OMB Director Mick Mulvaney Talks GDP Numbers

OMB Director Mick Mulvaney Talks GDP Numbers
Image source: CNBC Video Screenshot

OMB Director Mick Mulvaney Speaks On CNBC’s “Power Lunch” Today

WHEN: Today, Friday, July 27, 2018

WHERE: CNBC’s “Power Lunch”

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The following is the unofficial transcript of OMB Director Mick Mulvaney on CNBC’s “Power Lunch” (M-F 1-3PM ET) today, Friday, July 27th. The following is a link to video on


Tyler Mathisen: joining us live from the white house is OMB director Mick Mulvaney who was there when the president spoke today. OMB Director Mick Mulvaney welcome and good to see you.

Mick Mulvaney: good afternoon. Thank you as always for having me.

Mathisen: yeah, we are delighted. This was by any stretch a very nice number. How sustainable do you think it is and how much do you attribute it to the stimulus in both the budget deal and the tax cut deal?

Mulvaney: we’ll deal with the second question first, which I don’t think what you see here as much to do with the taxes or the -- the government spending. Government spending is part of the calculus. But we still believe that most of what you see is actually not related to taxes yet. Yes, there has been some positive impact on the gdp number of the tax bill but a lot of the benefits of the tax bill haven’t flowed through the system. We have seen a couple of positive signs on capital investment and so forth but more broadly, we don’t think we’ve seen that yet. We still think we’re seeing the residual benefits of what the president did when he got here. Most specifically the deregulatory agenda that we put in place, the energy policies that we put in place. We think that as much as anything has driven growth up to this point, which is why we are very confident, this is a sustainable thing.This was not a sugar high in any -- by any measure. Now keep in mind what we did in taxes was yes, we lowered rates and that can add the short term punch to the system but we also fundamentally changed the nature of the way we tax wealth creation in this country and that’s sustainable. So for a variety of reasons we don’t think you’re seeing a dramatic drop off. We think we see this growth sustained for several quarter sto come.

Mathisen: and as the president pointed out today, even a -- even something that sounds small, like a 1% inincrement to gdp has great long-term effects. I would guess one of the areas you must be particularly happy about is business investment. Which seemed to me to be both a kind of a cyclicalthing but also, I would have to think, part of a level of confidence that business has in this administration and a reaction to -- to the tax law.

Mulvaney: yeah, and if you watched the press conference you heard I believe Larry Kudlow talk about this that specifically. We at OMB watch that number as much as anything, because it’s that capital investment that leads to improvements in productivity that leads to that future growth in GDP, which is again we think the tax plan was so critical, because it did give that incentive, a long-term incentive for capital investment. Also which we believe it’s important to get let tax cut 2.0 bill passed as quickly as possible so businesses know that depreciation -- the depreciation rules on capital investment will be permanent. We’re trying to give business incentive for – forever, in a permanent condition, to invest in their businesses. Again instead of paying money to us, reinvest money in the business. They have the confidence to do that now the next couple of years they have the tax tools necessary to do that. But we need to make it permanent.

Melissa lee: mick, in your view with the greatest gains from tax reform yet to come in terms of business spending or – has this supplied a lot back into buybacks and dividends, already? And does it matter to you?

Mulvaney: --- not really. I think the point was just that I think folks are undervaluing the impact on these GDP numbers of the stuff the president has done in the first 18 months on the job. Which is a specifically again going back to dereg. Dereguby itself is the biggest story. The day Donald Trump won the election business knew the first time in eight years that the government wasn’t out to get them. And you saw a spike in business confidence and consumer confidence, even before our policies were actually hitting the streets so I think that’s one of the things you’re seeing. That’s why I think it’s so – it’s so sustainable. Because when we lessen the regulatory burden -- we’re not talk about getting rid of regulations we are talking about a lighter hand and getting out of the way of American capitalism. And when you do that it pays benefits again and again. It’s not a short-term shock to the system.

Mathisen: in terms of the forecast of seeing this 4.1% growth rate sort continue the rest of the year, mick, I mean what role does the fed have? I mean the president was talking about the fed’s path of raising rates. And effectively said that he didn’t like the fed rate raising rates because you’re put so much work into the economy. Even at the margin let’s say the fed takes the peddle off the metal, mick, do you think the growth rate could be higher? It sounds like in the market that the president thinks rate increases impacts economic growth at the margin in some of way.

