WHEN: TODAY, WEDNESDAY, March 14, 2018
WHERE: CNBC'S "CLOSING BELL"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with CNBC Senior Contributor Larry Kudlow on CNBC's "Closing Bell" (M-F 3PM - 5PM) today, Wednesday, March 14. Following is a link to video of the interview on CNBC.com: https://www.cnbc.com/video/2018/03/14/larry-kudlow-im-honored-to-take-white-house-job.html.
All references must be sourced to CNBC.
KELLY EVANS: HERE ON SET, YOU MIGHT KNOW HIM, LARRY KUDLOW IS HERE.
LARRY KUDLOW: ABSOLUTELY, MY GOOD FRIEND.
EVANS: WE ARE PUTTING THE MICROPHONE ON YOU, LARRY, WE'RE NOT WAITING UNTIL YOU ARE OFFICIALLY READY TO GO.
KUDLOW: LET ME SAY HELLO TO MY DEAR FRIEND, DAN CLIFTON, THE SMARTEST POLICY GUY IN WASHINGTON, D.C.
CLIFTON: CONGRATULATIONS LARRY.
KUDLOW: I'LL CALL YOU FOR HELP. I MAY HAVE TO CALL YOU FOR A LITTLE HELP BUDDY. THANK YOU VERY MUCH. WHICH CAMERA AM I ON?
WILFRED FROST: LARRY, CONGRATULATIONS TO YOU.
KUDLOW: THANK YOU, APPRECIATE IT.
FROST: TALK US THROUGH WHAT UNFOLLOWED IN THE LAST COUPLE WEEKS, WHEN DID THE PRESIDENT FIRST GET IN TOUCH WITH YOU AND WHEN DID HE FORMALLY OFFER YOU THE ROLE, AND WHAT WAS YOUR IMMEDIATE REACTION?
KUDLOW: WELL, THAT LAST ONE'S EASY. IMMEDIATE REACTION, YES, HONORED TO TAKE THE JOB. WHICH WAS LAST NIGHT?
EVANS: IN AN UBER?
KUDLOW: ACTUALLY, IT STARTED ON 5thAVENUE I WAS AT CIPRIANI'S FOR ONE OF OUR JOHN KATZ DINNERS, JOHN AND MARGO, JUDY AND LARRY, MARK SIMONE AND ALEX, WE HAVE THEM ALL THE TIME, AND SO THE PHONE RANG, AND, OF COURSE, THE PLACE IS PACKED, AND ONE OF HIS MILITARY GUYS SAID, YOU KNOW, THE PRESIDENT'S CALLING. I WALKED OUTSIDE WE STARTED A CONVERSATION ON 5thAVENUE, VERY COLD, SO I GOT IN THE UBER –
EVANS: THE WEATHER WAS COLD, NOT THE PRESIDENT.
KUDLOW: THE PRESIDENT WAS GREAT TALK ABOUT THAT IN A MOMENT. I HAD TO GET UPTOWN TO DO THE JOHN BATCHELOR SHOW LIKE I DO EVERY 15 SOME ODD YEARS EVERY TUESDAY NIGHT FOR A HOUR, SO WE WERE TALKING –
EVANS: WHO SUGGESTED THE 10-12 HOURS WOULD BE MORE WORK THAN YOU ARE ACCUSTOMED TO?
KUDLOW: OH, HOW UNFAIR.
EVANS: YOU DO 10-12 HOUR DAYS ALL THE TIME. TELL US ABOUT THE CONVERSATION.
KUDLOW: I USED ANCHORED TWICE ON THIS NETWORK IN THIS -- FOR A LONG TIME, I THINK THE 11 TO NOON, COME BACK AT 7:00. I'M READY. I PLAYED A STRONG GAME –
FROST: AND I HOPE YOU WILL CONTINUE TO JOIN US REGULARLY AS WELL?
EVANS: EXCLUSIVELY, RIGHT? LARRY, COME ON, YOU KNOW, ALL THE OTHER TV -- NOPE, NOPE, YOU HAVE TO STICK HERE. YOU HAVE A CONTRACT, DON'T YOU?
KUDLOW: KELLY, WHATEVER YOU WANT. MY GREAT PLEASURE.
EVANS: CONTINUE TO TELL US ABOUT WHAT THE PRESIDENT OFFERED YOU, AND WHAT YOU EXPECT YOU'LL BE ABLE TO DO IN THIS ROLE?
KUDLOW: WELL, LOOK, HE CALLED ME SUNDAY AFTERNOON, AND I WAS IN CONNECTICUT, JUST FINISHED PLAYING TENNIS, AND I THOUGHT HE WAS GOING TO CALL ME TO BALL ME OUT BECAUSE I HAD SOME PROBLEMS WITH THE ACROSS THE BOARD TARIFFS, AS YOU KNOW, BUT HE DIDN'T, ACTUALLY HE CALLED AND STARTED TO EXPLAIN HIS POSITION TO ME THINKING ON THE MATTER, WHICH I WANT TO GET TO IN A MINUTE BECAUSE ITS NOT QUITE WHAT PEOPLE THINK IT IS, AND THEN WE GOT INTO THE CONVERSATION AND HE STARTED TALKING ABOUT THE NEC DIRECTOR JOB. THAT'S WHEN I REALIZED THAT'S WHAT THIS WAS REALLY GOING TO BE ABOUT, AND HE WAS WONDERFUL. I MEAN, ONE OF THE -- LISTEN, I'VE BEEN AROUND A WHILE, MY HEAD IS NOT TURNED EASILY, I'VE SERVED IN THE WHITE HOUSE, ET CETERA, ET CETERA, BUT JUST TO TALK TO HIM FOR 30-40 MINUTES AT A CLIP, THREE, FOUR DAYS IN A ROW IS A WONDERFUL THING. I JUST WANT TO SAY THAT. IT'S A WONDERFUL THING, AND HE AND I HAVE KNOWN EACH OTHER MANY YEARS, INTERVIEWED HIM ON RADIO AND TV, WAS IN THE CAMPAIGN HELPING OUT, I KNOW HIM, YOU KNOW, REASONABLY WELL, AND IT WAS JUST A TERRIFIC EXPERIENCE I DON'T WANT TO SOUND SOPHOMORIC, BUT IT WAS JUST A REALLY GOOD THING.
FROST: LARRY, WE WANT TO DIVE IN THE DIFFERENCES, BUT MULTIPLE 30 MINUTE PHONE CALLS A DAY IN THE LAST WEEK.
KUDLOW: YES.
FROST: SET UP FOR US HOW WAS THE PRESIDENT IN THE MOMENT? A LOT OFPEOPLE ARE FRAMING THIS AS A CHAOTIC OR VERY VOLATILE COUPLE WEEKS. HOW IS HE DOING PERSONALLY?
KUDLOW: GREAT. SOUNDED GREAT. I WILL SEE HIM TOMORROW, GOING DOWN TONIGHT, GOT ALL KINDS OF THINGS TO DO SOUNDED GREAT. LOOK, THE ECONOMY IS STARTING TO BOOM THE TAX CUTS ARE WORKING THE DEREGULATION IS WORKING. WERE GOING TO GET ONTO INFRASTRUCTURE YEAH, WE'RE GETTING ON TO TRADE ALSO HE'S COMPLETELY IN COMMAND AS HE ALWAYS DOES, NOW AS HE EXPLAINS STUFF HE'S THINKING, BUT HE ASKS QUESTIONS. THIS IS AN OLD THING BETWEEN US, AND HE ASKS GOOD QUESTIONS IF I TRY TO GIVE THE KUDLOW THING, HES GOING TO COME BACK AND HES A SMART MAN, SO I -- LOOK, I HAVEN'T BEEN IN THE WHITE HOUSE AS A STAFFER, YOU KNOW, SO I CANT SAY WHAT ALL GOES ON THERE, BUT I DIDN'T HEAR THAT.
EVANS: DAN CLIFTON, ONE OF THE REASONS WE TALKED TO HIM, HE SAID NOW THAT THE TARIFF NUMBER COULD BE $60 BILLION, THAT WOULD DO MORE TO OFFSET THE IMPACT OF TAX CUTS, IN FACT, YOU KNOW –
KUDLOW: WHICH TARIFF NUMBER IS THIS?
EVANS: THIS IS THE TARIFF NUMBER REPORTEDLY ROBERT LIGHTHEISER BROUGHT HIM 30 BILLION WORTH OF TARIFFS ON CHINA ACROSS THINGS LIKE TOYS OR TECH, OTHER INDUSTRIES, AND THE PRESIDENT SAID IT WAS NOT ENOUGH, AND NOW THE REPORTING NUMBERS WERE $60 BILLION. STRATEGAS CONCERN IS, LOOK, NOW THE NUMBERS ARE STARTING TO ADD UP TO SOMETHING THAT COULD HURT GROWTH MORE SUBSTANTIALLY AND UNDERMINE BENEFIT OF THE TAX CUTS WE KNOW YOU LOVE SO MUCH. WHAT'S THE MESSAGE GOING TO BE TO THE PRESIDENT ON THIS?
KUDLOW: WELL, I'M A LITTLE UNSURE ABOUT THESE NUMBERS. IM NOT PRIVY TO THE NUMBERS I TALKED BOB LIGHTHEIZER ABOUT IT AT SOME LENGTH TODAY, AN OLD FRIEND OF MINE, AND I CANT COMMENT ON THAT, BUT I WILL SAY THIS, CHINA IS NOT PLAYED BY THE RULES FOR A LONG TIME IVE TALKED ABOUT THAT, INTELLECTUAL PROPERTY RIGHTS, CORPORATE TECHNOLOGIES, OTHER BARRIERS, TRANSSHIPMENTS TO GET AROUND THINGS, AND SO CHINA NEEDS A COME UPPANCE ON TRADE. I BELIEVE THAT NOW –
FROST: LOOKING AT LIVE PICTURES OF PRESIDENT TRUMP AT THE BOEING PLANT AS WELL, WHICH WELL KEEP LOOKING AT THE PICTURES. WE JUST HAD A STATEMENT, LARRY, FROM THE WHITE HOUSE, SARAH SANDERS SAYING KUDLOW OFFERED AND ACCEPTED THE POSITION OF ASSISTANT TO THE PRESIDENT FOR ECONOMIC POLICY DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL OF COURSE WE ALREADY KNEW THAT LARRY SINCE YOU CONFIRMED THAT TO US, BUT NOW OFFICIAL CONFIRMATION. CONGRATULATIONS
KUDLOW: THANK YOU BY THE WAY, IT WAS OUT – I DIDNT KNOW THAT I WASN'T WATCHING THE TV THIS MORNING, AND THE PRESIDENT CALLED, AND HE SAID, IT'S OUT I DONT THINK HE WAS INTENDING TO PUT IT OUT UNTIL TOMORROW OR FRIDAY, AND I SAID, OH, AND HE SAID, YOURE ON THE AIR. HE SAID, IM LOOKING AT A PICTURE OF YOU HE SAID, VERY HANDSOME THAT'S HOW TRUMP HE IS.
FROST: HE'S THERE AT THE BOEING PLANT NOW. BOEING IS DOWN SIGNIFICANTLY TODAY, 2.5% OVER FIVE DAYS, DOWN 5%, AIRBUS ITS RIVAL FLAT OVER THAT PERIOD. WE KNOW HE LOOKS AT THE STOCK MARKET DO YOU THINK HELL BE LOOKING AT THE REACTION TO BOEINGS STOCK PRICE TODAY, LISTENING TO PEOPLE THERE AT THE PLANT THINKING, GOSH, MAYBE TARIFFS ON CHINA IS NOT THE RIGHT MOVE BECAUSE THEY CAN RETALIATE AND HURT AMERICAN COMPANIES LIKE BOEING?
