A new budget that President Donald Trump will send to Congress on Monday will call for a 5 percent, “across-the-board” cut in domestic spending — and will include $8.6 billion for funding a wall along the southern border, Trump’s chief economic adviser Larry Kudlow told Chris Wallace of “Fox News Sunday” on Sunday morning.
“We believe the 3 percent growth rate of 2018 will continue in 2019 and beyond 2020,” said Kudlow.
Dealing with budget deficits requires rapid growth, he said, which in turn points to the advisability of keeping tax cuts in place.
“It will be a tough budget,” said Kudlow.
“We are going to do our own caps this year and I think it’s long overdue. Some of these recent budgets have not been favorable toward spending. So I think it’s exactly the right prescription.”
Kudlow predicted yet another budget battle over a proposed $8.6 billion request for funds to build a security wall on the southern border.
He said the current situation represents an economic and humanitarian crisis.
“[Trump] is going to stay with his wall and he’s going to stay with the border security theme. I think it’s essential.”
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But Wallace on Sunday challenged Kudlow about the feasibility of a 5 percent domestic spending cut, saying it is not possible without tapping into entitlement spending.
While most Republican presidents say their budget will balance in 10 years, Wallace said it not would be until the 2030s that Trump’s proposed budget would achieve that balance.
“I don’t think good growth policies have to obsess, necessarily, about the budget deficits and so forth,” said Kudlow, explaining that federal borrowing as a 4.5 percent to 5 percent share of GDP is a “very modest number” — and that we are on a “steady glide path toward lower federal spending and federal borrowing as a share of the economy.”
Kudlow also pointed out that 10-year Treasury bonds at 2.63 percent suggest the markets are not responding negatively to the administration’s budget, spending and deficits.
Though a jobs report for February did not meet projections — 20,000 jobs were added, versus a 180,000 projection — Kudlow called the decreasing unemployment rates a “big home run” and the fact that wages are up 3.4 percent a “terrific sign.”
“As wages have been rising, people are coming out, moving back into the labor force. They’re not only coming off unemployment to work at the higher wage rates,” said Kudlow, “but they’re actually sort of coming out of the woodwork. People who were not part of the labor force are now coming back.”
He added that the biggest category of improvement in the area is for women.
Kudlow was somewhat guarded about his predictions for economic growth in the next quarter. Though he did not provide a hard number, he said he would “take the over” on growth forecasts — some of which suggest the 1 percent range for the first quarter of 2019.
“I’m going to argue growth and jobs will continue to expand,” said Kudlow.
“Our policies are strong and I think our growth rates this coming year will exceed these estimates just as they have last year.”
Kudlow pointed to low tax rates for individuals and businesses, across-the-board deregulation, and the president’s ending of the “war on business” as factors that are encouraging continued growth.
“I’m going to argue growth and jobs will continue to expand,” said Kudlow, citing rises in productivity output per hour at the highest rate in years, having gone from nearly zero to 2 percent.
“I think his trade policies are succeeding,” said Kudlow, referencing international economic matters. “He’s been tough and sometimes he will use tariffs, something I’ve learned that will bring people to the table.”
“We’re getting closer. We’re making a lot of headway on the China trade deal … We are negotiating with Europe and we’re talking and negotiating with Japan,” he added.
“We have to have tough, reciprocal trading policies with our neighbors.”
Kudlow pushed back on Wallace’s assertion that the Chinese canceled a trip to Mar-a-Lago, Florida, for a signing ceremony in March, suggesting no such ceremony had been scheduled.
“As the president said, across the board, the deal has to be good for the United States and for our workers and our famers and our manufacturers … We made great headway when the Chinese were here two weeks ago. In the past week, we’ve been in communications with them … working out some of the difficult final points,” Kudlow added.
In a final point, Kudlow said he was “bullish” and optimistic about the possibility of a signing ceremony between President Trump and China’s President Xi in March or April.
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Michele Blood is a Flemington, New Jersey-based freelance writer and regular contributor to LifeZette.