Larry Kudlow on health of US economy, possibility of new tax cuts


DAVID. DAVID: MARK. THANK YOU VERY MUCH. SPEAKING OF LARRY KUDLOW, PRESIDENT TRUMP’S TEAM IS TRYING TO CLEAN UP CONFUSION. HIS CHIEF ECONOMIC ADVISOR TELLING ME ON FOX BUSINESS ANOTHER TAX CUT PITCH IS INDEED COMING. LISTEN.>>WE ARE DEVELOPING AGAIN TAX CUTS 2.0. WE’RE TOUCHING BASE WITH ALL THE KEY PEOPLE IN THE ADMINISTRATION. DAVID: BUT, LARRY, IT SEEMS THAT THE PRESIDENT TOOK 2.0 OFF THE TABLE YESTERDAY.>>HE DIDN’T. I SPOKE TO HIM ABOUT IT. WHAT HE WAS SPEAKING TO WAS SOMETHING IMMEDIATE, URGENT OR ANTI-RECESSION. WE JUST DON’T BUY THAT SCENARIO. DAVID: FORGIVE ME FOR INTERRUPTING, BUT HOW SOON — MIGHT WE SEE MORE TAX CUTS BEFORE THE ELECTION?>>BEFORE THE ELECTION, YES. IN FACT, YOU MIGHT EVEN SEE TAX CUTS 2.0, WHICH WOULD DRIVE ADDITIONAL TAX RELIEF AND CREATE ADDITIONAL TAX INCENTIVES FOR MIDDLE CLASS FOLKS, FOR BLUE COLLAR WORKERS, FOR SMALL BUSINESSES. ADDITIONAL INCENTIVES. ADDITIONAL TAX CUTS AND YOU MIGHT SEE THAT DURING THE CAMPAIGN, TO BE PERFECTLY HONEST. THERE IS NOTHING IN THE NEAR-TERM. THAT’S WHAT THE PRESIDENT WAS GETTING AT. WE BELIEVE THE ECONOMY IS QUITE HEALTHY. WE EXPECT SOME RELIEF ON SHORT-TERM INTEREST RATES COMING UP FROM THE FED AND SO FORTH. BUT LONGER RUN, WHY NOT? THE TAX CODE CAN USE MUCH MORE REFORM, RIGHT? MUCH LOWER MARGINAL RATES FOR INDIVIDUALS, FOR BUSINESSES AND SO FORTH. WE’VE MADE TREMENDOUS PROGRESS IN 2017, 2018, 2019, BUT WE HAVE MORE WORK TO DO. NO QUESTION ABOUT THAT. DAVID: LARRY, YOU JUST MADE PRETTY BIG NEWS SUGGESTING DURING THE CAMPAIGN ITSELF LONG BEFORE THE ELECTION ITSELF WE COULD SEE A ROLLOUT OF NEW TAX CUT PROPOSALSMENTS YOU VERY MAY WELL SEE A NEW ROLL OUT OF ADDITIONAL, ADDITIONAL MIDDLE CLASS TAX–>>WHAT KIND? YOU SAID MIDDLE CLASS. THAT TO ME SOUNDS LIKE PAYROLL TAX CUTS.>>NO, I DON’T WANT TO GET INTO A LOT OF DETAIL ON THAT BUS I DON’T WANT TO GET AHEAD OF THE CURVE, BUT HIGHLY UNLIKELY WE’LL GO TO SOME SORT OF — THE IDEA OF SOME SHORT-TERM PAYROLL TAX CUT FIX, IT DOESN’T WORK, IT NEVER WORKS. IT HAS NO LASTING IMPACT. WE’RE LOOKING AT INCENTIVES. WE’RE LOOKING AT LOWER — LOOK, THE PERSONAL TAX RATES COULD EASILY BE LOWERED AND PROBABLY, THE BRACKETS COULD BE SHRUNK. THAT’S A THOUGHT. SMALL BUSINESSES, FOR EXAMPLE, COULD EASILY BENEFIT FROM ADDITIONAL TAX REFORM. FOR EXAMPLE, YOU KNOW, LLC’S MIGHT EVEN BENEFIT– WE MIGHT EVEN KIND OF WORK THROUGH A WAY TO HELP OUR FRIENDS IN SOME OF THE STATES WHO ARE CONCERNED ABOUT THE SHRINKAGE OF THE TAX DEDUCTIONS THERE. DAVID: IT’S ALL TAXES.