Larry Kudlow, the veteran financial guru and former economist in the Reagan administration, said President Donald Trump’s proposed 2018 budget will help to accelerate economic growth by 3.5 percent to 4 percent a year.
“Roll back regulations and grow, grow, grow. Three percent, in my opinion, is minimal,” he said on CNBC. “They can do 3.5 percent to 4 percent if they get the tax cuts through ASAP.”
The U.S. economy has grown by 3.2 percent a year on average since 1947, but never exceeded 3 percent during the Obama administration, the first time in history. Trump’s proposed budget is based on tax and spending cuts to strengthen economic growth without increasing the deficit.
Kudlow said he likes the idea of reducing dependence on the government, as Budget Director Mick Mulvaney described the spending plans on Tuesday.
“It’s a taxpayer-first budget,” Mulvaney said. “We are no longer going to measure compassion by the number of programs and the amount spent on those programs.”
Kudlow said the budget reminds him of the Clinton administration’s welfare reforms that reduced dependence on the dole.
“The measure of success is not how much cash or government or welfare assisted,” Kudlow said. “It's how many people we put back to work.”
Trump asked Congress for $3.6 trillion in spending cuts on food stamps, Medicaid health insurance payments, disability benefits, low-income housing assistance and block grants that fund meals-on-wheels for the elderly.
“You have this perverse incentive effect going on, because the work requirements have been decimated,” Kudlow said of Clinton-era policies that weaned people off government payments. “Obamacare provided the break-even working poor with incentives not to work. If they went to work, they would lose their health care.”
House Speaker Paul Ryan said Trump’s budget will get reworked in Congress, which is typical for presidential proposals. He said there are areas where the White House and congressional Republicans share similar goals.
“Here’s what I’m happy about: We finally have a president who’s willing to actually even balance the budget,” Ryan told reporters. “And we will have a great debate about the details on how to achieve those goals.”
Senate Majority Leader Mitch McConnell rejected Trump’s proposed cuts to foreign aid and medical research.
"Every president sends up a budget, and with all due respect to the current president, I can't recall any time in which we have been sort of dictated to by either a Republican or a Democratic president," McConnell said in an interview with The Associated Press. "We'll put our own imprint on it, particularly with regard to overseas."
Kudlow is host of "The Larry Kudlow Show" and author of "JFK and the Reagan Revolution: A Secret History of American Prosperity," written with Brian Domitrovic and published by Portfolio.
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