KUDLOW: WELL, WE WILL SEE I MUST SAY AS SOMEONE WHO DOESNT LIKE TARIFFS, I THINK CHINA HAS EARNED A TOUGHER RESPONSE NOT ONLY FROM THE UNITED STATES, BUT I MEAN, I WOULD -- A THOUGHT I HAVE IS THAT THE UNITED STATES COULD LEAD A COALITION, OF LARGE TRADING PARTNERS AND ALLIES AGAINST CHINA OR TO LET CHINA KNOW THAT THEY ARE BREAKING THE RULES LEFT AND RIGHT, THAT'S THE WAY I LIKE TO SEE. YOU CAN CALL IT A TRADE COALITION OF THE WILLING, AND I CAN'T COMMENT ON SPECIFIC NUMBERS. I DONT THINK THOSE NUMBERS HAVE MUCH TO DO WITH US I DON'T KNOW WHERE THEY COME FROM. I MEAN, MY PROBLEM WITH THE STEEL AND ALUMINUM TARIFFS AS ORIGINALLY ANNOUNCED THAT IT MIGHT DO HARM TO AMERICAN USERS OF STEEL AND ALUMINUM. I MADE THAT POINT ON THE AIR I MADE IT TO HIM AND CONSUMERS, ULTIMATELY. WHAT IS HAPPENING IS ON THAT, AND THIS IS A VERY IMPORTANT THING, THE END OF LAST WEEK, HE STARTED UP WITH THE CARVEOUTS, THE EXCLUSION. CANADA, MEXICO, PERHAPS AUSTRALIA. NOW, WERE WE ON FRIDAY WE TALKED ABOUT THIS.
EVANS: I THINK WE WERE.
KUDLOW: I SAID TO YOU THAT I WAS RELIEVED BECAUSE I JUST DON'T LIKE BLANKET TARIFFS AND I DON'T THINK YOU SHOULD PUNISH YOUR FRIENDS TO TRY TO PUNISH YOUR ENEMIES IN INTERNATIONAL AFFAIRS, AND THAT'S WHERE HE WENT. SO ON THE RADIO SATURDAY, I APPLAUDED THE CARVEOUTS, AND IN TALKING TO HIM IN RECENT DAYS, EUROPE CAN GET CARVEOUTS IF THEY NEGOTIATE WITH US TO REDUCE SOME OF THEIR BARRIERS. THEY HAVE MANY BARRIERS. DITTO FOR JAPAN. CHINA, I DON'T KNOW. MAYBE CHINA WILL NEGOTIATE IN GOOD FAITH, WE'LL SEE. BUT REGARDING OUR TAX RATES, NO, I DON'T THINK OUR ECONOMY IS THREATENED YET. AND EVEN IF THE WORST CASE HAS GONE THROUGH, I DON'T THINK IT WOULD HAVE – MY PROBLEM IS THE PRINCIPLE OF THE THING, I JUST DON'T LIKE BLANKET TARIFFS. I PREFER – LOOK, I WAS TALKING TO SPEAKER PAUL RYAN TODAY AT SOME LENGTH ABOUT THIS. WE – SUPPLY SIDERS HAVE ALWAYS SAID, IF YOU MUST, AT LEAST TARGET THEM SPECIFICALLY. THAT WILL WORK. REAGAN – WE HAD, WHAT, MOTORCYCLES, WE HAD SHIPS IF I RECALL –
EVANS: ACTUALLY, WE SPOKE TO DAVID STOCKMAN, YOUR FORMER BOSS LAST HOUR –
KUDLOW: COLORFUL TV. OH, I KNOW.
EVANS: AND HE HAD SOME INTERESTING THINGS TO SAY ABOUT THIS. HE SAID HE SEES YOU IN THIS POSITION AS A HEADS, TRUMP WINS, TAILS, TRUMP LOSES. MAYBE I WROTE THAT DOWN WRONG. HIS POINT WAS THE PRESIDENT IS GOING TO WIN NO MATTER WHAT, LARRY, YOU COULD BE THE FALL GUY. HE SAID, "THE PRESIDENT IS AN INCORRIGIBLE LIFELONG PROTECTIONIST. PEOPLE ARE DELUSIONAL IF THEY THINK HE IS GOING TO CHANGE OR IF ANYTHING WILL CHANGE ON TRADE OUTCOMES." THAT TRUMP IS, "A 17th MERCANTILIST IN A TIME WARP," AND THAT GARY COHEN'S DEPARTURE WAS HIS ACKNOWLEDGEMENT THAT THERE WAS NOTHING ANYBODY COULD SAY OR DO TO CHANGE THE COURSE OF THAT OUTCOME.
KUDLOW: FOR 35-SOME ODD YEARS, MY FRIEND, DAVE STOCKMAN, HAS BEEN A SKY IS FALLING GUY. NO MATTER WHAT, HE IS PUSHING HIS AGENDA. HE'S NEVER MET DONALD TRUMP. HE DOESN'T KNOW ANYTHING ABOUT IT. I LOVE DAVE, I LOVE JENNIFER. I WORKED FOR HIM FOR THREE, THREE AND A HALF YEARS. IT WASN'T EASY. DAVE IS ENTITLED TO HIS OPINIONS. ALRIGHT? I DON'T HAPPEN TO AGREE WITH THOSE OPINIONS, AND I DON'T WANT TO GO ANY FURTHER BECAUSE I DONT WANT TO GET PERSONAL.
EVANS: IS YOUR OBJECTIVE TO CHANGE THE PRESIDENT'S MIND?
KUDLOW: WELL, I'M NOT SURE.
FROST: LARRY, LET'S JUST HAVE THE CLOSE. YOU'VE GOT ALL THE NOISE OF THE BELL, THE DOW CLOSES DOWN AROUND ABOUT 250 POINTS. THE S&P DOWN ABOUT 16 POINTS AND OF COURSE, THE BIGGEST UNDERPERFORMER TODAY ON THE DOW WAS BOEING.
EVANS: AND YOU ARE WATCHING "CLOSING BELL," EVERYBODY. I'M KELLY EVANS, THIS IS WILFRED FROST. WE ARE JOINED BY LARRY KUDLOW WHO – IS IT OFFICIAL? WHAT DO WE CALL YOU? MR. DIRECTOR?
KUDLOW: YOU JUST CALL ME LARRY. IT IS PERFECTLY OKAY.
EVANS: OKAY.
KUDLOW: YOU KNOW, I BROUGHT HER TO THE NETWORK. LET'S BE VERY CLEAR. SHE WAS ONE OF MY GREATEST GUESTS WITH RATINGS THROUGH THE ROOF ON "THE KUDLOW REPORT" –
EVANS: LARRY, YOU SHOULD SEE THE E-MAILS RIGHT NOW FROM PEOPLE WHO WANT TO OFFER YOU THEIR CONGRATULATIONS.
FROST: MANY OF THEM.
EVANS: THEY ARE SO THRILLED FOR YOU.
KUDLOW: GOD BLESS ALL OF THEM. AND ONE NIGHT SHE'S ON, AND NIK DEOGUN COMES DOWN, HE NEVER COMES DOWN TO THE SET –
EVANS: NO ONE WANTS TO HEAR ABOUT ME RIGHT NOW.
KUDLOW: AND HE'S TAKING HER AWAY FROM ME.
EVANS: LET ME READ YOU –
KUDLOW: I CAN SEE IT.
EVANS: LISTEN. LET ME READ YOU A STATEMENT FROM CNBC CHAIRMAN, MARK HOFFMAN.
KUDLOW: YES.
EVANS: HERE IS WHAT HE HAD TO SAY. "LARRY IS A THOUGHTFUL, TENACIOUS, AND GRACIOUS GENTLEMAN WHO POSSESSES AN ENCYCLOPEDIC KNOWLEDGE OF MARKETS, ECONOMICS AND PUBLIC POLICY. HE HAS THE UNIQUE ABILITY TO MAKE THE MOST COMPLEX CONCEPTS COMPREHENSIBLE AND ACCESSIBLE. LARRY'S BEEN PART OF THE FABRIC OF CNBC SINCE OUR FOUNDING IN 1989. WE THANK HIM FOR HIS MANY CONTRIBUTIONS AND WISH HIM WELL."
KUDLOW: THANK YOU. I TALKED TO MARK TODAY. IT IS EXTREMELY KIND. THE LAST 25 YEARS OF MY LIFE HAVE BEEN TIED UP WITH CNBC, WHICH CHANGED MY LIFE, CHANGED MY PROFESSION, AND IT'S BEEN A FAMILY TO ME. AND, HOWEVER THIS THING WORKS OUT, IT WILL BE GODS WILL IF THERE'S AN OPPORTUNITY WHEN MY SERVICE IS COMPLETE, I HOPE VERY MUCH TO COME BACK AND HELP CNBC. IT IS MY FAMILY AND IT'S CHANGED MY LIFE. AND CNBC ALSO, YEARS BACK, GAVE ME A SECOND CHANCE AFTER MY CRASH AND BURN. RON INSANA AND BILL GRIFFETH. AND NEXT THING I KNEW, I WAS IN THE ROTATION. AND NEXT THING I KNEW ONE NIGHT I WAS SITTING ON AIR WITH JIMMY CRAMER. WE DIDN'T KNOW WHAT WE WERE DOING, BUT I LOVED THE GUY, AND IT WAS WONDERFUL. I LOVE THIS PLACE. 'IM HONORED TO TAKE THIS POSITION. THE HARDEST PART ABOUT IT IS I WON'T BE HERE THREE, FOUR DAYS A WEEK ANYMORE.
FROST: LARRY, SO MANY OF US AT CNBC ECHO MARK HOFFMAN'S WORDS. YOU ARE AN INSPIRATION TO ALL OF US. NOW YOU HAVE A CHANCE TO MAKE A DIFFERENCE FOR MANY, MANY MORE PEOPLE. HOW MUCH OF AN HONOR IS THAT FOR YOU?
KUDLOW: YES. ENORMOUS HONOR. MY LIFE HAS HAD TWISTS AND TURNS. AND AS PEOPLE KNOW, YOU KNOW, WITH GODS GRACE, I'LL HAVE 23 YEARS CLEAN AND SOBER IN THE NEXT COUPLE MONTHS. THAT MADE IT ALL POSSIBLE. AND WONDERFUL PEOPLE LIKE YOU, AND KELLY, AND MARK HOFFMAN, AND NIK DEOGUN AND EVERYBODY ELSE HERE, THE WHOLE NEWS ROOM, IT'S JUST – I LOVE IT. BUT THERE ARE GREATER RESPONSIBILITIES. I'M AWARE OF THAT. I BELIEVE I'M UP TO THE TASK. I'VE GOT A LOT OF ENERGY.
EVANS: LISTEN, PEOPLE ARE LUCKY IF THEY GET A SECOND ACT IN LIFE, LARRY.
KUDLOW: I KNOW.
EVANS: THIS IS WHAT – THIRD? FOURTH FOR YOU?
FROST: AND THE BEST YET.
EVANS: I MEAN, FIFTH? DO YOU KNOW THE KIND OF HOPE PEOPLE –
KUDLOW: WHO'S COUNTING?
EVANS: ANYWAY, THE PRESIDENT, WE'RE GOING TO HEAR FROM THE PRESIDENT POSSIBLY HIMSELF AS WELL. HE IS IN ST. LOUIS. HE IS TOURING A BOEING FACTORY. AND THAT IS A FASCINATING BACKDROP RIGHT NOW AS THE MAIN ISSUE OF CONTENTION FOR THE MARKETS IS THE DIRECTION OF THESE TARIFFS. SO, JUST ONE FINAL POINT THAT DAVID STOCKMAN MADE. HE SAID HE THINKS, LARRY, THAT YOU "ARE THE KIND OF GUY WHO JUST WANTS TO DO WHATEVER IT TAKES TO KEEP STOCKS RISING." NOW, PEOPLE SAY THAT ABOUT THE PRESIDENT AS WELL. AND THEY ARE ALL LOOKING AT THE TARIFF POLICY THROUGH THE LENS OF IS IT HELPING OR HURTING COMPANIES LIKE BOEING, IS IT HELPING OR HURTING STOCK – WHAT DO YOU THINK?
