From earlier this month this is about 15 minutes. It so the u. S. Economy has been expanding now for several years, but the Global Economy has slowed a bit and weve seen a little bit of an uneven performance with a consumer at times. And somebody said reception. Lets talk about these issues crews the roller kudlow whose the assistant to the president. Please welcome them. Hello larry, please take a seat. Hello lets just jump right into it because we have a lot of news this morning. Pelosi Just Announced the democrats and the administration have great reached an agreement on the un usmca deal, especially two votes next week, how good is this for the rest of us . For the u. S. Economy . Is it going to make any difference, and really is it any better than . After i think its better than nafta, i think its brother the nafta, i think it updates nafta. Particularly, in some important new and economy ways. The way this thing was always designed by bass ambassador lighthizer, in a bipartisan sense, you have domestic contact and labor issues, which have been resolved more on the old economy side, very important by the bye to update that. But you also have new economy issues, in particular, intellectual property rights, which have never been put into one of these trade agreements before, and i think financial and Digital Services to. Theyre going to make a big difference, and youre going to get a lot of investment, that we might not have had, and i had just pulled out some of the estimates from the International Trade commission the icc that and i know that this is very important effect but a lot of people are pointing out numbers in the irgc lower, numbers but actually they gave wide ranges of impact on the u. S. Economy over a period of several years. And i just wanted to put that out there, on jobs, the range was 176 to 500 and daily 9000 jobs. And thats a big range. But it does reflect uncertainties about better investments and better risk taking. The better of that range is 350,000 jobs, and thats a gigantic numbers. And on gdp, there was a very wide range of 35 basis points to 1. 2 , and the midpoint of that was three quarters of the percent, so you, could overtime, have an increase of three quarters of percent on real gdp on trend, per year yes, and as much as 350,000 jobs per year, those are big numbers. Those are very big numbers. Its another point i want to make is that there is a stability thats never been done before. And thats where we over start this by saying, a template of the trade agreement. So, the Economic Growth impact, of nafta, or usmca, is very very substantial. Worker defends, domestic continent, very very substantial, and very an economy, very substantial. And really, these are our big trading partners, as you know its china is a sexier topic, but the reality is, total trade in north america, total trade with canada and mexico, is basically, slightly more than twice what it is with china. And you say template, is this type of agreement template for other trade agreements can, you apply this to other trading partners . I think so, and as you know, where negotiations, with china of course, were also in negotiations with some breakthroughs with japan. And were also in negotiations with a you you, really maybe in negotiations with the united kingdom, if that works out, so, yeah, as a template, i must say, look i have known bob for very long time. We were both reagan together, thats how far back we go. Hes the best trade negotiator in the business. And i think weve created a template, and i think its going to be a big pro growth template. Lets change to the sexier topic, as you put it. The general report this morning that u. S. And chinese negotiators are dip laying chinese goods that are going into just factors we can, do you want to confirm this publicly . No i cannot confirm this publicly. But it was in the journal in must be true. I understand. Fabulous newspaper. It so, couple things. Im not gonna go into details, but i will say this. The pilot president has struck a very constructive an optimistic tone, particularly in the last week or two, and his public comments, his tweets and so forth, which is a good thing, my friend handrail can singer, just returned from hell, week in china ups, and reported back law that the chinese team that president she has a very positive attitude, and you have the two leaders, and i am also volunteers, bound to say that President Trump, second of all he has said, it is not satisfactory it is not the kind of real deal he wants, it and then the the tariffs will go back into place. There is still a possibility there still on the table. Yes there is, i dont want to sound pessimistic, i dont want to spend that, im just saying the reality is, that those tariffs are still on the table in december 15 tariffs and the president has indicated, if the short strokes remain, negotiations do not pan out to his, liking then those tariffs will go back into place. So they could not, but they also could. There is a non definitive decision on. That then, how long is it going to take to get to a phase one deal . Many people on this administration have said it is close, but the president said in this week we can wait until next to you to the election. Why is that . Weve given a wide range of options, which are reckon is the mark of a good negotiator. And i wouldnt want to comment any further on that. Theres never been times when there is no arbitrary, december 15 will be a very important date. No question about that. There is a weak somewhat to go. Other than that, look. It is what it is, the president said it could go, on it can go. On if the president is happy with the outcomes that are being negotiated by secretary mnuchin, thats what may be working. Sticking points. Weve reported that agricultural purchases, committing china to keep buying big purchases, how