>>TAXES. I’M NOT — THESE ARE FOR EXAMPLES. FOR EXAMPLES, THE CAPITAL GAINS TAX COULD BE CHANGED, COULD BE REDUCED FROM 23.8% WHICH IS VERY, VERY HIGH. THERE’S A LOT OF THINGS THAT CAN BE DONE TO SIMPLIFY THE TAX CODE, TO HELP MIDDLE CLASS FOLKS IN SMALL BUSINESSES, TO LOWER RATES, TO CREATE INCENTIVES. DAVID: SO TAX CUTS 2.0, IS THAT A CAMPAIGN STRATEGY HEADED INTO 2020. THE HEAD OF FORBES MEDIA, STEVE FORBES. AND CO-CHAIR, AND JESSICA TARHOV. TAXES A STRATEGY?>>THE TAX CODE, MUCH TOO HIGH AND EVEN IN BLUE STATES THEY’D LOVE THE IDEA OF REDUCING TAX RATES AND STIMULATE THE ECONOMY. GOOD TAX CUTS ARE GOOD. THE IDEA THAT YOU CAN OVERSTIMULATE WITH GOOD TAX CUTS IS PREPOSTEROUS. IF YOUR PAY GOES UP, DAVID, OR SOMEBODY’S PAY GOES UP, I DON’T THINK THEY’RE SWEATING AT NIGHT BECAUSE THEIR INCOME IS IMPROVING. GO FOR WHAT’S GOOD. BY GOLLY, WHY DOESN’T HE PROPOSE A FLAT TAX AND THROW THE WHOLE THING OUT, EVERYONE WOULD CHEER. DAVID: JESSICA, IF YOU ASK THE VOTE, DO YOU WANT TO PAY MORE OR LESS IN TAXES? HOW DO YOU THINK THEY’RE GOING TO ANSWER.>>THEY’LL OBVIOUSLY SAY THEY WANT TO PAY LESS FOR TAXES. DAVID: THERE YOU GO. IT’S A GOOD IDEA.>>I THINK THAT MIDDLE CLASS AND LOWER CLASS TAX CUTS ARE A GOOD IDEA. ALL THE CANDIDATES ON THE DEMOCRAT SIDE HAVE THOSE TO BENEFIT THE ISSUE. DAVID: HOW ARE THEY GOING TO PAY FOR IT?>>WE ARE GOING TO SUBMIT TO CONGRESS, INFRASTRUCTURE. DAVID: BECAUSE THERE’S NOT ENOUGH MONEY IN THE UNITED STATES TO PAY FOR EVERYTHING THEY’RE PROPOSING.>>THE PEOPLE ON THE REPUBLICAN SIDE, THE TAX CUTS BENEFITTED PEOPLE THEY WERE NOT SUPPOSED TO BENEFIT OR PURPORTED TO BENEFIT. CORPORATE PAYOUTS. YOU’RE LOOKING AT ME PERPLEXED AND WITH A TRADE WAR–>>LET’S BE CLEAR ABOUT THIS. THIS IS A NEW YORK TIMES HEADLINES, THEY’RE NOT TRUMP FANS. FACE IT YOU PROBABLY GOT A TAX CUT. THEY’RE ASSOCIATED WITH LIBERAL ORGANIZATIONS SAYING THAT 65% OF TAXPAYERS GOT A TAX CUT. ONLY 6% ACTUALLY PAID MORE IN THEIR TAXES, BUT THAT’S A PROBLEM FOR REPUBLICANS BECAUSE THEY DID NOT MESSAGE THAT WELL IN 2018, DID THEY?>>WELL, I MEAN, A LOT OF MEDIA DIDN’T WANT TO REPORT THE REAL FAX ABOUT THE TAX CUTS AND JOBS ACT. DAVID: WITH AN ABOUT REPUBLICANS DUTY TO REPORT IF THEY DIDN’T WANT TO BE REELECTED. A LOT OF THEM WEREN’T AS A RESULT OF NOT REPORTING THAT IN 2018.