KUDLOW: LOOK, IN TERMS OF MY ECONOMIC PHILOSOPHY OR VIEWS, IT'S NO SECRET I'M A DISCIPLE OF ARTHUR LAFFER, AND ROBERT MUNDELL AND SOME OTHERS, STEVE FORBES, STEVE MOORE. LOOK, I'M GOING TO MAKE IT REALLY SIMPLE. MR. STOCKMAN, NOTWITHSTANDING. I BELIEVE, FIRST OF ALL, THE GREATEST AND MOST IMPORTANT THING FOR THIS OR ANY OTHER COUNTRY IS RAPID ECONOMIC GROWTH AND PROSPERITY FOR EVERYONE. THAT'S MY BASIC VIEW AND IT HAS BEEN FOR FOUR DECADES. SECOND, THERE ARE WAYS TO DO IT. I DON'T BELIEVE IN SECULAR STAGNATION. WE GO THROUGH SLUMPS IN THIS COUNTRY, GOOD POLICIES ALWAYS HELP. ULTIMATELY, IT'S THE GENIUS OF OUR AMERICAN BUSINESSMEN AND WOMEN AND OUR CONSTITUTION AND OUR RULE OF LAW. BUT, IF YOU KEEP TAX RATES MINIMAL, IF YOU KEEP REGULATIONS AND GOVERNMENT SPENDING MINIMAL, IF YOU KEEP THE DOLLAR SOUND AND STEADY, YOU ARE GOING TO HAVE A TERRIFIC ECONOMY. IF GOVERNMENT HAS A MODEST APPROACH AND LET'S PEOPLE DO WHAT THEY NEED TO DO AND ALLOWS THE FREEDOM TO DO IT, WE WILL DO GREAT IN THIS COUNTRY. WE ARE ALREADY, I BELIEVE, ON THE FRONT END OF A TREMENDOUS INVESTMENT BOOM. NUMBERS ARE GOING TO COME OUT OVER TIME. THAT'S MY PHILOSOPHY. WHETHER THAT – LOOK, I LOVE THE STOCK MARKET. I LOVE WEALTH. I THINK RISING STOCKS HELPS EVERYBODY, ALL RIGHT? AND LET ME FINISH THIS POINT. MANY OF THE PEOPLE WHO ARE CRITICAL OF ME OR THE PRESIDENT'S TAX CUTS ARE THE VERY PEOPLE WHO ARE BEING HELPED THE MOST. FOR EXAMPLE, MY FRIENDS IN THE UNION MOVEMENT. TEACHERS UNION, GOVERNMENT WORKERS, THEY HATE THIS STUFF. WELL, YOU KNOW WHAT? THE LOWER TAX RATES AND THE FASTER ECONOMIC GROWTH AND THE BETTER PROFITS IS THE ONLY HOPE THEY HAVE OF EVER SEEING THEIR PENSIONS. SO DON'T TELL ME IT DOESN'T HELP EVERYBODY BECAUSE IT DOES. AND, IN FACT, I KNOW PEOPLE ARE NAGGING AND COMPLAINING TO ME ABOUT THE SOLE TAX ON STATE AND LOCAL GOVERNMENTS. OKAY, WE'LL FIGURE THAT OUT OVER TIME, BUT YOU KNOW WHAT? I'M GOING TO SAY, AS I HAVE, EVERYBODY IS GOING TO BENEFIT FROM A BOOM. EVERYBODY. YOU KNOW WHY? I SAY TO MY FRIENDS, WEALTHY PEOPLE IN THE SUBURBS OR THE CITY, YOUR BUSINESS IS GOING TO IMPROVE, YOUR ORDERBOOK IS GOING TO IMPROVE. YOU'RE GOING TO BE BETTER OFF EVERYWHERE.
EVANS: HERE'S A QUESTION. BIG TIME INVESTOR LARRY. BIG TIME INVESTOR I ASKED WHAT WOULD YOU WANT TO ASK LARRY KUDLOW RIGHT NOW? AND HE SAID, "IF YOU COULD WAVE A MAGIC WAND, WHAT IS ONE INCREMENTAL POLICY THAT WOULD ENSURE A HIGHER LONG-TERM GROWTH RATE?" WHAT WOULD YOU DO? IS IT INFRASTRUCTURE OR ARE YOU NOT SO KEEN ON THAT?
KUDLOW: NO.
EVANS: WHAT IS IT THAT WOULD BE THAT ONE THING?
KUDLOW: I'M KEEN ON – I'LL JUST SAY IT IN A LITTLE PHRASE. LOWER TAX RATES AND SOUND MONEY.
EVANS: PERSONAL TAX RATES?
KUDLOW: PERSONAL, CORPORATE. LOWER TAX RATES AND SOUND STABLE DOLLAR. IF YOU HAVE THAT COMBINATION, AS BRIAN DOMITROVIC AND I WROTE IN OUR BOOK, JFK AND THE REAGAN REVOLUTION, WHEN THAT MODEL HAS BEEN TRIED UNDER JFK AND UNDER REAGAN, IT'S WORKED FABULOUSLY. AND I'LL EVEN GIVE –
EVANS: YOU THINK TRUMP IS GOING TO EMBRACE A STRONG DOLLAR? WHAT WOULD THAT LOOK LIKE? ARE YOU AND SECRETARY MNUCHIN –
KUDLOW: I HAVE NO REASON TO BELIEVE PRESIDENT TRUMP OPPOSES SOUND AND STABLE DOLLAR. A GREAT COUNTRY NEEDS A STRONG CURRENCY. HE KNOWS THAT. I HAVE NO REASON TO BELIEVE HE DOESN'T FAVOR A SOUND AND STRONG AND STEADY – I'M NOT SAYING THE DOLLAR HAS TO GO UP 30%. I'M JUST SAYING LET THE REST OF THE WORLD KNOW WE ARE GOING TO KEEP THE WORLD'S INTERNATIONAL RESERVE CURRENCY STEADY. THAT CREATES CONFIDENCE AT HOME AND CONFIDENCE OVERSEAS. I HAVE NO REASON TO BELIEVE THE PRESIDENT DISAGREES WITH THAT VIEW.
FROST: WHAT DOES IT MEAN FOR THE DEFICIT? ARE YOU WILLING TO LET THE DEFICIT RISE IN THE SHORT TERM?
KUDLOW: I HAVE TO.
FROST: TO WHAT SORT OF LEVEL?
KUDLOW: I HAVE TO. THAT'S THE WAY THIS CRAZY STATIC SCORING IS IN WASHINGTON, D.C. I DON'T BELIEVE A WORD OF IT. LOOK, I WAS THE NUMBERS GUY AT OMB FOR THREE YEARS. I HEARD THE SAME THING WHEN REAGAN CUT TAX RATES, OKAY? SHORT RUN, YES, YOU'RE GONNA GET DEFICIT, BUT, LET ME -- LOOK, YOU'RE RUNNING A BUSINESS. YOU'RE RUNNING A BUSINESS. AND YOU SEE INVESTMENT OPPORTUNITIES TO EXPAND YOUR BUSINESS, MACHINERY, EQUIPMENT, TRAINING, HIRING, WHATEVER, SO YOU GO OUT AND BORROW IN THE SHORT RUN IN ORDER TO EXPAND THE BUSINESS OVER TIME, THAT'S THE WAY IT WORKS. IF YOU'RE BORROWING TO FINANCE CURRENT SERVICES OR DAY TO DAY EXPENDITURES, YOU'VE GOT A PROBLEM. IF YOU'RE BORROWING TO HAVE GREATER INVESTMENT, LITERALLY, WE ARE INVESTING IN AMERICA WITH THESE LOWER TAX RATES AND, SOUND MONEY, AND MAKING SURE WE LOOK OVER INTERESTS OVERSEAS. THAT'S THE BEST POSSIBLE THING.
EVANS: LARRY, LET ME ASK YOU, WHAT KIND OF CONVERSATIONS HAVE YOU HAD WITH GARY COHEN? IT SOUNDS LIKE HE MIGHT HE STICK AROUND FOR PART OF THIS TRANSITION?
KUDLOW: I HOPE HE DOES. I HAVE TALKED TO GARY ALMOST DAILY. HE IS WONDERFUL, HE HAS BEEN A GREAT HELP TO ME. AT ONE POINT, I ASKED HIM, I CALLED HIM ONE DAY AS WE WERE GOING THROUGH THIS, I SAID, GARY, THIS IS A REALLY DUMB QUESTION, BUT, LOOK, WHAT DO YOU DO? WHAT'S YOUR DAY LIKE? WHAT DO YOU DO? AND HE LAUGHED HE SAID, NO, THAT'S ACTUALLY QUITE A GOOD QUESTION.
EVANS: SO ARE YOU MOVING TO WASHINGTON?
KUDLOW: I AM, OH, YES, ABSOLUTELY.
FROST: TONIGHT?
KUDLOW: WELL, WE WON'T MOVE LOCK, STOCK, AND BARREL. WE'LL GO DOWN THERE, JUDY AND I. BUT, YEAH, JUST A 24/7 TYPE JOB.
EVANS: DID GARY HAVE ANY CAUTIONARY ADVICE FOR YOU? WHAT NOT TO DO? WHO NOT TO TANGLE WITH? DOES HE SAY, HEY, MY PLAN WAS WORKING PERFECTLY UNTIL ROB PORTMAN LEFT AND PETER NAVARRO WALKED INTO THE OVAL OFFICE?
KUDLOW: YOU KNOW, I HAVE ONLY REALLY GOOD THINGS TO SAY ABOUT MR. COHN WHO I THINK -- HE AND STEVEN MNUCHIN WERE SO INSTRUMENTAL IN THIS TAX CUT, IT IS UNBELIEVABLE. IT CHANGED EVERYTHING. AND THEY'RE WORKING WITH CONGRESS AND THEY'RE WORKING WITH THE PUBLIC. YOU'VE HEARD ME A FEW TIMES SUPPORT THEIR POINT OF VIEW. I HAVE NOTHING BUT GOOD THINGS TO SAY ABOUT GARY COHN AND I HAVE NOTHING BUT GOOD THINGS TO SAY ABOUT STEVE MNUCHIN, AND THIS PRO-GROWTH WOULD NEVER HAVE HAPPENED WITHOUT PRESIDENT TRUMP. PEOPLE TOOK ME DURING THE CAMPAIGN, OH, DON'T BELIEVE HIM, HE'S USING YOU, WHATEVER THAT MEANS. I SAID, WHAT? I JUST SAW HIM. WE ARE TALKING ABOUT – TRUMP WAS THE LAST GUY IN WASHINGTON, EXCEPT WHEN I WENT DOWN ON THE TRAIN, IN FACT, ARGUED FOR 15% CORPORATE TAX RATE, AND HE GOT IT DONE. THIS IS AFTER THE HEALTH CARE THING FELL APART—
EVANS: WHAT ABOUT PETE NAVARRO, QUICKLY?
KUDLOW: PETER NAVARRO IS A GOOD FRIEND OF MINE. I TALKED TO HIM TODAY OR YESTERDAY AT SOME LENGTH. HE WAS A REGULAR ON THE KUDLOW REPORT FOR MANY YEARS. HE'S A GOOD FRIEND. WE AGREE ON SOME THINGS AND WE DISAGREE ON SOME THINGS. AND LET ME SAY, IF YOU KNOW ME, POLICY DISPUTES ARE GREAT. I NEVER AND NEVER WILL MAKE IT PERSONAL. NEVER. HE'S A SMART GUY. AS I SAY, WE WILL HAVE OUR AGREEMENTS AND WE WILL HAVE OUR DISAGREEMENTS. MY FRIEND WILBUR FROST HAS BEEN HELPING ME ON THIS. SAME THING, WILBUR SAID TO ME, LARRY, ALL I ASK IS THAT WHEN THE DECISION IS MADE BY THE PRESIDENT, WE THEN MOVE ON TO THE NEXT ISSUE. AND I SAID, WILBUR, YOU HAVE MY WORD. YOU HAVE MY WORD. THAT'S THE WAY – YOU KNOW, I WANT TO SET UP, BY THE WAY, OR STRENGTHEN A PROCESS SO THAT WHEN DECISIONS ARE MADE, WE DEVOTE OUR TIME AND DISCIPLINE TO EXECUTING THE PRESIDENT'S POLICY DESIRES. THAT'S THE WAY THIS SHOULD WORK. I'VE HAD EXPERIENCE IN THE AREA YEARS AGO WITH REAGAN AND I FOLLOWED IT VERY CLOSELY IN THE BUSH YEARS.