is that going . It certainly a hot topic of conversation. What about chinese demands to roll back u. S. Tariffs . How is that going . Chinese demands to roll back i believe that is also part of the conversation. Thank you. Some people have called phase one a big deal, i believe my colleague john bossy had asked mulvaney this morning where we going after this . I think personally, and i had not read every detail, im part of the principles group, but i have not read every detail, the Deputies Group is meeting almost daily, or nightly, so things are moving, but i think that a lot of these chapters, it live on a intellectual property, on financial services, on currencies, a lot of the chapters, have come beyond . Where we were, have advanced the ball to where we were last spring, when talks broke down. Okay, i have heard you and other members of the administration to fend tariffs as a tactic towards the goals of leveling the Playing Field but to make it fairer for american companies, american workers, stopping forced technology transfer, and intellectual property theft, i think a lot of people would agree with those goals. At the same time weve heard executives that the uncertainty is making it hard for them to plan their budgets, their sourcing their, supply chains its not just china, weve had new tariffs announced last week on argentina and brazil, no we havent implemented. We havent implemented them but we said we would. Said we would impose tariffs on argentina and brazil . No decisions have been made. All right, i was uncertain about. That and proposed trap tariffs on friends . And then last spring la president s threatened to impose tariffs on mexico, and then didnt. There are many executives that say this has held them back on investment, and many investors have said that this is a reason for the u. S. And global slowdown. How do you respond . A couple things. First of all, the u. S. s economy is in great shift and Getting Better in my judgment. Weve had a soft patch, after a year of very low very stringent monetary tightening, which i think is a key point, and now the fed is taking the foot off the break in the Balance Sheet is growing again. And thats a good thing. The recent job numbers have been terrifics, most of the numbers have been terrific. We have really good productivity numbers this morning. In fact on the productivity side, i think a lot of economists are going to change their estimates for long term potential of gdp, youre running lets say, on h quarter basis, and round numbers one and a half percent productivity, one and a half percent job gain, year almost a 3 . In round numbers of two very positive. So first of all, america is working, get these employment numbers having sex exceeded everyones expectations, but i would argue that america is working. And i would argue that were seeing a worker boom, i would like to go to that point the worker boom, my old boss Ronald Reagan used to call after talks, after inflation, and in less than three years its increased according to the census bureau, by 5000 bought dollars for families. Can we go to the coal questions . , im slow i want to put this in economic, trade is very important, leg but you have the u. S. Economy doing very well, with tax cuts, and deregulation, and to your point, it trade reforms. So america is working, actually like anna mists on both sides of the aisle have pointed out the production workers are increasing their way. God we need to go to the poll question if we can pulp that up, the Global Economic slowdown has prompted my company to cut back on planned Capital Investment or hiring. Please answer while you can. And while you answer we have about one more question before we open up to the audience, and that is i really wanted to ask you what are the prospects for another Trump Administration tax cut proposal before the election . Just trying to read dont were, going to get all the results of the. And oh im sorry. Is the president going to propose another tax cut in the year, . Were working on something called tax cuts to point no. And were soliciting lots of ideas from lean house numbers, outside experts, and people in the administrations. More specifically for individuals or companies . I dont want to be specific. I can tell. What are some of the options on the . Table we have middle class tax relief, and my guess is where it will include both businesses and individual reforms, and some things i wouldnt expect the product until well into 2020. Close to the election . Probably close to the election. Well it would be in effect, a sort of, postelection planning doctorate. If elected these are the kinds of appropriate approaches, pro growth approaches, middle class, business, Small Business approaches, that a second term would happen, yes. All right, john you want to take it away . Questions for larry from the audience . Questions . While the roller thinking, larry just for clarity, the president did say that he was raising tariffs on steel and aluminum from brazil and argentina because they felt that they have been wrongly devalued currency. Maybe the rules didnt go through, but thats what the president planned. Let me ask about what she just said about beat tournament trade deal, which is that you expect that whats being negotiated now to move beyond what was already agreed to by the chinese in the spring. Can you give us some detail, not too much detail, a little bit more on that to understand what additional headway has been made on some of the tougher . Issues well, no, i dont opened up to details in the negotiations, its very hard to do that. I would just suggest, as i did there, it just looks to me like somebody had a these key chapters, i mentioned, i do theft, currency stability, financial for services, opening up agriculture, not just purchasing commodities but also Tariff Barriers on