>>THE PRESIDENT IS PUSHING FACTS ABOUT WHAT HAPPENED AND PEOPLE THAT BENEFITTED FROM THE BOTTOM TO THE TOP AND BENEFITTED FROM THE TAX ACT. AND THAT BENEFITTED POSITIVELY FAMILIES ACROSS THE COUNTRY. FAMILIES FROM WHERE I COME FROM OHIO, MIDDLE CLASS FAMILIES. THAT GOES A LONG WAY. THEY SEE LESS TAXES OVERALL PAID. THE MAJORITY OF PEOPLE PAID LESS TAXES AND OF COURSE IN THE FIRST YEAR OF THE PRESIDENT’S ADMINISTRATION, 600,000 WOMEN WERE LIFTED OUT OF POVERTY. YOU SAW PEOPLE COME OFF FOOD STAMPS. IT’S A GREAT TIME TO BE IN AMERICA.>>AGAIN, STEVE, THE MESSAGING FROM REPUBLICANS ON THE TAX CUTS, I THINK, HAS BEEN TERRIBLE. THEY HAVE NOT FOCUSED ON THE FACTS, WHICH EVEN THE NEW YORK TIMES CAN’T AVOID.>>YEAH, THE REPUBLICANS ARE THEIR OWN WORST ENEMIES ON THAT. THAT’S WHY WE LOST SEATS IN NEW JERSEY, IN NEW YORK AND IN SOUTHERN CALIFORNIA, NOT TO MENTION THE ELECTION FRAUD ON THE SIDE.>>WHAT ELECTION FRAUD ARE YOU TALKING.>>ANOTHER TIME. AND THE TIME FOR CANVASSING FOR ABSENTEE BALLOTS. DAVID: LET’S NOT GET TOO IN THE WEEDS.>>BOTTOM LINE, YOU EARNED IT, YOU SHOULD KEEP IT. DAVID: SIMPLE.>>AND WHEN WE REDUCE THE BURDEN ON PEOPLE, YOU NOT ONLY KEEP MORE, BUT YOU EARN MORE. DAVID: ALL RIGHT. LET ME SWITCH GEARS A LITTLE BIT FOR YOU, JESSICA, ON THE RECESSION TALK BECAUSE THERE’S BEEN A LOT OF RECESSION TALK, NOT JUST BY DEMOCRATS, BUT IN THE MEDIA ITSELF, ALSO BY PEOPLE ON WALL STREET THAT ARE CONCERNED ABOUT. YOU SAW THE MARKET DROP YESTERDAY.>>RIGHT. DAVID: MOST OF THAT WAS CHINA CONCERNS, BUT A LOT OF IT WAS THIS UNDERLYING CONCERN ABOUT HOW THAT MIGHT AFFECT THE OVERALL ECONOMY. HOW IS THAT GOING TO BE PLAYED OUT ON THE CAMPAIGN TRAIL BY DEMOCRATS?>>I THINK IT’S GOING TO BE PLAYED OUT. NO ONE WANTS A RECESSION. THIS ISN’T A BUNCH OF CANDIDATES RUNNING AROUND TALKING– WHAT THE PRESIDENT DID YESTERDAY ON HIS TWITTER ACCOUNT, BASICALLY, MOVING US CLOSER AND CLOSER TO RECESSION VIA TWEET, FRANKLY UNDOING THE PROGRESS. DAVID: EVEN THOUGH SCHUMER SUPPORTS ON TAXES.>>HE SUPPORTS WITH CHINA, BUT DOESN’T SUPPORT A TRADE WAR AND THE TARIFFS. DAVID: BUT HE SUPPORTS ON CHINA, AND DOESN’T HE SUPPORT THE POLICY?