EVANS: IS PETER NAVARRO GOING TO REPORT TO YOU NOW OR THAT'S OVER?
KUDLOW: I DON'T KNOW ANYTHING ABOUT THAT.
EVANS: HE'S NOW A – NOW, ONLY BECAUSE YOU BRING UP THE PROCESS. I DIDN'T KNOW IF YOU MEANT THAT WAS—
KUDLOW: IN MY MIND, PETER NAVARRO IS AN EQUAL. OKAY. WHATEVER THE FLOWCHART MAY OR MAY NOT SAY, I HAVEN'T GOTTEN THAT FAR. BY THE WAY, I'M A GOOD BUREAUCRAT, ALWAYS HAVE BEEN. I'M A PROCESS GUY, I'M A POLICY GUY. THAT'S WHY THE PRESIDENT SAID TO ME, AND OTHER FRIENDS OF MINE SAID, "YOU HAVE BEEN WORKING 40 YEARS FOR THIS." AND THE PRESIDENT SAID TO ME, "THIS IS THE JOB YOU WANTED." AND I SAID, "YES, SIR, IT IS."
FROST: 25 YEARS OF THOSE 40 AT CNBC.
KUDLOW: AND I ASKED HIM – I ASKED HIM. THAT'S CORRECT, BY THE WAY. THREE YEARS AT THE FED. TEN YEARS AS THE CHIEF ECONOMIST AT BEAR STERNS. OTHER ACTIVITIES AROUND.
FROST: THIS, BY THE WAY, THE TEN-YEAR ANNIVERSARY OF BEAR STERNS GOING BUST. WHICH IS A SIDE POINT.
KUDLOW: I READ THE ARTICLE WITH GREAT INTEREST.
FROST: LARRY, THE – GARY COHN, BACK TO HIM. HE WAS SEEN AS SOMEONE WHO LINKED CEOs, LINKED THE BUSINESS WORLD WITH THE ADMINISTRATION. IS THAT SOMETHING YOU SEE AS A ROLE YOU'LL HAVE TO TAKE ON?
KUDLOW: ABSOLUTELY.
FROST: HAVE CEOs RUNG YOU ALREADY? HAVE YOU SPOKEN TO ANY IN PARTICULAR?
KUDLOW: SOME. THERE'S A LAUNDRY LIST ACCORDING TO OUR FRONT OFFICE OF PEOPLE THAT WANT TO TALK TO ME. I WANT VERY MUCH TO DO IT. I WANT TO FOLLOW IN GARY'S FOOTSTEPS. I THINK THAT'S EXTREMELY WISE. I DID THAT YEARS AGO WITHR REAGAN, I WAS A BUSINESS GUY FROM WALL STREET. YES, MUST DO THAT. IT'S NOT A CONSENSUS THING. IT'S THE PRESIDENTS DESIRE AND HIS SENIOR STAFF TO LET FOLKS KNOW WHAT WE'RE DOING AND WHY WE'RE DOING IT. I KNOW THERE'S AGREEMENTS AND DISAGREEMENTS, BUT TO ME, TRANSPARENCY IS A VERY IMPORTANT PRINCIPLE, PARTICULARLY NOWADAYS, YOU KNOW, WITH ALL THE HIGH-TECH COMMUNICATION. YOU CAN'T HIDE ANYTHING NOR SHOULD YOU. SO I LOOK FORWARD TO MEETING WITH THEM. JAMIE DIMON WHO IS A FRIEND OF MINE APPARENTLY CALLED SOMEONE AND SAID "COULD I HAVE KUDLOW'S NUMBER?" THE ONLY THING I DIDN'T LIKE ABOUT IT IS I THOUGHT HE HAD MY NUMBER.
FROST: IF YOU WRITE IT DOWN, I'LL SEND IT TO HIM.
KUDLOW: HE'S A WONDERFUL – LISTEN I'LL GIVE HIM EVERYTHING IN THE WORLD AS LONG AS HE BUYS ME DINNER AS LONG AS HE BUYS ME DINNER AT DECO. THAT'S OUR LOCAL WATERING HOLE UP IN THE UPPER EAST SIDE.
FROST: I'M SURE HE'LL BE WILLING TO DO THAT. JUST BACK TO GARY COHN ONE MORE TIME. CLEARLY HE HAD DISAGREEMENTS AT TIMES WITH THE PRESIDENT. ULTIMATELY, IT LED TO HIS DEPARTURE. DO YOU FEAR THAT? AND WHAT'S THE SORT OF TENURE YOU'RE HOPING FOR IN THE ROLL? ONE YEAR? THREE, FOUR YEARS? SEVEN YEARS?
KUDLOW: OH, I COULDN'T POSSIBLY. LOOK, I WOULDN'T HAVE TOLD YOU SIX DAYS AGO THAT I'D BE TALKING ABOUT THIS. LOOK, I'VE KNOWN THE PRESIDENT A LONG TIME. WE HAVE MUTUAL ADMIRATION -- SOCIETY. HE IS THE PRESIDENT, SO IT'S A DIFFERENT ROLE. AND I WILL ABIDE BY THAT. THERE MAY BE AGREEMENTS, THERE MAY BE DISAGREEMENTS, WE'LL TALK IT THROUGH, BUT AS I SAID, ONCE DECISIONS ARE MADE THAT'S IT. TIME TO EXECUTE.
EVANS: THE PRESIDENT IS GOING TO SPEAK, I BELIEVE, IN ST. LOUIS AT THE BOEING PLANT WITHIN JUST ABOUT MINUTE OR TWO. WILL YOU STICK AROUND?
KUDLOW: LOVE TO.
EVANS: WE WANT YOUR THOUGHTS ON WHAT HE HAS TO SAY THERE.
KUDLOW: I'M INTERESTED IN WHAT HE SAYS.
EVANS: YOU DON'T KNOW ALREADY? ARE YOU GOING TO BE GIVING HIM -- DO YOU EXPECT TO BE GIVING HIM DIRECTIONS ON MATTERS LIKE THIS?
KUDLOW: I WOULD CERTAINLY GIVE HIM THE BEST ADVICE I CAN, AND WORKING WITH MY PAL, KEVIN HASSET AT CEA, WE'RE GONNA – WE'RE NUMBERS PEOPLE. WE MAKE ASSERTIONS, BUT WE'RE NUMBERS PEOPLE, AND THE PRESIDENT DESERVES THE BEST INFORMATION HE CAN GET.
EVANS: LET ME ASK YOU SOMETHING ON THE PENNSYLVANIA ELECTION RESULTS REAL QUICKLY. A DISTRICT TRUMP THAT WON BY 20 POINTS, LOOKS LIKE IT'S A DEAD HEAT, OR MAYBE THE DEMOCRATS JUST HAVE WON AT THIS POINT. AND STRATEGAS' DAN CLIFTON WAS WE JUST HAD ON AS WELL SAID A WAVE ELECTION IS COMING IN THE FALL. HOW IS THAT GONNA COMPLICATE THINGS FOR THE WHITE HOUSE? OR DOES IT JUST TAKE POLICY AND LOOK -- IF THEY'RE THE BIGGEST SUPPORTERS OF THE PRESIDENT'S TARIFFS, ELIZABETH WARREN IS MORE IN HIS CORNER
KUDLOW: THE PRESIDENT, BY THE WAY, THE INTERPOLLS SHOW HE STILL HAS 24 LEAD IN THE DISTRICT. I DON'T WANT TO GET INTO – IT'S A CLOSE RACE. AND LET THE BEST PERSON WIN. I CAN'T TELL THAT. I DON'T WANT TO ANTICIPATE STUFF. YOU KNOW ME, I'M AN OPTIMIST.
EVANS: I'M JUST WONDERING, IS THIS GOING TO DRAG HIM IN MORE OF THAT TARIFF DIRECTION? THIS IS THE ONE PLACE YOU GUYS HAVE A CORE DISAGREEMENT.
KUDLOW: I'M AN OPTIMIST. I BELIEVE IN GROWTH. SO DOES HE THE COUNTRY IS GOING TO HAVE A GREAT RUN HERE. WE'VE BEEN A LITTLE SLOW. I THINK THIS IS THE GREATEST COUNTRY IN THE WORLD AND WE WILL PRODUCE THE BEST ECONOMY IN THE WORLD. THAT'S WHAT OUR HISTORY TELLS US.
FROST: AND THE PRESIDENT, YOU SAID, WHEN YOU SPOKE TO HIM OVER THE LAST FEW DAYS WASN'T IN A NEGATIVE MOOD, DEPSITE PERHAPS --?
KUDLOW: HE WAS IN A GREAT MOOD. GREAT JOKES BACK AND FORTH, HE'S KIDDING ME ABOUT STUFF, HE WAS GREAT. YOU KNOW, TO KNOW HIM, I JUST HAVE TO TELL YOU THIS, IT'S A LOT DIFFERENT THAN WHAT SOME PEOPLE'S PAST VIEWS ARE.
FROST: LARRY, THE PRESIDENT IS ABOUT TO BEGIN SPEAKING.
EVANS: AND WE'LL LISTEN IN TO PRESIDENT TRUMP IN ST. LOUIS.
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FROST: THANK YOU VERY MUCH FOR THAT. LET'S GET IMMEDIATE REACTION FROM LARRY KUDLOW, OF COURSE, WHO IS STILL WITH US. LARRY, YOUR REACTION TO THEM, HOW ACHIEVABLE IS IT BEFORE MIDTERMS.
KUDLOW: I HAVE HEARD THE SAME THING. CONFIRMING EVERYTHING SAID. VERY IMPORTANT. A LOT OF PEOPLE, KEVIN BRADY, EVERYBODY, THE PRESIDENT, MAKE THE INDIVIDUAL TAX CUTS PERMANENT. THEY HAD TO FIDDLE WITH THEM BECAUSE OF THE GOOFY STATIC SCORING MODELS THAT NEVER WORK.
EVANS: THEY DON'T CARE ABOUT THE COSTS, JUST MAKING IT PERMANENT?
KUDLOW: WE'LL SEE. I DON'T KNOW THESE COSTS ARE -- LOOK – CAN WE PLEASE USE DYNAMIC SCORING.
EVANS: SO EVERYONE KNOWS WHAT YOU ARE TALKING ABOUT, STATIC SCORING SAYS TAKING COST OF THIS PROGRAM, AND THERE YOU HAVE IT DYNAMIC SCORING IS TAKES COST, BUT IF THE ECONOMY GROWS 3%, WE TWEAK PROJECTIONS SO IT DOES NOT LOOK AS COSTLY. YOU - COSTLY YOU WANT THE LATTER TO HAPPEN.
KUDLOW: INDEED AND ACTUALLY.
EVANS: THE CRITICS WILL SAY PROBLEM IS THEN YOU CAN JUST PLUG IN A 4%, 5% 10% GROWTH NUMBER AND IT ALL LOOKS LIKE ROSES.
