Pres. Trump's new economic adviser suggests Detroit auto companies 'go south'
Larry Kudlow thinks Detroit 'crowd' should 'go south' for tax rates
DETROIT – President Donald Trump has chosen Larry Kudlow to be his top economic aide, elevating the influence of a longtime fixture on the CNBC business news network who previously served in the Reagan administration and has emerged as a leading evangelist for tax cuts and a smaller government.
Kudlow will join an administration in the middle of a tumultuous remodeling as a wave of White House staffers and top officials have departed in recent weeks. Trump on Tuesday dumped his secretary of state, former Exxon Mobil CEO Rex Tillerson.
The famously pinstripe-suited Kudlow would succeed Gary Cohn, a former Goldman Sachs executive who is leaving the post in a dispute over Trump’s decision to impose tariffs on imported steel and aluminum.
With Trump’s tax cuts already being implemented, Kudlow would be advising a president who appears increasingly determined to tax foreign imports — a policy Kudlow personally opposes. Kudlow said he is “in accord” with Trump’s agenda and his team at the White House would help implement the policies set by the president.
On Wednesday, Kudlow appeared on CNBC to speak about his new job. In the interview, Kudlow suggested Detroit automakers consider moving south for better tax rates.
Kudlow told CNBC that his sources tell him Canadian Prime Minister Justin Trudeau is working with Pres. Trump on trade.
Here's the transcript of the exchange from CNBC:
Kudlow: Very good source. It's one I’ve been speaking with in recent days. So, I’m told that. And he told the same thing about Europe. But I will say this; this source is worried about the trade situation in Europe. The EU has very bad protectionist policies. They also have very bad tax policies. They have big vats. We have to pay the darn vats. And they sometimes have quotas on our cars. That's not right. We let them in, we welcome them in the south and so forth. Low tax states and the right to work laws. That's great. The Detroit crowd should go south. And there's better state tax rates. That's a big point in our last –
Frost: the EU has a 10% import tax on U.S. cars. Does your source –
Kudlow: we don't.
Frost: think if this doesn't get resubtracted there will be a reciprocal tariff put on European cars?
Kudlow: He is looking at it real closely. He is looking at it real closely. It's a good question. Yeah the answer is yes.
More on Kudlow's background:
In 1987, Kudlow moved to Wall Street and, though he never completed a master’s program in economics and policy at Princeton University, served as chief economist at Bear Stearns. He left that position in the early 1990s to treat an addiction to alcohol and drugs, after which he worked at Laffer’s research and consulting firm.
Kudlow soon settled comfortably into the world of political and economic punditry, working at the conservative National Review magazine and ultimately becoming a host of CNBC shows beginning in 2001. He has remained a contributor to CNBC and a colleague and friend for many at the network. Indeed, among the first to report on Kudlow’s possible move to the White House was Jim Cramer, the stock market guru and his former co-host on “Kudlow & Cramer.” It was on CNBC that Kudlow gained a high-profile platform for explaining, defending and — at times — faulting Trump’s economic agenda.
Kudlow channeled his push for lower taxes into a 2016 book he co-wrote, in which he argued that President John F. Kennedy’s tax cuts had boosted economic growth. The book, “JFK and the Reagan Revolution,” asserted that Reagan’s 1980s tax cuts followed the same template. When Trump’s own tax cuts ran into resistance over the higher budget deficits that would result, Kudlow downplayed the risks of debt. He argued on CNBC that Reagan ran even higher deficits to finance tax cuts and military spending — a formula that Kudlow contends helped accelerate growth.
Kudlow has, at times, been overly optimistic — if not outright mistaken — about what Republican administrations can achieve for the economy. He declared in a December 2007 column for National Review that George W. Bush’s presidency was ushering in a new golden era.
“There’s no recession coming,” Kudlow wrote. “It’s not going to happen.”
Economists later concluded that the Great Recession and the financial meltdown it triggered began the month that column was published.
Laffer described Kudlow as someone who would be inclined to offer “unvarnished” advice to the president on the appropriate path for economic policy.
“And if by chance, he doesn’t convince the president of something, he will be a loyal employee,” Laffer said. “He stays loyal even if the decision goes against him.”
Kudlow has shown himself willing to embrace personal transformations. He converted from Judaism to Catholicism, according to a 2000 interview with the religious magazine Crisis. After graduating as a history major from the University of Rochester in 1969, he worked on Democratic campaigns in New York. But he evolved into a committed Republican who considered entering the 2016 race to challenge Sen. Richard Blumenthal, a Connecticut Democrat.
Jared Bernstein, who was an economic adviser to Vice President Joe Biden during Barack Obama’s presidency, said he’s been debating Kudlow from the opposite side of the ideological fence for decades and still likes him. Bernstein said he has never managed to convince Kudlow that that tax cuts that he has zealously championed have failed to deliver the promised growth, a view shared by many academic economists. But Kudlow understands trade, the Federal Reserve, employment, inflation and the financial markets, Bernstein said.
“And, at least on those issues, he listens,” said Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a liberal think tank.
For a president who pays close attention to image and wants advisers who look every inch the part, Kudlow seems to fit the role of high-powered presidential aide. Customarily attired in narrow-lapelled suits, Kudlow has relied on the same Savile Row-trained, New York-based tailor, Leonard Logsdail, for 26 years.
Logsdail said Kudlow still wears some of the first suits he made for him.
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