Larry Kudlow on $22.5 Trillion Debt: ‘I Don’t See It As a Huge Problem At All Right Now’
White House National Economic Council Director Larry Kudlow does not believe that $22.5 trillion of U.S. presents a huge problem right now in a Tuesday interview with CNBC’s Kelly Evans. Kudlow sat down with Evans at CNBC’s Capital Exchange summit to discuss sustaining growth and avoiding recession.
After audience member Peter Weber asked Kudlow, a former CNBC anchor, about the deficit, in particular how Kudlow plans on dealing with what he described as “unsustainable.”
Following is CNBC’s transcript of Kudlow’s response (emphasis added):
LARRY KUDLOW: Well, Peter, right now the latest numbers are current deficit is about 2 1/2 percent of GDP. It’s a very modest number. And, actually, I could — we could talk about the CBO and so forth, but I’ll spare you my views on that. But when the CBO put out its long-term numbers, whatever it is, 50 years — I just read economist John Taylor’s wonderful blog — actually, they’re lower. It’s fascinating. Nobody pointed that out.
KELLY EVANS: Because of growth or –
LARRY KUDLOW: Yes, yes. Even the CBO acknowledges that over the next 50 years — now, I’d love to be around for that analysis; I may not be — but the deficit is coming down in the long run. And I will say, Peter, as I have, there are basically only two ways to lower budget deficits. One is economic growth, which is worth the 3 1/2 trillion per point of GDP; that’s why I’m harping on USMCA, not small potatoes, and limited government. And we are pursuing both. I don’t see this as a huge problem right now at all. Quite manageable. And revenue analysis — and I know we have other questions, and I don’t want to spend too much time, but revenue analysis is coming in very well with respect to our earliest projections of the impact of the tax cuts on the economy and the budget. I mean, actually, I would argue strongly that the corporate tax cut has already been paid for, and that roughly two-thirds of the overall tax cut has been paid for. 2018 was year 1. 2019 is year 2. Give me another year or two, and I think you’re going to see tremendous improvement. But right now, 2 1/2 percent of GDP, that’s the CBO number. It ain’t much.
Deficit spending was a long-standing issue for Republicans critical of an Obama administration that was viewed by conservatives for wanton and irresponsible government spending. While Kudlow touts the goal of a growing government remedying deficit spending.
The Trump administration has added over $2.5 trillion to the deficit in the first two years, which is less than the roughly $3.5 trillion added to the deficit under Obama’s first two years, though the former president did inherit a struggling economy brought about by the financial crisis of 2008, and passed expensive spending bills that many see as responsible for starting the record 10-year recover that the U.S. economy is currently enjoying.
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