KUDLOW: IT'S BETTER THAN PLUGGING 1.5% NUMBER. LOOK AMERICAN HISTORY PROVES OTHERWISE. PLUG IN 3% I DONT CARE PLUG IN 3.5%, IT LOOKS BETTER. INDIVIDUALS DESERVE A PERMANENT BREAK. THAT'S IMPORTANT ADDING MORE TO IT. TALK ABOUT CAPITAL GAINS, POSSIBLY LOWERING THE RATE, BUT POSSIBLY INDEXING THEM FOR INFLATION, WHICH IS SOMETHING MANY OF US ARGUED FOR YEARS. WE INDEX, THE INDIVIDUAL CODE FOR INFLATION, BECAUSE OF THE 70s EXPERIENCE, INDEX CAPITAL GAINS BECAUSE YOU ARE PAYING TAXES ON ILLUSIONARY OR INFLATIONARY PROFITS, WHICH IS UNFAIR TO INVESTORS AND ITS ANTI-ENTREPRENEURSHIP. AND THE OTHER THING I KNOW ABOUT I TRIED TO GET BRADY THIS MORNING, BUT WE COULDNT, BUT LET'S REALLY HELP THE SMALL BUSINESSES ON THIS THE SMALL BUSINESS PORTION, THE 20% DEDUCTIONS AND SO FORTH, IT'S STILL VERY COMPLICATED AND OPAQUE THE RULES HAVE NOT BEEN FULLY WRITTEN YET. THEY ARE CONCERNED ABOUT THAT. I THINK WE NEED TO GIVE THEM SOME HELP AND IT SHOULD BE VERY POSITIVE HELP, NOT PUNISHING THEM SMALL BUSINESS VERY IMPORTANT.
FROST: CAN PHASE TWO INCLUDE A BROADER CUT OF THE CORPORATE TAX RATE? OR ARE WE THERE?
KUDLOW: I HATE TO SAY I DON'T EXPECT IT YOU'RE TALKING -- LOOK, I WANT 15% CORPORATE RATE, BUT, NO, I DON'T THINK SO. NOT THIS TIME AROUND, BUT THE KEY HERE WITH ALL THE POLITICS AND SO FORTH, IF THE ECONOMY IS GROWING AS WE EXPECT IT TO GRO, THAT IS A TERRIFIC THING FOR MR. TRUMP TO RUN ON AND THE REPUBLICAN PARTY TO RUN ON THERE HAS TO BE GOOD MESSAGING ON THIS. IF I HAVE ANY FAULT WITH THE WHITE HOUSE, I DONT THINK THEY HAD ENOUGH REALLY HAMMERING THIS THING IN GO FOR IT. YOU HAVE A GOOD PRODUCT. THE POLLS SHOW IT'S POPULAR. THE MORE PEOPLE KNOW IT, THE MORE LIKE IT. GET OUT THERE AND PUSH.
FROST: IS THAT YOUR FIRST AGENDA ITEM, MAKE THE MOST OF THE TAX CUTS THE ADMINISTRATION ALREADY PASSED TO SHOW WHAT BENEFITS ARE TO EVERYONE
KUDLOW: IT'S GOING TO BE ONE OF THEM. IT'S GOING TO BE ONE OF THEM THE PRESIDENT LIKES ME AS A MEDIA COMMUNICATOR, SO I WILL BE MORE THAN HAPPY TO OBLIGE.
EVANS: IT'S GOING TO BE HARD FOR US TO GO HAVE YOU COMMUNICATE ANY OTHER PLATFORM. LET'S BRING IN YLAN SHE HERE'S MORE ON WHAT PHASE TWO LOOKS LIKE.
YLAN MUI: THE QUESTION HERE IS WHETHER THIS IS GOING TO BE A POLICY PROPOSAL OR A POLITICAL PROPOSAL. DEMOCRATS HAVE ALREADY PUT OUT THEIR OWN PLAN FOR WHAT TAX BILL WOULD LOOK LIKE POST-2018, INCLUDING RAISING THE CORPORATE RATE TO 25%, REINSATING THINGS LIKE THE ALTERNATIVE MINIMUM TAX TO INDIVIDUALS AND CORPORATIONS. NOW YOU ARE SEEING REPUBLICANS HITTING DEMOCRATS ON THEIR PLAN GOING FORWARD, BUT THEY ALSO WANT THEIR OWN PLAN GOING FORWARD. THEY DON'T WANT TO JUST RUN ON PAST ACCOMPLISHMENTS, SO I THINK THAT WHAT YOULL SEE IN PHASE TWO IS REALLY SOMETHING THAT'S MORE GEARED TOWARDS A 2018 MIDTERM MESSAGING RATHER THAN SOMETHING THAT'S GOING TO ACTUALLY PASS BEFORE NOVEMBER.
KUDLOW: WELL, LOOK, THERE'S ALWAYS POLITICS IN THIS STUFF, I GET IT YOU'RE REPORTING IS ALWAYS GREAT, BUT I WILL TELL YOU THIS, KEVIN BRADY WAS REALLY THE INSTIGATOR AND HE SOLD PRESIDENT TRUMP ON IT AND TRUMP ACKNOWLEDGED IT IN A MEETING OR A SPEECH SOMEPLACE, AND AS I SPOKE TO PRESIDENT TRUMP IN RECENT DAYS, HES REFERRED TO IT A NUMBER OF TIMES. I'LL JUST SAY I UNDERSTAND POLITICS AND ELECTION YEARS, BUT THESE ARE SERIOUS PROPOSALS, TRUST ME WHETHER THEY GET THEM OR NOT REMAINS TO BE SEEN THEY ARE SERIOUS PROPOSALS.
MUI: BUT THE VEHICLE THEY USED TO GET THE PREVIOUS PROPOSALS IN NO LONGER EXIST
KUDLOW: WE'LL SEE WE'LL SEE. YOU CAN ONLY TAKE ONE BITE OUT OF THE RECONCILIATION APPLE THERES OTHER WAYS AND MEANS TO GET THAT DONE -- PARDON ME.
MUI: LARRY, YOU CONFIRMING A NEW RECONCILIATION VEHICLE, A NEW BUDGET PROPOSAL THAT COULD USED TO PASS TAX REFORM, PHASE TWO?
KUDLOW: YOU KNOW, I WOULD GET RID OF THE RECONCILIATION PROCESS I SAID THIS TO SO MANY PEOPLE THROUGHOUT THE YEARS IT'S A PAIN IN THE BUTT. MAKES NO SENSE GET RID OF FILIBUSTERS MAKES NO SENSE THIS IS THE 21st CENTURY, THE INFORMATION AGE, AND THEY ARE BEHAVING LIKE IT'S THE 1830s. I'D GET RID OF ALL THAT STUFF, JUST DO A VOTE, UP OR DOWN 50 PLUS PENCE WINS.
EVANS: THEY ARE GOING TO GO THE WHITE HOUSE GUY IS GETTING A LITTLE TOO BIG FOR YOUR BRITCHES, WHAT TO DO IN THE SENATE AND THROWING POLICIES OUT THE WINDOW
KUDLOW: I SPOKE TO McCONNELL ON THIS. HE IS A WONDERFUL MAN AND A GREAT FRIEND. HE HAS MIXED OPINIONS ABOUT MY OPINIONS. I BELIEVE IT I HAVE SAID THIS BEFORE. IT'S LIKE THE 1830s. WE DONT NEED IT ANYMORE IF WE EVER NEEDED IT. THE OTHER THING IS THIS, DEMOCRATS, I DONT UNDERSTAND THE DEMOCRATIC PARTY, AND LET ME JUST SAY, I AM A FORMER DEMOCRAT, OKAY, LET ME JUST SAY THAT I THINK SOME OF THE BEST REPUBLICANS WERE FORMER DEMOCRATS, JOHN F. KENNEDY, ABOUT WHOM A WROTE A BOOK, A DEMOCRAT WHO CUT TAXES, PRO-GROWTH DEMOCRATS WANT TO CUT THE CORPORATE TAX RATE BIG TIME. I TALKED TO THEM I KNOW THEM. THEY ARE STIFLED BY THEIR LEADERSHIP I DONT UNDERSTAND THAT PARTY. HOW ARE YOU GOING TO RUN ON RAISING TAXES? EXPLAIN THAT TO ME IF THE TAX CUTS ARE WORKING AND POPULAR, WHICH IS WHAT THE EVIDENCE SHOWS AND THE POLLS SHOW, HOW ARE THEY – LET'S TAX RICH PEOPLE.
EVANS: THEY ARE GOING TO SAY RAISE THE TAXES AND USE THE MONEY FOR INFRASTRUCTURE.
KUDLOW: THEY ARE GOING TO SAY RAISE THE TAXES AND WELL SPEND AND SPEND AND SPEND ON A BUNCH OF THINGS, AND I DON'T THINK ITS A WINNING MESSAGE IM NOT GOING TO PREDICT THE MIDTERMS IN MARCH, BUT IM SAYING, I THINK THE GOP, IF THEY GET THE MESSAGE OUT AS MUCH STRONGER GROUND ON THIS ELECTION THAN EVER BEFORE I THINK THEY PHASE TWO IS A GOOD IDEA, AND, BY THE WAY, MR TRUMPS DEFENSE IN AMERICA, REGARDING INTERNATIONAL TRADE, WHATEVER THE SPECIFICS TURN OUT TO BE IS A POPULAR ISSUE, A VERY POPULAR ISSUE YOU COULD GO TOO FAR ON THAT I SUPPOSED BUT HES A NEGOTIATOR. SO FAR, THE RETURNS ARE GOOD.
EVANS: I DON'T THINK I HAVE HEARD YOUR VIEWS ON THE TECH PIECE OF THIS. SO THIS IS NOW THE BATTLEFRONT MOVES TO CHINA, SPECIFICALLY TARGETING AREAS OF ABUSE THERE, LIKE TECH AND INTELLECTUAL PROPERTY. IS THAT SOMETHING THAT, LOOK, NO MATTER WHAT THE COST IS NEEDS TO BE DONE, OR IS THAT SOMETHING THAT THREATENS PROBABLY THE MOST SUCCESSFUL PART OF THE U.S. ECONOMY?
KUDLOW: THAT IS CORRECT THATS CORRECT THEREFORE, IM -- IF IT COMES TO IT, IM GOING TO STRONGLY FAVOR TARGETED TARIFFS AND TAX INCREASES ON CHINA UNTIL THEY COME TO THE TABLE SINCERELY AND PLAY BALL WITH US.
EVANS: IT'S NOT JUST THAT TOO IT IS ALSO THIS IDEA THAT MAYBE CHINESE COMPANIES WOULD NOT BE ALLOWED TO LIST ON THE NEW YORK STOCK EXCHANGE OR U.S. COMPANIES LOOK WHAT HAPPENED WITH BROADCOM AND QUALCOMM COULD NOT HAVE AND CHINESE INVESTMENT– ARE THOSE REASONABLE MEASURES
KUDLOW: I DON'T WANT TO PREDICT IN THIS STAGE. AGAIN I DON'T LIKE ACROSS THE BOARD TARIFFS ARE VERY UNHEALTHY, BUT IN THE HISTORY OF HISTORY, TARGETED TARIFFS ARE SOMETIMES VERY NECESSARY, AND THE PRESIDENT AND I TALKED ABOUT THIS IN LENGTH IN RECENT DAYS, AND HE MAKES A PERSUASIVE CASE AGAIN, I DONT WANT TO FIGHT THE ALLIES I WANT TO SETTLE THE DISPUTE, YOU KNOW, ON THE TABLE WITH NAFTA AND EUROPE AND SO FORTH AND JAPAN. TO ME, THAT'S THE BEST WAY WE MUST NOT SHOOT OURSELVES IN THE FOOT TARIFFS ARE TAXES. BUT, BUT, BUT, WELL THINGS REACH SUCH AN EXTREME POINT AS THEY HAVE WITH CHINA -- AMERICAN COMPANY GOES TO A PROVINCE, AND THE PROVINCIAL PEOPLE FORCE THEM TO PUT ALL THE PLANS ON THE TABLE INCLUDING THE TECHNOLOGY. THAT'S UNHEARD OF. AND THEN -
EVANS: APPLE, CONCESSIONS OF THE MOST IMPORTANT COMPANY WE HAVE MAKES THERE TO APPEASE THE AUTHORITIES?
KUDLOW: RIGHT. YOU GOT THE PROVINCIAL GUYS, LIKE, MOBSTERS, AND YOU GOT TO GET VIGOROOUS TO GET THERE IN THE FIRST PLACE, THEN THEY STEAL YOUR TECHNOLOGY AND PROPERTY RIGHTS LOOK, THAT'S GOT TO CHANGE AD IF MR TRUMP CARRIES THAT FORWARD I CANNOT CRITICIZE THAT, ALL MY FREE TRADE FRIENDS CAN'T CRITICIZE THAT.