agriculture, as well as actual spending, because of these things are not resolved, into specifics,. Weve read these in the papers already, these are big subsidies, these forced tech transfers, these are for a letter date. Some of these will fall this was always planned, phase one, and then whats not done will go into phase two, and one quick point, the decision by the president dense a couple of weeks, ago or wherever it was, to look at this in phases, rather than one large discussion, was a very significant phase, which i think helped enhance the probability of getting some of these another question, right here in the back. Tell us who you are. Look im from snap on, look, i wonder if you could give a saw some insight into how the white house balances the trade talks, with perhaps endorsing the congress is view of hong kong protesters. Thinking that maybe that gives the moderates forces in china, less maneuvering, and the time were talking to. How do you balance the . I dont think there is a direct link, between the i call them freedom of democracy issues, if you will and trade talks. I dont think there is a direct link. But having said that, i think the president has made it very clear, that the United States consistently has a long history, but favorites freedom and democracy, and human rights. And feels compelled to speak out, where these things develop. So you saw our support for the freedom of democracy gang group in hong kong, which was subsequently right a fide bar the rule of elections. Now, these are separate tracks, i understand that this relationship between trade truck and a human rights track i get that. It but nonetheless,y there may be some spillover, i understand that too, its a complicated matter, its complex matters, but we have very strong american rallies, that pertained to freedom. We support freedom loving, people wherever they are where around the world, that is shear for our entire history. And so in this, case we supported the congressional resolution secretary pompeo has been very eloquent on this, Vice President pence very elegant, very President Trump has said it many many times. You have separate paths you understand we have separate tracks. One last questions otherwise im going to wrap it. Up yes right here very quickly larry i have a question about Interest Rates. Were operating on a persistence tee low inflation environment, we cant foresee them going up anytime soon, the pressure is to bring them down, if you have a normalization of the rate environment, how would your economic policies shift in a very brief overview . In a normalization would mean going, doubling even tripling from there where they are today. Because the cost of money is miss priced in my opinion. Of course global rights are very low, for a variety of reasons, that word normalizing it, i dont mean to pick at you but, i dont know what at what anything means. I we live in the world that is because virtually no inflation. The traditional asia of the term structure of Interest Rates, and the curve of, the outlook for inflation, the outlook for returns on capital, and the returns premium, that has been upended in recent years. Theres no inflation out there, in fact whatever inflation is reported its still too high. To calculate this property. I dont see why Interest Rates have to go up. Im just giving in my personal view. The market determines most Interest Rates. And, i dont think, that are central bank, or other central banks, should worry about controlling Interest Rates. I think they should provide ample equipment and the rates will take care of themselves by form of all what that has passed away when i was a child, in 1975 as a researcher and speech writer it wasnt easy it wasnt easy job in a speech writer because i never used my he was a brilliant man he. Was exactly the right man the country needs to start of inflation. And i forever give him credit for that. And although he did not prefer my boss he did tell me to go work for my, boss volker if you read the very good article that i was in the wall street journal his report his view is that the market and i agree with. That i just dont think that we have much to worry about. Just to say this. We do have problems, with the World Economy slump. This is the only country the evil elise usa is the only country showing prominent Economic Growth, and i think the signal of the stock market means that the 2020 growth is going to be much faster than 2019. Let us not forget some of the incentive oriented supply side policies that have worked throughout history. Mainly lower marginal tax rates, rolling back unnecessary excessive regulations, and attempts to reduce trade barriers. These are classic neoclassic, and cent of oriented policies, by former boss Ronald Reagan you mike box donald trump, thats the problem for world growth. I think the central bank obsession is just wrong, i think they are to be looking at port pro grow measures, and the g7 as you know well be here in the u. S. , at camp david, in the late spring early summer, i will be in the shoppers around that thing, and were going to devote those sessions to what i called back to basics. We will be devoting those sessions to the need to restore worlds Economic Growth. In europe, and latin america, in the middle east, and in asia. There are very few country growings, most countries are not, that is the single biggest problem that faces up today. We must restore growth and prosperity. And then lift those animal spirits as best we can. We will devote our g7 efforts to that. I dont see much central bank function, i see those going to oldfashioned supply side oriented policies. Where we should reward success, and not punish it. Good news on inflation unless youre trying to raise their prices. Larry kudlow, thank you very much. applause pleasure
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