A top economic adviser to President Donald Trump said on Monday he expects U.S. budget deficits of about four percent to five percent of the nation’s economic output for the next one to two years.
White House economic adviser Larry Kudlow, speaking at the Economic Club of New York, added that there would likely be an effort in 2019 to cut entitlement-program spending.
Kudlow did not specify where future cuts would be made.
“We have to be tougher on spending,” Kudlow said, adding that government spending was the reason for the wider budget deficits, not the Republican-led tax cuts activated this year.
"People are quick to blame deficits on tax cuts but I don't buy that," the veteran financial guru and former Ronald Reagan adviser said. "Tax cuts promote growth and wages," he said.
Kudlow said the administration was "still chipping away" to reduce the "burdens and inefficiencies of entitlements."
"If you grow rapidly, you're going to have lesser deficits. Growth solves a lot of problems," said Kudlow, who served as the Trump campaign's senior economic adviser. "The gap is principally spending too much."
Through the growth in GDP after tax cuts, CNBC.com explained, Kudlow said the U.S. has "just about paid for two thirds of the total tax cuts," he said.
While the White House must crack down to curb spending, tax cuts should help in the meantime.
“We’re going to run deficits of about 4 to 5 percent of GDP for the next year or two, OK. I’d rather they were lower but it’s not a catastrophe,” said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
"We spent too much, I absolutely agree," Kudlow said. “Going down the road, of course we’d like to slim that down as much as possible and we’ll work at it,” he said.
"We're working on it," Kudlow said.
He stated that the biggest factor for revenue was economic growth rate. A quicker pace of growth will bring in more revenue, Kudlow said, and that President Donald Trump’s economic policies were aimed at boosting the U.S. growth rate.
Kudlow also said he did not expect the Congress would be able to make the Trump administration’s recent individual tax cuts permanent before the Nov. 6 midterm congressional elections.
“I don’t think it will get through the whole Congress” before the election, he said, but added that making the personal tax cuts permanent “is a good message” and disagreed with forecasts that they would further increase budget deficits.
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