FROST: IS ONE OF YOUR BIGGEST JOBS, THEREFORE, TO CONVINCE SOME OF THE CEOs WHO WE HAVE SPOKEN ABOUT ALREADY WHO HAVE CAME OUT AND LOUDLY CRITICIZED TARIFFS OF ANY FORM BECAUSE THE ARGUMENT YOU ARE MAKING RIGHT NOW SOUNDS VERY SENSIBLE. WE KNOW THERES PROPERTY STOLEN FROM CHINA GOING ON THROUGHOUT NOT JUST THIS PRESIDENCY BUT PREVIOUS PRESIDENCIES HOW DO YOU ARGUE TO THE CEOs COMING OUT UNILATERALLY LIKE JAMIE DIMON TO SAY TARIFFS ARE A BAD IDEA.
KUDLOW: AGAIN, I'M NOT IN LOVE WITH TARIFFS, DON'T GET ME WRONG, BUT, BUT, BUT, IL'L BE HAPPY TO SIT DOWN GARY COHN ESTABLISHED THIS AS PART OF THE NEC ROLE, HE WAS A GENIUS AT IT BRINGING BUSINESS PEOPLE IN. VERY IMPORTANT TRUMP HIMSELF HAS BEEN VERY ACCESSIBLE TO THE BUSINESS PEOPLE. THAT'S GOOD. I'LL CARRY THAT BATON TO THE BEST OF MY ABILITY, BUT THERE'S GOING TO BE DISAGREEMENTS. I'M SORRY. I GET THAT. WE'LL SEE.
EVANS: ARE YOU BRINGING ANY OF THE PEOPLE IN OF YOUR OWN?
KUDLOW: AT THE MOMENT, MY BIGGEST CONCERN IS KEEPING THE STAFF THEY HAVE AN EXCELLENT NEC STAFF THAT GARY COHN PUT TOGETHER.I KNOW SOME QUITE WELL I WAS METAPHORICALLY ON MY KNEES WITH ONE ASKING FOR HER HELP I WONT MENTION HER NAME, BUT SHES A SUPERWOMAN, AND SHE IS GOING TO STAY AND HELP OUT I HOPE THEY ALL DO.
EVANS: IS MORALE LOW BECAUSE OF WHAT HAPPENED WITH COHN?
KUDLOW: I DON'T KNOW.
EVANS: WHY DO THEY NEED SO MUCH CONVINCING IS MY QUESTIONS?
KUDLOW: SOMETIMES YOU HAVE ANXIETIES IN LIFE AND IT TAKES A SEASONED OLD GUY TO CALM HIM DOWN THEY HAVE PERFORMED VERY WELL AND I HOPE THEY STAY, THAT IS MY PITCH. I MAY MEET WITH SOME OF THEM TOMORROW OR CERTAINLY IN THE COMING DAYS I WANT THEM TO STAY. WE MAY ADD SOME AND SO FORTH, BUT IT'S A GOOD GROUP, VERY GOOD GROUP. OF ALL THE WARS INSIDE THE ADMINISTRATION, THE NEC STAFF GETS REALLY HIGH MARKS FROM EVERYBODY, WHICH IS AMAZING.
FROST: LARRY, WHAT'S YOUR VIEW – I MEAN, MONETARY POLICY IS NOT FOR YOU TO DECIDE, BUT VIEW ON INFLATION?
KUDLOW: STABLE DOLLAR, STABLE MONEY, CONFIDENT, RELIABLE, STRONG, AND STABLE THE ADJECTIVES ARE VERY IMPORTANT IN THAT GAME. I, RIGHT NOW, STEVE MOORE AND I HAD A PIECE IN THE "JOURNAL" YESTERDAY OR THE DAY BEFORE, GROWTH DOES NOT CAUSE INFLATION. MORE PEOPLE WORKING, NORE PEOPLE PROSPERING GOD FORBID BLUE COLLAR WORKERS GET A RAISE AFTER NOT HAVING ONE SINCE 2000.
EVANS: I'M GUESSING YOU ARE NOT PUTTING A BUST OF PHILLIPS IN YOUR OFFICE?
KUDLOW: LOOK EVEN PHILLIPS CURVE HE DIDN'T SAY THAT I WROTE –
EVANS: WHAT HE SAID ABOUT WAGES, BUT NOT GENERAL INFLATION.
KUDLOW: THAT'S RIGHT. PHILLIPS IF THE UNEMPLOYMENT RATE GOES UP WAGES GO DOWN HE NEVER SAID IT WAS INFLATIONARY KEEP THE DOLLAR SOUND.
EVANS: READY FOR THIS? RE WE ARE TRADING LARRY, BRINGING ON THE FAST MONEY CREW.
KUDLOW: ALL RIGHT.
EVANS: GUYS, THANKS FOR JOINING US WE LOVE THIS CONCEPT. KAREN, WHATS YOUR LARRY TRADE NOW? NO PRESSURE CAUSE IT IS NOT LIKE HE IS LISTENING OR ANYTHING.
KAREN FINERMAN: ALL RIGHT, YEAH I MEAN, I LOVE LARRY I GOT TO SAY, GOING INTO TODAY, LONG A LOT OF PUTS, DIDNT LOVE THE GARY COHN CHANGE, BUT OF EVERYONE OUT THERE, IM MOST EXCITED ABOUT THIS CHOICE, OUTSTANDING HELL DO A GREAT JOB I THINK –
KUDLOW: THANK YOU
FINERMAN: A VERY, VERY GREAT JOB, NOT JUST ON POLICY, BUT THE OTHER PARTS YOU TALKED ABOUT, COMMUNICATION. WHICH IS MAYBE EQUALLY OR SOMETIMES MORE IMPORTANT. YOU HAVE THE SKILLS TO DO BOTH SO I THINK YOU'RE AN OUTSTANDING CHOICE.
KUDLOW: THANK YOU, KAREN, MUCH APPRECIATED.
TIM SEYMOUR: LARRY, CONGRATULATIONS, AND MAJOR YES BUYERS AS WE SAY ON LARRY, MOSTLY BECAUSE IF YOU LOOK AT THE MARKET OVER THE LAST COUPLE DAYS, WEVE GONE WITH BEING CONCERNED ABOUT OVERHEATING TO A PLACE WHERE NOW WE QUESTION GROWTH GRANTED, THERES BEEN A COUPLE MACRO POINTS, RETAIL SALES, PMIs AROUND THE WORLD SLOWING A LITTLE BIT, BUT BOTTOM LINE IS THE WORLD NEEDS TO UNDERSTAND, I SHOULD SAY MARKETS NEED TO UNDERSTAND WHAT THE WORLD UNDERSTANDS. WERE IN A BETTER ENVIRONMENT GLOBALLY AS LARRY POINTED OUT YES BETTER TO PUNISH YOUR ENEMIES ND NOT YOUR FRIENDS AT THE SAME TIME WE ARE LEARNING THIS NOW, WHO IS PRO OR AGAINST, FAIR DEALS OR NOT. REGARDLESS THE MOMENTUM FOR CORPORATE EPS AND WHERE ARE WITH IN THE COUNTRY RIGHT NOW IS STILL BULLISH.
KUDLOW: YES.
SEYMOUR: THE FACT IN THREE DAYS WE HAVE SOLD TO DIFFERENT PLACES IN THE MARKET, AND SENTIMENTS, HAVE CAUTION ON THAT VIEW, AND, THEREFORE, LARRY IS A FRESH VOICE IN THE EQUATION, AND IF THAT TAKES US HIGHER, IM A YES BUYER ON LARRY KUDLOW.
KUDLOW: THANK YOU, THANK YOU VERY MUCH LOOK, SOMEBODY SAID PROFITS ARE THE MOTHERS MILK OF STOCKS. I CANT REMEMBER WHO THAT WAS.
EVANS: IT COULD HAVE BEEN A WISE GUY ON CNBC. IM GOING TO PUT HIM ON THE SPOT REALLY NOW
KUDLOW: THE PROFIT PICTURE IS GOOD. IT'S LOOKING REAL GOOD, AND GROWTH IS NOT INFLATIONARY JUST LET IT RIP FOR HEAVENS SAKES. THE MARKET IS GOING TO TAKE CARE OF ITSELF. THE STORY TAKES CARE OF ITSELF LET IT RIP THE FED WILL DO WHAT IT HAS TO DO, BUT I HOPE THEY DON'T OVERDO IT.
EVANS: KAREN, TIM, DO YOU BUY THE DOLLAR?
KUDLOW: OH.
EVANS: AFTER EVERYTHING WE TALKED ABOUT, BUY THE DOLLAR?
SEYMOUR: I THINK THE DOLLAR IS GOING TO SUFFER AT LEAST WITH THE PROSPECT OF TWIN DEFICITS DONT THINK THE DOLLAR IS A MAJOR FALL HERE. IN FACT, OBVIOUSLY, WE CORRECTED 14% ON THE DOLLAR, WHICH IS ULTIMATELY THE RESULT OF, I THINK, OTHER CENTRAL BANKS STARTING TO CATCH UP MORE THAN THE FED THAN IT IS THERE'S SOME MAJOR WEAKNESS REMEMBER, A LOT OF THE DOLLAR MOVE, IN TERMS OF THE DOLLAR BASKET, EUROPE'S IN A BETTER PLACE. THE DOLLAR IS RANGE BOUND, I DO NOT IT IS GOING A LOT LOWER OR SHOULD GO A LOT LOWER, BUT THE TWIN DEFICITS ARE AN ISSUE FOR THE DOLLAR, AND THAT'S SOMETHING THAT AT LEAST WITH ALL THE FED BACKGROUND THAT SHOULD BE BULLISH, I THINK IT TEMPERS THAT.
KUDLOW: I KNOW WHO SAID THIS, BUT KING DOLLAR IS IN THE GREAT INTEREST OF THE AMERICANS. AND IT'S ECONOMY, AND IT'S STOCK MARKET. LOOK, WHETHER YOU'RE DOMESTIC INVESTOR OR FOREIGN INVESTORS, YOU ARE NOT GOING TO BUY A CURRENCY CHRONICALLY FALLING.
EVANS: IF YOU HEARD WHAT TIM SAID ABOUT THE TWIN DEFICITS? WE HEAR THIS ALL UP AND DOWN WALL STREET RIGHT NOW. THEY LISTEN TO WHAT YOU SAID ABOUT PHASE TWO OF THE TAX CUTS, AND LARRY GETS IN THERE, WELL SPEND MORE TO LOWER RATES, AND THE DOLLAR GOES DOWN.
KUDLOW: I'M NOT A SPENDER, BUT A SPENDING CUTTER. SPENDING CUTTER. EVEN THOUGH STOCKMAN WON'T ADMIT THAT IT'S TRUE ACTUALLY EVEN STOCKMAN DID BETTER ON THAT, BUT THAT'S ANOTHER SUBJECT.
EVANS: LARRY, WHERE DO YOU WANT TO SEE THE DOLLAR, THEN?
KUDLOW: I WOULD LIKE TO SEE THE DOLLAR A WEE BIT STRONGER THAN CURRENTLY, BUT STABILITY IS THE KEY. I DON'T THINK YOU HAVE DIRECT TARGETS IN THESE DAYS, BUT YOU KNOW IT WHEN YOU SEE IT THE DOLLAR LOST GROUND 10-11% IN THE LAST YEAR I GET THAT IT'S STILL WAY ABOVE THE LOWS OF 2011-2012, AND IT HAD AN ENORMOUS RALLY, SO ON THE DXY, ITS WHERE, A 90? ALL RIGHT. I WOULD NOT WANT TO SEE IT DROP ANOTHER 10%, FOR EXAMPLE, OKAY, IF IT DID THAT, IT SUGGESTS EXCESS MONEY AND INFLATION I DON'T SEE THAT RIGHT NOW ME I WOULD BUY KING DOLLAR AND SELL GOLD THAT'S THE TRADE THAT I LOVE I DON'T THINK IT'S ABOUT BUDGET DEFICITS IT'S NOT ABOUT TRADE DEFICITS. IT'S WHETHER WE GROW THE ECONOMY AS I BELIEVE WE WILL AND THAT WE TAKE CARE OF OUR CURRENCY AND INSTILL CONFIDENCE THAT'S HOW I SEE IT. THE DEFICITS ARE GOING TO TAKE CARE OF THEMSELVES, PLEASE THEY ARE GOING TO TAKE CARE OF THEMSELVES THE TRADE DEFICIT WITH TRUMP ECONOMIC GROWTH, TRADE DEFICIT IS GOING TO GET WIDER, IT'S GOING TO GET WIDER IT'S NOT A GOOD MEASURE OF THE ECONOMY.
