Larry Kudlow, the Reagan administration economist who also advised the Trump campaign, said President Trump will highlight first-year triumphs like tax reform and regulatory cuts in his State of the Union speech tonight.
Unlike Trump’s inauguration speech that pilloried Washington’s legions of bureaucrats, special interest groups and media lackeys as out-of-touch elites who neglected America's dying middle class, the president's remarks tonight are likely to sound more collegial and optimistic. His speech last week at the World Economic Forum in Davos, Switzerland, likely had hints of tonight’s address on Capitol Hill, Kudlow said.
“He’s going to dwell a lot on the economy, the ‘we’re open for business’ in Davos, a popular line,” Kudlow said on cable channel CNBC. “He has accomplished enormously. He's going to talk about tax reform, going to talk about regulatory reform…. Immigration is very important, trade, NAFTA very important issue for him, infrastructure very important issue for him he's definitely going to go there.”
Trump's signature accomplishment during his first term was the passage of a sweeping tax reform bill that cut corporate tax rates and gave multinational companies an incentive to return billions of dollars in offshore cash to the U.S. The tax reform helped to lift U.S. stocks as investors anticipated companies would report higher profits, dividend payments and stock buybacks.
Trump last week brought his “America First” campaign message to Davos, a lion’s den of business and political elites seeking to promote a globalist agenda that’s contrary to Trump’s campaign message of protecting U.S. workers from the ravages of unfair trade. But instead of ripping into the audience, he softened his tone and spoke more about the advantages of doing business in America.
"America first does not mean America alone," Trump said. "When the United States grows, so does the world."
Kudlow said Trump will stand firm on the issues of immigration reform and renegotiating the North American Free-Trade Agreement to make it more favorable to American workers.
“He [Trump] wants very much to make a deal where the ‘dreamers’ stay,” Kudlow said, referring to undocumented migrants who arrived in the U.S. as kids. “He’s never wanted them to leave.”
Trump also will demand greater resources for security, including the wall along the southern U.S. border with Mexico. He promised to build the wall when he announced his presidential run in 2015.
“America wants this stuff solved,” Kudlow said. “You look at the poll numbers, and the support for increased border security is like three-to-one in favor.”
Trump recognizes that pulling out of NAFTA would lead to steep losses in the stock market, because many large U.S. companies have adapted to their business models to a freer flow of goods among Canada, Mexico and the United States. Withdrawing from the agreement would have to be prolonged in order to give industries time to adjust to a new trade framework.
“He [Trump] would rather negotiate with Canada and Mexico, but if it doesn't work, he will pull out,” Kudlow said. “The process may be elongated. He understands the integration of the countries and the industries, and he would rather negotiate.”
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