WHEN: Today, Monday, April 6, 2020
WHERE: CNBC's "Squawk on the Street"
The following is the unofficial transcript of a CNBC interview National Economic Council Director Larry Kudlow on CNBC's "Squawk on the Street" (M-F 9AM – 11AM) today, Monday, April 6th. The following is a link to video of the interview on CNBC.com: https://www.cnbc.com/video/2020/04/06/watch-cnbcs-full-interview-with-national-economic-council-director-larry-kudlow.html.
All references must be sourced to CNBC.
DAVID FABER: Welcome back to "Squawk on the Street." We want to bring in Larry Kudlow in now this morning to discuss with him, of course, as he is the National Economic Council Director. Well, a lot of different things, Larry, of course on the agenda. Let's start off with the program of course that began on Friday, the PPP administered by the Small Business Administration. Anything rolled out that quickly one might imagine might have a couple of complications. We are hearing from some banks having trouble in terms of at least dealing with all of the applications coming at them. And I'm also hearing from some professionals and accountants that there's some confusion in terms of calculating the average monthly payroll costs, for example. What can you tell us in terms of how it's being administered and what changes need to be made to make it move even faster?
LARRY KUDLOW: Well, look, it's a monumental undertaking. And I think you need to give Secretary Mnuchin and SBA a lot of credit. This thing is not easy. I came as of 9:30 this morning, David, there are commitments for 38 billion worth of loans. The loans -- 130,000 loans themselves. 2400 lenders. So, that's a terrific start, okay. Make that point. On some of the details, you know, I'm not involved in the day today workings. Treasury will probably be able to fill you in. I'm not sure I heard your last point, but maybe you can repeat it if I can help, I will. But, again, it got off to a terrific start. 38 billion as of this morning. That's a big number.
DAVID FABER: Yeah, no, it is. My question was specific to what I've been hearing from some professionals, accountants, for example. They're having some difficulty calculating average monthly payroll costs. Apparently, there are also some lack of concrete answers in terms of some of the rules that have been issued. Again, I know this is more Treasury's area, Larry, than yours. I don't know if you have anything to share in terms of whether they can provide more specifics at SBA for those applying.
LARRY KUDLOW: Well, look, no question they will. I mean, the glitches will get worked. It's a monumental undertaking. You know, $350 billion. You can just imagine from Small Business to banks, to loan guarantees, ultimately backed up by SBA and Treasury. I mean, again, this is our effort to respond to the almost -- the exponential rise in the coronavirus and the mitigation effects necessary to deal with it. And, of course, we are going to look into a very difficult economic period and economic contraction. We're in the midst of it. You and others, we've all seen the early unemployment numbers. So, look, we're trying to deal with it in two ways. And it's really about payrolls and about individuals and families. First of all, on the payroll side, we're doing the best we can to reward companies that can keep their payrolls going and we will forgive these loans and loan guarantees to the extent that the payroll forgiveness works. Okay. That's very important. As long as you keep your people on, we're going to help you a lot. We may help you additionally, but that's the first step. On the other side, I just want to make this point, we're giving assistance checks to 175 million Americans. 175 million Americans. It's a huge number. And the checks from the Treasury and the IRS probably start going out I think this week, perhaps early next, but I think Secretary Mnuchin was talking about this week. And also, you know, if you are laid off, we plussed up the unemployment benefits substantially. The labor department has delivered the funds to the states. The states are trying to distribute it. So, we are trying to keep this economy together. And hopefully, we're going to get a break. I say hopefully. I say prayerfully in the next four to eight weeks. And we'll -- maybe that's all it's going to take. Maybe it's going to be worse. I don't want to forecast. We're doing everything we can, liquidity, cash, rescue, try to keep the labor force connected to the actual businesses. I think so far, it's a good start for a monumental task.
JIM CRAMER: Larry, as always, it's Jim, thank you for your optimism. Very much needed. I know sometimes criticize, we know we don't care because it's one nation. There are people, Larry, who want to contribute, so badly. It feels like the march of Dime when you and I knew that we had to lift--. What's a matter with doing a trillion-dollar 30-year at 1.5 that we can all – a war bond, a COVID war bond? Do you know how quickly that would sell out? We feel helpless, but we want to stop this. Everyone in America wants to stop this and we want to find a way to do it. Let us.
LARRY KUDLOW: You know, Jimmy, as far as I'm concerned, I think it's a great idea. Obviously, I've talked to our colleagues about this. Whatever the maturity and the exact rate would be. This is a time, it seems to me, to sell bonds in order to raise money for the war effort. In this case, the pandemic effort. In this case, the effort to keep families and individuals in businesses afloat. I am all for it. This would be a long-term investment into the future of American health, safety, and the economy. So, from my standpoint, technical considerations aside, I think the concept is exactly right. I think it's exactly right.
JIM CRAMER: All right. So, you know the bond market really well and you're a great economist. I worked with you for many years. Would this be something you could refer to the president because we would all unite. And what a terrific thing. A war bond that everybody can go for. How much would we all want to buy that, Larry? This is such a good opportunity.
LARRY KUDLOW: Jimmy, I will pass along to the president who is always keenly interested in your point of view as is Secretary Mnuchin. And certainly, I have always used you as a guiding light. We may not always agree, but we do on the big things. No, I like the way you put that. And I think this is a moment to do whatever it takes to yield whatever federal levers are necessary. One of the levers might be an unusual but timely and important means of federal finance. No question about it.
SARA EISEN: Hey, Larry, it's Sara Eisen. Good to have you. Can you give us a sense of what the conversations in the White House are right now around how and when we're going to reopen our economy and just what that looks like? I think it's hard for investors to wrap their arms around this one.