FROST: TIM AND KAREN, WE'RE GOING TO HAVE TO LEAVE IT THERE WITH YOU GUYS, BUT WE LOOK FORWARD TO "FAST MONEY" IN A ABOUT 12 OR 13 MINUTES TIME. BUT WE WILL CONTINUE OF COURSE, DISCUSSING THINGS –
SEYMOUR: THANK YOU.
FINERMAN: THANKS YOU. CONGRATULATIONS, LARRY.
KUDLOW: THANK YOU SO MUCH.
FROST: WITH LARRY, NOW, JUST QUICKLY ON THE DOLLAR –
KUDLOW: YEAH?
FROST: BACK IN DAVOS, WAS IT A MISTAKE OF SECRETARY MNUCHIN TO EVEN GIVE THE POSSIBILITY OF INTERPRETATION THAT THE TREASURY SECRETARY DOESN'T WANT A STRONG DOLLAR.
KUDLOW: HE'S IN RECOVERY RIGHT NOW. HE'S IN RECOVERY. HE'S A GOOD FRIEND OF MINE WHO TEXTS BACK AND FORTH. I CALL IT THE ADJECTIVES. ADJECTIVES ARE VERY IMPORTANT IN LIFE. SO, STRONG, STEADY, RELIABLE, CONSISTENT. THOSE ARE WONDERFUL ADJECTIVES FOR A TREASURY SECRETARY. STEVEN MNUCHIN KNOWS ROBERT RUBIN FROM GOLDMAN SACHS. ROBERT RUBIN IN MY OPINION WAS A FABULOUS TREASURY SECRETARY, BECAUSE HE MADE IT VERY CLEAR THAT THEIR POLICIES WAS FOR A STEADY AND STRONG DOLLAR IN THE NATION'S INTEREST. AND I'M NOT A BELIEVER IN INTERVENTION, BUT EVERY ONCE IN A WHILE, RUBIN WOULD DO SOME DOLLAR BUYING JUST TO TELL THE SHORT SELLERS YOU'RE ON THE WRONG TRACK, FELLAS. AND I'M NOT AN ADVOCATE – LONG-TERM INTERVENTIONIST DOESN'T WORK, BUT YOU GET MY DRIFT.
EVANS: BUT LEAVING THE DOOR OPEN TO SOME SHORT TERM.
KUDLOW: KEEP THE ADJECTIVES UP. THAT'S ALL I'LL SAY. AND STEVEN MNUCHIN BELIEVES THAT. HE'S A STRONG DOLLAR GUY, HE'S A GROWTH GUY. FRANKLY ONE OF THE MOST UNDERATE PEOPLE IN THE CABINET. I MEAN, HE'S WORKED WONDERS ON TAXES AND SO FORTH. SO, NO, YOU MAY HAVE TO COME AND DO SOMETHING IF IT FALLS A LOT. I HOPE THAT DOESN'T HAPPEN. THE FEDERAL RESERVE MAY HAVE YOU KNOW, TO RAISE THE FUNDS RATE A WEEBIT, OKAY, FINE. BUT RIGHT NOW, I LOVE IT WHERE IT IS, KIND OF, THE XY AT 90 LET'S CALL IT, IT GOT AS HIGH AS 103, SOMEWHERE IN THERE, GET THE OTHERS --- YOU KNOW WHAT WOULD BE GREAT? I WAS TELLING PAUL VOLCKER, MY FORMER BOSS AT THE NEW YORK FED, VOLCKER SAYS, ONE OF THE THINGS WE NEED TO DO IS HAVE A CONFERENCE AND AN EFFORT, THE G20 NOW NOT THE G7, TO ENHANCE CURRENCY COOPERATION AND STABILITY WORLDWIDE. WE DO NOT WANT BEGGAR-THY-NEIGHBOR POLICIES. WE DO NOT WANT DOLLAR WARS. THAT'S BAD FOR EVERYBODY. AND, BY THE WAY, NO ONE HAS EVER DEVALUED THEIR CURRENCY INTO PROSPERITY. BUT VOLCKER'S IDEA OF HAVING A FULL SCALE CONFERENCE OF CURRENCY REFORM, I DON'T MEAN NECESSARILY PEGGING RATES, BUT JUST, YOU KNOW IT WHEN YOU SEE IT. BUTWE HAVE TO WORK TOGETHER. I DON'T KNOW WHY THE G2 DOESN'T BRING IT UP. THEY TALK ABOUT --
EVANS: A COUPLE OF YEARS AGO THEY GOT CLOSE. I MEAN, THEY WERE –
KUDLOW: I KNOW, I KNOW. NOW THEY GO AROUND AND TALK ABOUT GLOBAL CLIMATE WARMING AND ALL THIS STUFF. THAT'S THEIR JOB, THEY ARE FINANCE MINISTERS FOR GODS SAKES.
EVANS: THAT'S THEIR JOB – BUT THE DOLLARS LOSING BECAUSE THE OTHERS ARE GETTING A LITTLE STRONGER NOW. THAT'S WHAT MAKES IT DIFFERENT FROM THE LAST COUPLE YEARS.
KUDLOW: OKAY, THAT'S A VERY GOOD POINT. NO, NO YOU'RE ABSOLUTELY RIGHT. AND IT'S INTERESTING IN THIS DOLLAR SLIDE, AND IT'S A TERRIFIC POINT KELLY. GOLD HAS NOT EXPLODED UPWARDS, COMMODITIES HAVE NOT EXPLODED. THOSE WOULD BE SERIOUS INFLATION SIGNALS. SO TO SOME EXTENT YOU'RE RIGHT. EUROPE IS GROWING BETTER, JAPAN IS GROWING BETTER, SO THEIR CURRENCIES ARE STRONGER. THANK YOU FOR THAT. THAT'S A TERRIFIC POINT. I'M GOING TO SELL THAT TO MR. TRUMP AND MAKE SURE I GIVE YOU FULL CREDIT AS I ALWAYS DO. BUT I JUST DON'T WANT TO SEE THE DOLLAR REALLY PLUNGE, THAT WOULD BE BAD. BUT SO FAR I'M OKAY WITH THIS STORY. AND LET'S JUST KEEP UP WITH IT.
FROST: STEPPING AWAY FROM THE DOLLAR, BACK TO THE STOCK MARKET, LARRY TWO WEEKS AGO OR SO, WE SAT HERE, THE THREE OF US, ASKING YOU ABOUT THE STEEL AND ALUMINUM TARIFFS THE DAY THEY WERE PUT ON. THE MARKET WAS FALLING SHARPLY THOSE COUPLE OF DAYS, AND YOU SAID HERE ON THIS SET THAT YOU WERE HOPING THE PRESIDENT WAS ACKNOWLEDGING THE FALL IN THE STOCK MARKET. CLEARLY SINCE THEN HE'S ROLLED THEM BACK A LITTLE BIT.
KUDLOW: THAT'S CORRECT.
FROST: DO YOU THINK THAT WAS BECAUSE OF THE STOCK MARKET FALL? DID YOU SPEAK TO HIM SPECIFICALLY ABOUT THAT? HOW CLOSELY DO YOU THINK HE LOOKS AT THE STOCK MARKET AS AN INDICATOR WHETHER HIS POLICIES, HIS WORDS ARE THE RIGHT THINGS?
KUDLOW: I KNOW HE FOLLOWS THE MARKET. WE HAVEN'T SPOKEN ABOUT THE MARKET IN RECENT DAYS. HE DOES FOLLOW IT. AND HE SHOULD FOLLOW IT. I THINK THE STOCK MARKET IS A PRETTY GOOD INDICATOR OF THE CURRENT FUTURE ECONOMY. LOOK, I WAS VERY CONCERNED. I MEAN I WAS NOT A HAPPY CAMPER WHEN THE ALUMINUM AND STEEL THING FIRST BROKE BECAUSE OF ITS BLANKETNESS AND BECAUSE IT SEEMED LIKE WE WERE PUNISHING OUR FRIENDS. BUT HE SHIFTED. VERY IMPORTANT AND HE, AGAIN, HE'S A NEGOTIATOR. WE DON'T HAVE MANY PRESIDENTS WHO WERE NEGOTIATORS. DO YOU KNOW WHO IS A GOOD NEGOTIATOR, ONCE PRESIDENT OF THE UNION? RONALD REAGAN. HE KNEW HOW TO USE CARROTS AND STICKS.
EVANS: NAFTA, TPP ARE THOSE THEN IMPORTANT OBJECTIVES OF YOURS?
KUDLOW: YES.
EVANS: WE ALWAYS TALK IN BROADLY, LARRY, WITH YOU, ABOUT FREE TRADE. YOU KNOW, WITH THOSE TRADE AGREEMENTS BEING OUT THERE AND WITH THESE POSSIBLY BEING NEGOTIATING CHIPS ARE YOU GOING TO KIND OF PUSH ALL THIS TOWARDS AN OUTCOME WHERE, OKAY, WE USE THESE AS BARGAINING TOOLS SO THAT WE STAY IN NAFTA. I DON'T KNOW IF YOU THINK WE NEED A BETTER DEAL. MAYBE YOU JOIN THE TRANS-PACIFIC PARTNERSHIP?
KUDLOW: WELL, LOOK, IT'S THE PRESIDENT'S VIEW THAT COUNTS. AND THE PRESIDENT WOULD MUCH PREFER TO NEGOTIATE THROUGH NAFTA. MUCH PREFER. AND THAT'S ONE OF THE REASONS THAT HE EXEMPTED CANADA AND MEXICO, THE TWO NAFTA PARTNERS, BECAUSE IT WAS OVERDONE. AND OKAY. I'M FOR NAFTA BUT IT HAS TO BE FIXED. IT'S REALLY GOT TO BE REUPHOLSTERED IN MANY DIFFERENT WAYS. YOU'VE GOT TAX ISSUES AND YOU'VE GOT INTERNAL REGULATORY ISSUES. BUT OUR ECONOMIES ARE COMPLETELY INTEGRATED NOWADAYS. SO I DON'T THINK -- IF WE LEFT NAFTA I THINK IT WOULD HAVE BAD CONSEQUENCES TO BE PERFECTLY HONEST. I THINK THE PRESIDENT ACKNOWLEDGES THAT. AND HIS BASIC POINT IS LET'S NEGOTIATE. AND THAT'S A GOOD POINT FOR INTERNATIONAL TRADE.
FROST: LARRY, HANG ON. WE'VE GOT MORE FROM YLAN NOW ON THE DETAILS – POTENTIAL DETAILS OF THIS PHASE TWO OF TAX REFORM. YLAN.
YLAN MUI: HEY GUYS. KEVIN BRADY'S OFFICE NOW CONFIRMING TO ME THEY ARE HOPING TO BRING FORWARD SOME IMPROVEMENTS TO THE TAX CODE, THIS PHASE TWO THIS YEAR. UNCLEAR IF THAT WOULD BE BEFORE OR AFTER THOSE NOVEMBER ELECTIONS. BUT AGAIN, THE GOAL OF THE NEW PACKAGE WOULD BE TO MAKE THOSE INDIVIDUAL TAX CUTS PERMANENT, TO ENCOURAGE HOUSEHOLD SAVINGS AND TO HELP BUSINESSES BECOME MORE INNOVATIVE. SO THERE IS NOW SOME SORT OF TIM LINE AT LEAST FOR THOSE DISCUSSIONS THAT CHAIRMAN BRADY IS HAVING WITH THE WHITE HOUSE.