>>NO, YOU CAN ACCOMPLISH WITH THE POLICY ROUTES. THINGS THAT DEMOCRATS WOULD DO TO CHALLENGE CHINA THAT WOULDN’T END UP WITH 25, 30, WHATEVER HIS LATEST TWEET SAYS TAXES, TARIFFS TAXES ON GOODS. DAVID: JESSICA MENTIONED BELL MAHER WHO SAYS HE WANTS A RECESSION TO GET RID OF TRUMP, THAT’S WHAT HIS GOAL IS. DO YOU THINK THAT THE MEDIA, AT LEAST PEOPLE LIKE MAHER AND OTHER DEMOCRATS ARE EVERPLAYING THEIR HAND IN TALKING ABOUT RECESSION, PARTICULARLY IF IT DOESN’T HAPPEN?>>YEAH, ABSOLUTELY. NO, I DON’T THINK THAT EVERYONE IS OUT THERE TALKING LIKE BILL MAHER, FOR PEOPLE WHO ARE, IT’S SICK TO WISH THAT ON THE PEOPLE OF THIS COUNTRY. IT’S SAD TO SEE THAT PEOPLE’S HATE FOR THIS PRESIDENT OVERCOMES COMMON SENSE. AS HE TRIED TO SQUEEZE IN IN THE LAST SEGMENT, AND OBAMA SAID TO YELLIN, WE WILL NOT HAVE RECESSION, THE ECONOMY IS TOO STRONG.>>DO YOU THINK THAT BILL MAHER WANT RECESSION–>>THE CBO CAME OUT SAYING THAT THE BAD NEWS THE DEFICIT IS GETTING MUCH WORSE. THE GOOD NEWS WE’LL GROW SLOWER THAN WHAT THE PRESIDENT FORECAST, BUT THROUGH THE NEXT COUPLE OF YEARS.>>IF YOU GOT RID OF THE TRADE UNCERTAINTIES WITH CHINA AND PENDING ONE WITH EUROPE, YOU’D NOT ONLY SEE THE MARKET GO UP 5,000 POINTS, BUT YOU’D SEE GROWTH ON THE RESUMED PATH. DAVID: JESSICA, HOW DO THE DEMOCRATS DEAL IN THE CAMPAIGN WITH THE JOB GROWTH WHICH IS EXTRAORDINARY. YOU HAVE MORE JOBS THAN PEOPLE LOOKING FOR JOBS. THAT’S THE FIRST TIME THAT’S HAPPENED IN MY LIFETIME AND IT’S A PRETTY IMPRESSIVE REGARD, IS IT NOT?>>IT IS IMPRESSIVE. LAST YEARS, WE’VE SEEN THE GROWTH AND AT THAT INCLUDES THE OBAMA YEARS. I THINK THAT YOU SHOULD ABSOLUTELY APPLAUD THE SUCCESSES AND THE STRENGTHS AND WEAKNESSES.>>WHICH IS WHERE?>>CERTAINLY IN TRADE POLICY WITH WHAT’S GOING ON. FROM OUR INITIAL DISCUSSION ABOUT THE TAX CUTS, IT WAS SAID THAT YOU WERE GOING TO GET AN EXTRA THOUSAND DOLLARS IN YOUR POCKET, BUT BETWEEN THE CBO REPORT AND THE MORGAN STANLEY REPORT ABOUT THE IMPACTS OF THE TRADE WAR ON AVERAGE AMERICANS, YOU’RE LOSING YOUR MONEY RIGHT AWAY. I DON’T BELIEVE THAT THEY’D TALK ABOUT TAX CUTS 2.0 IF IT HAD BEEN A STERLING SUCCESS. SOME OF THAT IS MESSAGING. I TOTALLY AGREE WITH YOU, REPUBLICANS HAVE DONE A BAD JOB WITH THAT, BUT SOME IS JUST THE REALITY OF WHO WAS GETTING ASTRONOMICALLY RICHER FROM THIS RATHER THAN A FEW HUNDRED DOLLARS BACK IN THEIR POCKET?>>THAT’S 65% OF TAXPAYERS PAID LESS. I DON’T THINK THAT MESSAGE REALLY GOT OUT. AND I DON’T THINK THAT THE GOOD TAX CUTTING BELIEVES EVER

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