LARRY KUDLOW: Well, I know it's hard. By the way, it's hard for everybody. It's hard for us. It's hard for you. It's hard for investors. I think mostly it's hard for just ordinary main street middle-income Americans. This is just hard. So, we have had a number of conversations. You heard the president, again, yesterday, at the news conference repeat his desire to get the economy open, reopened, as soon as possible. He doesn't want the cure to be worse than the problem. I believe that's how he puts it in quote, unquote. We have a taskforce. I mean, look, the health side has to come first. The health side must continue to come first. And the mitigation efforts, we believe, are working. There's -- I saw Bill Gates on TV yesterday suggesting maybe some stability by the end of this month. Let us hope and pray that's even possible. We are looking at not only at the health side and including all the necessary protocols and the best practices. We're looking at the economic side. How we can work hand in hand with the health people, maybe to gradually reopen the economy, open chunks of the economy, stay away from the worst hot zones. There's a lot of scenarios here. It's not my area of expertise. But we are looking at that right now, though, Sara, our absolute top priority is to execute phase three. Again, you're talking about 175 million Americans getting about $600 billion worth assistance, plus another 350 billion for small businesses. 150 billion for the states, $150 billion for the hospitals and as you know and others, because of the treasury's stabilization fund, the exchange stabilization fund, I think of it as an emergency fund, that $500 billion piece allows the federal reserve to lever up, maybe something like 10 to 1 to provide a lot of assistance to all parts of the economy, stabilize the financial markets, add the necessary liquidity, add the necessary cash. I don't think the Fed is finished. They've done a great job through 13.3. My guess is they're not finished with their efforts including the main street lending facility. So, we are trying to pull all this together. The health side, the economic side, I'll call it the financial stabilization side. If we as Americans, all of us as Americans, if we can work together, move through this, succeed with the execution of this enormous rescue plan. By the way, it is about a third of GDP, 6.2 trillion dollars, all in. If we can do that, if we can do that, then we can look forward, hopefully, prayerfully, to some flattening of that curve that everybody talks about, and maybe we'll be pleasantly surprised.
DAVID FABER: Larry, it's David again. There are those who say you're going to have to do even more. Phase three is great. The CARES act, obviously very important. But there is a part of the economy here, and here I'm talking about businesses that have fewer than 500 employees but are not investment grade. You know, Rich Handler who runs Jeffries writing this weekend, we're not looking for a bailout of CLOS or private equity firms or LBOS, but rather to return previously high-quality companies employing millions of people to the same position we were in before we were at war with the virus. Is there a talk about another plan, phase four, perhaps, that would deal with that part of the economy? Such an important one. Not investment grade but has more than 500 employees.
LARRY KUDLOW: Well, I agree. And it's something that's coming up. People calling us and emailing us and so forth. I know Secretary Mnuchin is looking very carefully at that. As a side point, the Feds' main street lending facility could, could, David, I don't want to get ahead of their curve. But could help to solve some of those problems. I think on your broader point, without putting a label on it, if we need more money for the Payroll Protection Program, or other aspects, we will go to Congress and ask for more money. The President indicated that yesterday. Secretary Mnuchin said it. I've said it. We will go and seek additional assistance. I don't want to put names on it. I think a lot of this stuff has to be, you know, specific to the programs that have been put in place. But yes, we will go for more money. And to some extent that goes back to Jimmy Cramer's point. If we have to do this and we need more money and we need to keep -- do everything we can to keep America as much together as possible. I mean, individuals and families and then the relationship between people working in the businesses they work for, then why not sell large bonds? Why not go for it in a patriotic way, in an American safety way to bring the economy back whenever that can be possible? What the heck? 50-basis points or I think Jimmy said 100-basis points, why not do it? So, we won't be bashful in asking for more funds for assistance if we need it.
DAVID FABER: Yeah. Larry, do you ever step back, though, and think to yourself, my god, these numbers. We talked for years and you said, no, we can't spend $1 trillion or $2 trillion on infrastructure. We can't spend this on health care. We can't spend that. And now we're talking about numbers the likes of which we've never seen before and you're saying sure, keep spending it. Sometimes I wonder why we didn't spend it originally and put it in infrastructure all over this country that we needed years ago.
LARRY KUDLOW: Well, of course, the president has for many years talked about getting an infrastructure bill through. Look, one of the things I've learned here, I mean, I've been around quite some time, and I'm seeing things I never thought I'd see, and I'm seeing an urgency and just a sense of being helpful. It goes back to something President Trump said several weeks ago. That he would use the full powers of the federal government, the full powers of the federal government to deal with this. And I know all of us have said we will do whatever it takes to try to get through this incredible emergency. I think that's the commitment. And I don't believe anybody would have predicted the exponential rise of this, but whatever, we're doing everything we can to do it. And I just want to add one more point. I think to some extent to Jim's point, but perhaps all of you, this President has used the private sector, the free enterprise private sector in this crisis more than any other president has ever in a prior crisis. Now, you say well, prior crises aren't comparable. Fair enough. But the point I'm making is this is a public/private partnership. I mean, my pal here, Peter Navarro working with FEMA and DHS, you have all these big companies, whether it is masks, whether it's respirators and ventilators and so forth, I've got a laundry list of things. I'll never remember them. But GM and GE and Ford and Walmart and Target and the biotech companies and the big pharma companies. No one has used the private sector like we have now. And that has enhanced our effort. Private sector folks are smarter than we are and more innovative and creative.
DAVID FABER: That may be true. Although, we need to throw the government to figure out how to get things to states in need. Larry, we have to leave it right there for now but thank you for joining us. We appreciate you joining us.
LARRY KUDLOW: Thank you. Appreciate it.
DAVID FABER: Larry Kudlow.
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