KUDLOW: YLAN, SPOT ON. THAT'S A KEY POINT. AND THE OTHER KEY POINT ABOUT PERMANENCE IS I WOULD LIKE TO SEE THE IMMEDIATE INVESTMENT EXPENSING BE MADE PERMANENT. IT HAS A FIVE YEAR WINDOW.
EVANS: BUT DOES THAT TAKE THE STIMULUS OUT OF IT? BECAUSE IF THERE'S NO REASON – IF IT'S IT'S NOT GOING TO SUNSET THERE IS NO URGENCY TO DO IT NOW OR –
KUDLOW: NO. LONG TERM. THAT'S THE DEAL.
EVANS: THAT'S THE RULE.
KUDLOW: IT MAKES OUR INVESTMENT ENVIRONMENT MORE HOSPITABLE FOR FOLKS AT HOME AND FOLKS ABROAD. LOOK, YOU KNOW, TRUMP ALWAYS SAID THIS, I AGREE. WE WANT TO MAKE AMERICA THE WORLDWIDE INVESTMENT DESTINATION. WE HAD THAT MANTLE BUT WE'BE LOST IT IN RECENT YEARS. LET'S RETURN IN. WE'RE MORE COMPETITIVE WITH RESPECT TO TAXES, WE'RE MORE COMPETITIVE WITH RESPECT TO REGULATIONS, WE'RE MORE COMPETITIVE – IF WE CAN FIX THIS BROKEN INTERNATIONAL TRADING SYSTEM, DO IT THE RIGHT WAY, AND HENCE PEOPLE WILL COME TO US. WE WANT THEM TO COME TO US. COMPANIES THAT LEFT US WILL COME HOME. INTERNATIONAL COMPANIES THAT STAYED AWAY WILL COME BACK, WILL COME RIGHT IN AND BUILD NEW STUFF. THAT'S A BIG PART OF THE PRESIDENT'S THINKING AND HE'S RIGHT. I MEAN, LITERALLY WE ARE MAKING AMERICA GREAT. WHAT DID HE SAY IN DAVOS?
EVANS: WELL LOOK WHAT'S HAPPENED IN CANADA? THERE IS NOW PRESSURE ON THE PRIME MINISTER THERE BECAUSE SUDDENLY THEIR TAX RATES WHICH ALL THE U.S. COMPANIES INVERTED TO TAKE ADVANTAGE OF DON'T LOOK AS ATTRACTIVE.
KUDLOW: PITY. NOW I'M TOLD BY IMPORTANT SOURCES IN THE AMERICAN GOVERNMENT THAT MR. TRUDEAU HAS BEEN ON THE PHONE WITH THE PRESIDENT, HAND OVER FIST ACKNOWLEDGING CONCESSIONS.
FROST: I HAVE A FEELING YOUR SOURCES ARE GOOD AS WELL.
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 THAT 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 ANSWERS YES.
MUI: LARRY—
EVANS: GO AHEAD YLAN.
MUI: IF I COULD JUST JUMP IN HERE.
KUDLOW: YES.
MUI: YOU KNOW, ONE OF THE BIG INTERNATIONAL QUESTIONS IN ADDITION TO TARIFFS THAT COMPANIES ARE FACING IS WHAT HAPPENS WITH THE INTERNATIONAL SIDE OF THE TAX CODE. IT SEEMS THAT MANY COMPANIES ARE DIGESTING ALL OF THE MAJOR CHANGES PARTICULARLY ON THE THE COMPLICATED INTERNATIONAL SIDE THAT WERE DONE IN THE LAST TAX PACKAGE. ARE REPUBLICANS BITING OFF MORE THEY CAN CHEW WITH PUTTING TOGETHER YET ANOTHER TAX PACKAGE BEFORE THE LAST ONE IS COMPLETELY WORKED OUT?
KUDLOW: I THINK YOU JUST CHEW THE WHOLE PEANUT BUTTER SANDWICH ON THIS. IN OTHER WORDS YOU ARE GOING TO HAVE REVISIONS TO THE INDIVIDUAL CODE, REVISIONS TO THE SMALL BUSINESS CODE. AND I THINK YOU ARE QUITE RIGHT, BY THE WAY. A LOT OF THE INTERNATIONAL PROVISIONS, OKAY, MOVING TO -- MOVING AWAY FROM THE CURRENT SITUATION AND BEING TAXED ONLY ONCE, IT IS A LITTLE BIT OPAQUE, YLAN. YOU KNOW, YOU LOOK AT IT – I TRIED TO WORK THROUGH IT WITH PEOPLE. IT'S NOT CLEAR WHAT ALL IS IN THERE. SO WE WILL HAVE TO SEE. I JUST THINK IT ALL GOES TOGETHER. IF THEY COME FOR A SECOND PACKAGE YOU WILL SEE IT ALL BUNDLED IN TOGETHER AND HOPEFULLY WE WILL ABOLISH THE FILIBUSTER RULE, SO YOU JUST NEED A SIMPLE MAJORITY TO PASS AND IT. AND AMERICA WILL GROW AND WE WILL ALL BE OPTIMISTIC LIKE KUDLOW IS, I AM AN OPTIMIST. YOU KNOW THAT, I CAN'T HELP MYSELF.
FROST: 1978, WE BELIEVE THIS MIGHT HAVE BEEN YOUR FIRST TV APPEARANCE ON "NBC NIGHTLY NEWS." THEY DUG IT UP FOR US. LET'S HAVE A WATCH.
KUDLOW: THAT'S AWESOME.
KUDLOW: THE DOLLAR MARKET, THE STOCK MARKET, THE GOLD MARKET, THE BOND MARKET ARE ALL VERY MUCH RELATED. THESE ARE MARKETS MADE UP OF MILLIONS OF PEOPLE MAKING INDIVIDUAL ASSESSMENTS, INDIVIDUAL DECISIONS AND QUITE CLEARLY, THERE IS NOW A MASSIVE LOSS OF CONFIDENCE IN THE ABILITY OF THE U.S. TO HANDLED ITS INFLATION PROBLEM OVER THE NEXT COUPLE OF YEARS.
KUDLOW: GOOD POINT! NEEDED A HAIR CUT, BUT GOOD POINT. WELL, I HAD HAIR IN THOSE DAYS.
FROST: YOUR INTERVIEWER NEEDED A HAIRCUT MORE.
KUDLOW: HE WAS A GOOD BUSINESS REPORTER IN THE DAYS WHEN BUSINESS REPORTERS WERE VERY SCARCE I CAN'T -- MAYBE IT WILL COME TO ME. HE WAS TERRIFIC. HE WAS THE ONLY GUY WHO CARED. I WOULD GO ON THE TODAY SHOW WHEN TOM BROKAW WAS RUNNING IT AND I THINK JANE PAULEY WAS RUNNING IT AND WE'D START TALKING ABOUT THE ECONOMY, WHICH WAS A BIG SUBJECT BECAUSE IT WAS ALL GOING TO HELL IN A HANDBAG AND INFLATION AND INTEREST AND WHAT NOT. AND I'D – MIKE JOHNSON THAT'S IT. HOME RUN. MIKE JOHNSON. VERY NICE GUY. HAVEN'T SEEN HIM IN AGES. HOPE HE'S DOING OKAY.
FROST: LARRY SUCH A PRO THAT YOU ARE A GUEST WITH AN EARPIECE AS WELL. I MEAN, THIS IS PERFECT.
KUDLOW: JASON, IS THERE ANYBODY SMARTER THAN JASON? ANYWAY THE POINT IS I'D TRY TO GET A MESSAGE OUT ON THE ECONOMY. IT WASN'T EASY. TOM BROKAW HAS BEEN A LIFE LONG FRIEND I LOVE THE GUY. JANE PAULEY I DON'T KNOW SO WELL. BUT I REMEMBER ONE TIME GOING UP WITH ALL THIS CRISIS AND SHE'S SAYING WELL IT SOUNDS LIKE YOU KNOW WHAT YOU ARE TALKING ABOUT, I'M NOT QUITE SURE. AND I LOOKED OVER AND SAID WELL THAT'S BECAUSE YOU REALLY DON'T KNOW WHAT I'M TALKING ABOUT.
EVANS: WAS THAT THE LAST TIME YOU WERE EVER ON THAT PROGRAM?
KUDLOW: THERE WAS A HIATUS US OF SEVERAL YEARS.
EVANS: OR DECADES.
KUDLOW: THE CAST CHANGED AND I WAS WELCOMED BACK.
EVANS: YOU'RE BRAVE FOR BRINGING IT UP AGAIN.
KUDLOW: WELL, I WAS SORT OF ANNOYED, OKAY. YOU KNOW? NOW, NOWADAYS EVERYBODY COVERS EVERYTHING IN BUSINESS AND FINANCE. IT'S WONDERFUL.
EVANS: BUT TO YOUR POINT YOUR COMMUNICATION IS STILL ONE OF THE FIRST THINGS – WHAT IS THAT GOING TO LOOK LIKE ARE YOU GOING TO GET OUT THERE AND DO -- PICK A PLATFORM. RADIO. YOU HAVE TV. YOU HAVE TWITTER. YOU HAVE THE WEB. IS THERE GOING TO BE A EFFORT EVIDENT, OR JUST I'M AVAILABLE, I WANT TO TALK ABOUT THIS AND TELL EVERYBODY WHAT WE ARE TRYING TO DO.
> > WELL, I'M AVAILABLE. THERE'S NO QUESTION ABOUT THAT. I LOVE RADIO. ONE OF THE HARDEST PARTS OF IN I'M GOING TO HAVE TO GIVE UP MY RADIO SHOW FOR A WHILE. I LOVE TV. I TWEET, CONSTANTLY TWEET. I HAVEN'T IN RECENT DAYS BECAUSE I'VE BEEN LOCKED UP IN RIKERS ISLAND. BUT WHEN I GET MY FEET BACK ON THE GROUND, I WILL BE ABLE TO START TWEETING AGAIN AND GIVING OPINIONS LIKE WE ARE TONIGHT, WHICH IS FABULOUS. SO, EVERYTHING. EVERYTHING. LOOK, THE TWEETER IN CHIEF KNOWS A LOT ABOUT COMMUNICATIONS.
FROST: LARRY, WE WANT TO ECHO OUR CONGRATULATIONS. LOTS OF PEOPLE HAVE BEEN MENTIONING IT INCLUDING IN FACT, YOU MENTIONED YOU HAVEN'T BEEN ABLE TO SPEAK TO JAMIE DIMON. GOD SPEED MY FRIEND.
KUDLOW: A WONDERFUL MAN BY THE WAY.
FROST: SUM UP FOR US IN THE LAST 30 SECOND HOW MUCH THIS MEANS TO YOU, THIS NEW ROLE?
KUDLOW: IT'S MY LIFE, IT'S MY CAREER, MY PROFESSION. AND I TRAINED A LONG TIME FOR IT. AMD I'VE BEEN IN THE E-COMMERCE GAME A LONG TIME IN DIFFERENT AREAS AND I'M PROUD OF THAT AND THE PRESIDENT HAS GIVEN ME A CHANCE, AND I LOVE IT, I'M HONORED BY IT. I'M HONORED TO SERVE MY COUNTRY. IT'S A GREAT DREAM AND I WILL WORK LIKE HECK TO GET IT DONE. I REALLY WILL.
EVANS: HOW LONG DO WE HAVE TO WAIT FOR 3% GROWTH? A QUARTER?
KUDLOW: WEEK AFTER NEXT.
FROST: IT'S EASY.
EVANS: LARRY, A PLEASURE. THANK YOU SO MUCH, SO VERY MUCH FOR ALL YOUR TIME, AND BEING SO GENEROUS. THAT'S LARRY KUDLOW, AND THAT DOES IT FOR "CLOSING BELL" FROM WILFRED FROST AND MYSELF. "FAST MONEY" BEGINS RIGHT NOW.
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