In Larry Kudlow, Trump Finds His Economic Evangelist

His zeal has led him to issue some predictions that beat consensus and others that were wildly wrong, including twice denying the existence of recessions while they were already underway during President George W. Bush’s administration. (“Despite all the doom and gloom from the economic pessimistas,” he wrote in December 2007, right as the worst recession in a generation was beginning, “the resilient U.S. economy continues moving ahead.”)

But his preaching is consistent, effective and entertaining. Mr. Kudlow’s admirers say it might be just what Mr. Trump needs right now, at a time when the economy is humming but Americans aren’t giving the president or his party much credit for it.

“He’s a great guy to have in a bull market, freewheeling economy,” said James Pethokoukis, a columnist for the conservative American Enterprise Institute in Washington and a regular guest on Mr. Kudlow’s syndicated radio show. “He was made to be a spokesman for an administration in that kind of economy.”

Mr. Trump is confident that the economy is roaring and that he deserves credit for it, as evidenced by his announcement of Mr. Kudlow’s appointment Thursday on Twitter.

Americans are similarly confident in the economy’s performance, but that is not translating into widespread approval for Mr. Trump or his signature economic policies. A survey of 10,089 adults conducted this month for The New York Times by the online polling firm SurveyMonkey found that consumer confidence was strong, and remained at its highest point since Mr. Trump took office.

But only 44 percent of respondents approved of Mr. Trump’s performance in office, compared with 54 percent who disapproved.

The poll found support dipping slightly for Mr. Trump’s signature tax law: 49 percent of respondents approved of the bill, down from 51 percent in February, while 46 percent disapproved. That drop signals a potential ceiling of support for the new law, which had gained popularity after Mr. Trump signed it. In a worrying sign for conservatives, “strong” approval of the bill among Republicans and Republican-leaning respondents fell to 46 percent from 52 percent.

Promoting the tax law did not prove to be an effective strategy for Republicans in a special congressional election this week in Pennsylvania.

After flooding the airwaves of a district that Mr. Trump won by 20 percentage points in 2016 with tax-themed advertisements, Republicans shifted strategy for their closing argument, apparently judging the message to be ineffective. Their nominee, Rick Saccone, lost the race narrowly to Conor Lamb, a Democrat.

Mr. Kudlow, though, sees the tax law as a boon for the country and a powerful messaging weapon in the midterm elections this fall. He told his longtime colleagues at CNBC in an interview on Wednesday that one of his roles in the administration will be helping Mr. Trump persuade more Americans to see the law similarly.

“The president likes me as a media communicator,” Mr. Kudlow said, “so I will be more than happy to oblige.”

Most recent directors of the National Economic Council have not been academic economists, but the role has traditionally demanded more policy advice than salesmanship. The director is in effect the point person in the White House for economic issues, coordinating advice from across the cabinet and the West Wing. Mr. Trump’s advisers generally agree on tax issues, but they often diverge on trade, with warring factions between the traditional free-market group and a more populist group that reinforces Mr. Trump’s own inclinations and campaign talk.

Mr. Kudlow is a longtime advocate of free trade, seeing it as critical to America’s economic growth. He criticized Mr. Trump’s recent plan to levy global tariffs on aluminum and steel, but has since endorsed a slightly more tailored version of the tariffs that Mr. Trump announced this month. His predecessor, Gary D. Cohn, announced that he would step down after losing the battle over those tariffs.

Wall Street researchers were skeptical that Mr. Kudlow could persuade Mr. Trump to back away from his anti-trade agenda.

“We expect that the president and Mr. Kudlow will be at odds over trade policy,” analysts at Keefe, Bruyette & Woods wrote on Wednesday, “but that the president’s view will prevail.”

In the CNBC interview, Mr. Kudlow distilled the economic philosophy — including his love of tax cuts — that has animated him for four decades.

“I believe, first of all, the greatest and most important thing for this or any other country is rapid prosperity for everyone,” Mr. Kudlow said. “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.”

He also emphasized how he, like Mr. Trump, viewed the stock market as a barometer for economic success. “Look, I love the stock market,” he said. “I love wealth. I think rising stocks help everybody.”

Faith in those principles has at times led Mr. Kudlow to better his peers in economic forecasting, most notably in the late 1970s, when he bet against Wall Street’s consensus predictions that inflation would remain low. Mr. Kudlow also cites economic growth during the Reagan administration in the 1980s, and what he calls the five-year “boom” that followed the permanent tax cuts Mr. Bush signed into law in 2003, as evidence of the power of the supply side policies he preaches.

But Mr. Kudlow has been off on other predictions.

Like many conservatives, he warned in 2010 that the Federal Reserve, which invested trillions of dollars to help prop up the economy, risked stoking rapid inflation, which did not happen.

He said in 1993 that President Bill Clinton’s “across-the-board tax increases on labor, capital and energy will throw a wet blanket over the recovery and depress the economy’s long-run potential to grow.” Several booming years later, in 1998, he was telling conservatives to cut taxes and expect a surge of new federal revenue to follow for years to come. It did surge, briefly, but large budget deficits returned in the mid-2000s and have hung around.

Critics worry that Mr. Kudlow could miss the warning signs of another recession, or advise against government action to help pull the country out of any economic dip that might occur.

Liberal groups criticized Mr. Kudlow this week for dismissing concerns about inequality and the pay gap between women and men, and for his critiques of expanded safety net programs — which he has said discourage work and contributed to slow growth under Mr. Bush and President Barack Obama. He has also expressed opposition to the federal minimum wage.

Those critics who have jousted with him on air for years also say that Mr. Kudlow is, almost uniquely in the spirited world of economic debate, an engaging and curious adversary.

“There’s probably nobody I disagree with more, and like as much,” said Jared Bernstein, a liberal economist who advised Mr. Obama.

Continue reading the main story