to do. To take a cut of the investment banking fee from a deal that is forced for national security reasons.
KUDLOW: Well, yeah, I won't call it investment banking fee because the Department of Treasury is not in the investment banking business. I acknowledged that it's unusual. The President has his own mind on some of these things. I don't know, again, nothing is in cement here. We haven't even had all the bids and stuff that goes with it. That's not due til the middle of September. So, I don't know, Sara, how that will play out. It may turn out to be there, or fees may turn out not to be there. I will leave that in the process, and not comment anymore.
EISEN: Another huge story today, Larry, that I got to ask you about. Is the President calling for a boycott of Goodyear Tire? Which is confusing for a number of reasons. One, it's an Ohio company based in Akron, employs more than 60,000 people. And number two, you guys have been campaigning against the Democrats and their cancel culture for canceling things like Goya brands. Why on earth would you do this?
KUDLOW: What did he say about Goodyear? I mean I don't know this. Maybe I should. It’s hard to know everything.
EISEN: He called for a boycott of Goodyear Tires, because he didn't like something that was in, you know, their HR diversity policies as far as not showing political speech. And there was a picture circulating about banning MAGA hats and so the President didn’t like that. But just in general, calling for a boycott against an American company like that seems like an odd tactic for this administration.
KUDLOW: In general, we're certainly by America. And that's been our policy for quite some time. And I'd have to ask the President what he was referring to on the Goodyear matter. To be honest with you, I hadn’t seen it Sara. I will try to ask him this afternoon and answer your question some other time. But, yes, we are usually by America. And I think that's a good policy, especially in these days. But, look, the President's in favor of reciprocal trade deals, he's in favor of fair trade deals. And we've had quite a few of them with China, Japan, South Korea, even the EU, Britain coming up. So, I think we've done a great job there and one of the mantras is in fact by America, wherever possible.
FROST: Larry, thanks so much for joining us today and we hope that the President's home extension with that crane goes smoothly.
KUDLOW: They are just digging up the front lawn. I'm sorry, but thank you for having me back.
FROST: Larry Kudlow.