Mulvaney: a couple of things about that I saw the president’s tweets and we had a chance to talk about. First things first, let’s be clear. The president absolutely respects the independence of federal reserve. And we absolutely respect their desire to add more tools to the toolbox. And if they slowly raise rates they have more tools available to them if there is a downturn in the future. At the same time as I’ve said I think on your show and a couple of other ones, we do encourage economists both at the fed and around the country to consider the supply side of what is happening here. Inflation roughly defined: too much money chasing too few goods. If we really are, as we believe, in a supply0side driven expansion right now, that raises the number of goods and takes the pressure off of inflation. So we absolutely respect what the fed is doing. We absolutely respect their independence. We just encourage folks all over the spectrum to consider the fact that this is not necessarily a demand driven expansion as much as it is supply and that might call for a different outlook on how we handle rates.

Courtney Reagan: consumer spending a very important part of the GDP. And we’ve seen wage growth pretty stagnant. Definitely below the annual rate of inflation. So what happens going forward? Can the consumer continue to spend even if confidence is high. But their wages aren’t growing? Can it help fuel the GDP forward to do better than what we have seen here in the quarter?

Mulvaney: yeah we think it’s inevitable that you’re going to see more and more wage growth. You just have you have to as the economy continuing to move along. Again we are not talking about something not sustainable. If this number had been 5 or 5.5% -- I saw some very high projections out of various outlets before the numbers came out today, I’d have to come out here and say, “look I don’t think we can do that again.” but something in the 3s and low 4s is manageable for a long time opinion. And if we get that you see that accrue to wage earners. As we see the capital investment transfer over to productivity that always also leads to wage growth. So as we see things flow through, we are confident the consumers will have more money to spend -- obviously the tax cuts have an impact there as well. So yeah, we continue to be concerned about the amount of debt. Everybody is. Private debt, public debt. That’s an issue. There’s no question. But we are comfortable that with the way things going, the benefits flow to the ordinary hard working Americans.

Mathisen: the other day, director Mullvaney, at our capital exchange event – we were delighted to have you there, my friend John hardwood asked you an interesting question that I thought provided insight how the white house works. And he pointed out basically that before you came into this administration you were known as a hard deficit hawk. Well, we have bigger deficit right now. You were known as a free trader and you were known as the kind of person who didn’t support aid to agriculture. Three critical issues on the table right now. And your answer to his question is sort of how do you square your personal preferences and economic philosophy with policies you see the administration taking? And your answer was very interesting and revealing. Would you replay it?

Mulvaney: sure. Here is the brief version of it. Which is that I’m absolutely 100% confident -- because I’m sitting in the room with the president of the united states, that he is seeing all sides of all the issues you just mentioned. All sides of the spending and deficit issue. All sides of trade. All sides of the various policies that we go through. The president is getting a variety of opinions. Larry Kudlow and I might take one side of an argument when it comes to trade. Steve Mnuchin might on that side of the argument with us. You know, Wilbur Ross and Peter Navarro might be on the other side. But it’s the president who’s making that final decision based upon what I believe to be really good evidence from all sides of the equation. And when do you that – when you feel like you’re at least part of the process, you know that -- in my particular circumstance for example, that the fiscally conservative argument is being made and it’s being considered and given fair weight. If the president decides to go another way, number one that’s his prerogative, number two -- because he is the president, not me. And then number two, I know for a fact that at least I’ve been heard. So often republicans on the hill used to complain-- the biggest complaint was that we never had a chance to even participate in the conversation. That is happening. I think the president is making better decisions because of it. It’s the management style he wanted when he put together a team of me and Peter Navarro and Wilbur Ross and bob lighthizer and Steven Mnuchin. So this is what he wanted. We think we are getting good results out of it, and good decisions. And more importantly -- most importantly I think you’re seeing the rubber meeting the road on the results, which is the economy is up. Folks are employed. The numbers are good people are better off now than two years aig because donald trump is president.

Mathisen: Mr. Mulvaney thank you. We appreciate it. Always do.

Mulvaney: thank you so much.

Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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