WHEN: Today, Wednesday, October 14
WHERE: CNBC’s “Closing Bell”
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with National Economic Council Director Larry Kudlow on CNBC’s “Closing Bell” (M-F, 3PM-5PM ET). Following is a link to video on CNBC.com: https://www.cnbc.com/video/2020/10/14/democrats-are-taking-an-aall-or-nothinga-approach-larry-kudlow-on-stimulus-stalemate.html.
All references must be sourced to CNBC.
SARA EISEN: Joining us now in an exclusive interview is National Economic Council Director Larry Kudlow. Great to see you again, Larry, thanks for being here.
LARRY KUDLOW: Thank you, Sara. Appreciate it.
EISEN: So, all parties involved say they want stimulus. Many Americans are in desperate need of relief. Why can't a deal get done?
KUDLOW: Yeah, that's a heck of a good question. Look, I spoke to Secretary Mnuchin not long ago, and you know, he's frustrated. I mean, he is so good at this, but the bid and the offer have closed, as you know. But the main thing is why is it that our friends, the democratic friends on the other side want this all or nothing approach? Like, zero or everything. I mean, we've got certain needs for the economy. The economy is coming back nicely. It is a V-shaped recovery in my judgment. However, small businesses and the PPP loans would be a tremendous help. Unemployment assistance, you know, we did it by executive order – that's not going to last forever – that would be a tremendous help. Specifically COVID related and directed efforts to opening schools or new equipment and PPE and whatever it takes for testing and keeping the kids safe. That would be a terrific help. And from what I gathered there is broad agreement on that. Where there's not agreement is really a lot of ideological political stuff that has nothing to do with the economy or COVID. And look, Sara, I respect the political ideological differences, but I'm just saying, why do we have to settle that now? We could get a couple of things done that would be so helpful and help get more and more people back to work, save the small restaurants and small businesses and so forth. Why not?
EISEN: So here's my question. Why not do the full thing? I mean you're being given a chance to pass $2.2 trillion in spending with weeks until the election that would juice the economy and the stock market. And you keep walking away from that.
KUDLOW: Whoa. Walking away? Wait a second. Can we just redo that little news item you put out there? We are not walking away. We have closed the gap enormously. Okay? I'm not sure the Senate Republicans would buy into it. But we've gone from the administration's original position was about a trillion dollars now at 1.8 trillion. The Senate Republican original bill was 500 billion, now they are looking at something much larger. We're not walking away. Every single day Chief Meadows, Mark Meadows, Steven Mnuchin they are on the phone, the rest of us are talking at different levels and providing support –
EISEN: No, I just meant –
KUDLOW: You cannot characterize this as walking away.
EISEN: Larry, I didn’t mean walking away from negotiations –
KUDLOW: I beg your pardon –
EISEN: What I meant was –
KUDLOW: There is no evidence we have ever walked away.
EISEN: Sure, but I what I meant was, you said you don't want to do all or nothing. I'm saying why not do all? Why not do the $2.2 trillion to help this economy when you're being offered that chance ahead of an election at a time when so many Americans need it?
KUDLOW: We're really not being offered that chance. If I may. I don't want to involve myself in the negotiations. But I will say this. Many people – I'm going to keep this general – believe that Speaker Pelosi, with respect, keeps stringing us along. So, we agree to one thing and now it's another. We agree to another and now it's a third item. You know, we have come a very long way. Here's the question you should be asking. To keep this economy in a V-shaped recovery, to make sure the unemployment hardships, which still exist out there, can be dealt with effectively to help the small business – there’s no one that disagrees about that. Including I might able Limited Liability Insurance which they've asked for from day one on both sides of the aisle, okay. Why go all or nothing? Why not just agree to a few simple principles and litigate the rest of it later on? You've got plenty of time. I'm just saying that right now, right in here, you have a moment where I think you could come together in a sensible, targeted, efficient, smart package. And that's what Secretary Mnuchin is trying to do. And I'm not sure it's over, by the way. It's, you know, he's a great friend of mine. We’ve worked together at NEC, Treasury Department. The guy is always on the phone. I've been with President Trump quite a bit – the President, by the way, gave a fabulous speech to the New York Economic Club today. President Trump is willing, he has said that he is willing to spend a little more, if that's what it takes. Mnuchin is up there conveying that message, so is his Chief of Staff Mark Meadows. This is not a time to say all or nothing. Okay? I'm sorry, Sara. in a negotiation, people have to give on both sides. We are down to short strokes. I'm not saying it's done, or cooked or over. I'm just saying there is still time for calmer heads to prevail, to help Americans across the board, and help the kids. Jobs and kids that's been our mantra.
WILFRED FROST: Larry, it's good to see you, Wilf here. Switching focus a little bit, I wanted to ask what you have thought about the speed of the President's recovery from COVID and whether that makes you think that people should be a little bit more brave, a little more gung-ho whatever the word is, and be getting back to work, getting back to offices and socializing going to various hospitality type venues and getting the economy going again?
KUDLOW: Well look Wilfred, I can just tell you, I spent a good amount of time with President in the last 48 hours preparing this economic speech. He looks great. He sounds great. And I think all of his old energy has returned. He gave a heck of a speech today, one which you will hear more and more of on the campaign trail about economic growth and prosperity and opportunity, and the conflicts, the divisions, with the other side, that frankly, with their high taxes and regulations are going to move us towards stagnation and pessimism and perhaps recession as well. So that's key. He did it beautifully. He answered a whole bunch of questions from smart people. Now, his view has always been that we should reopen the economy and we should reopen the schools. And lately, it's very interesting to me – you know, we all talk about scientists and so forth. So, you've got these chaps from Oxford, Harvard and Stanford, leading a petition. Doctors, scientists, health care workers and so forth. I think there are over 5,000 people who say, we must protect the vulnerable. Nust protect the vulnerable – that is preconditions and the elderly – but we cannot keep people bottled up at home. That the social cost, and the economic costs, and the childcare cost and psychology is too great. That has been the President's message. It's interesting to see all these brilliant thinkers come together and essentially endorse that message. I think the other team would find the scientists and close the door. We don't want that. We want the door to be open. Look, the reason there's a V-shaped recovery is roughly 80% of the business in the USA are open, all right. Probably 80% of them were closed last winter. Now, given a chance, given low taxes, given low regulations, energy independence, good trade deals – given a chance, businesses opening have a terrific opportunity here. New business applications are skyrocketing. Big piece in The Wall Street Journal talked about how entrepreneurs and innovators, despite maybe all the odds of the pandemic, are actually opening up new businesses left and right. So, I think that's terrific. We have to keep the senate policies in place, but I think, yes, let's get it open, and let's do it smart. Let's not forget, it has to be done safely. There's no question about that. That's an old argument. Masking, distancing, testing where applicable, good hygiene. That will do it. That will give us a V-shaped recovery. But why not help some who are in need of some help right now? You know unemployed people in small business, why not go back? Can we just put the ideological politics aside for a moment and help the country, grow its way out of this?
EISEN: I think a lot of our viewers would agree with that sentiment, Larry. As far as a V-shaped recovery is concerned, I don't know that the data stands up to that. I mean, you mentioned that business is open, but Yelp shows that 60% of the businesses that were closed did not reopen when they were able to do so. So, clearly small business is hurting. We get layoff announcements from big business nearly every single week. Disney just announced 28,000 people are laid off. And we're heading into the winter where restaurants aren't going to be able to do as much business outside, and people aren't going to be able to do as much activity outside and COVID cases are set to rise. So, what happens to that V?
KUDLOW: I don't know if COVID cases are set to rise. That's a science issue. I can't speak to that. Here's what I would say. New business applications are soaring. So, I don't know – you know everybody's got their favorite website. All I can say is the government stats are very clear. There is a housing boom. I don't care whether you look at starts, sales, confidence, pending sales, there is a housing boom. We just had tremendous report from small business – the NFIB – small business confidence is soaring, okay. It's above a year ago levels which is terrific. We know there's an automobile boom. We know there's a manufacturing boom. We know there's durable goods boom. We know inventories have to be rebuilt because they were rock bottom at the end of the pandemic second quarter contraction. We know that the Atlanta fed GDP now is looking at 35% in the third quarter, and the blue-chip private forecasters, I think, are up to 29%. These are their numbers, not ours. I'd be thrilled with 20 plus. That was my original idea. And we know that economic policies matter a lot. And one of President Trump's key messages today – key messages – he said, “I will deliver optimism, opportunity and growth.” He said, the other side was going to be pessimism, stagnation and decline. Because this is no time for across the board tax hikes that would take money out of people's pockets and damage businesses or across the board regulation with government taking over the entire healthcare sector, the entire energy sector. And I want to add to this, whether we agree or not, the data show from the Census Bureau and the Bureau of Labor Statistics and the Federal Reserve under President Trump's economic policy – pre pandemic, okay – those who benefited the most were the ones who needed the most. The biggest beneficiary –
EISEN: But those are the ones getting hurt the most now.
KUDLOW: And what I'm talking about is middle class and lower wage folks whose family incomes have soared, whose household wealth has soared, and whose real wages has soared. That least among us have been helped the most. Now to your point, what you just uttered, I say yes. Let's keep in mind that we should help those who need help now. And that's why we should stop doing the ideological politicking and gigantic – all you need is a couple of standalone bills to refurbish and actually repurpose the existing $135 billion of small business PPP. That's easy, okay. All you need is a bill that will give you unemployment assistance to the end of the year or well into next year. We've done that by – we need a bill to do it. All you need is another appropriations to help the schools reopen and provide assistance to COVID related matters. This stuff is not hard. We shouldn't make it so hard. We shouldn't have things about healthcare assistance, illegal immigrants, we shouldn't have stuff about harvesting mail-in votes. There's a million things, unfortunately, that the other side wants to push. It has nothing to do with economic recovery or COVID. So, let's just – common sense – do it, and then we can litigate the other stuff. There is an election in three weeks and we'll see.
EISEN: Yeah. Larry Kudlow. Thank you very much. We'll continue to talk to both sides about it. Good to get your take always.
KUDLOW: Thank you. Appreciate it.
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