Larry Kudlow Trump’s Next Economic Advisor

Best known as a television host, he served in the Reagan administration and chief economist of Bear Stearns.

Larry Kudlow, who recently wrote an op-ed criticizing the President’s proposed steel and aluminum tariffs, is going to be his next chief economic advisor.

CNN (“Kudlow to become Trump’s next top economic adviser“):

President Donald Trump will name Larry Kudlow, the conservative media analyst who served as his informal economic adviser during the 2016 campaign, as the next head of the White House National Economic Council, two sources familiar with the decision tell CNN. Trump offered Kudlow the job Tuesday night over the phone and he accepted, the source said.

White House press secretary Sarah Sanders later confirmed Kudlow’s hire in a statement to reporters. ”Larry Kudlow was offered, and accepted, the position of assistant to the President for Economic Policy and Director of the National Economic Council,” Sanders said. “We will work to have an orderly transition and will keep everyone posted on the timing of him officially assuming the role.”

The move makes Kudlow Trump’s second top economic adviser after Gary Cohn, a former Goldman Sachs executive who worked for Trump for over a year, announced his resignation earlier this month over internal disagreements around the President’s decision to impose tariffs on steel and aluminum imports.

[…]

Kudlow’s ascension, however, does not solve the disagreement inside the administration over Trump’s tariff decision. The cable news personality has been outspoken in opposition to the tariff plan and wrote an op-ed for CNBC earlier this month that detailed his disagreements. ”In other words, steel and aluminum may win in the short term, but steel and aluminum users and consumers will lose,” Kudlow wrote. “In fact, tariff hikes are really tax hikes.”
Trump acknowledged his disagreement on tariffs with Kudlow in a conversation with reporters on Tuesday, but said he welcomed the difference of opinion.
“I’m looking at Larry Kudlow very strongly. I’ve known him a long time. We don’t agree on everything but in this case I think that’s good. I want to have a divergent opinion — we agree on most,” Trump said. He added that Kudlow has “come around to believing in tariffs as a negotiating point.”
Peter Navarro, Trump’s top trade adviser and a fervent proponent of the President’s tariffs, was seen as the force behind Cohn’s eventual departure. The two butted heads over the decision and internally Trump’s decision was seen as a win for Navarro and a damaging loss for Cohn.
Wary of the narrative that Navarro and Kudlow will clash in the same way that Navarro and Cohn did, a source close to Navarro said the President’s trade adviser is “very happy” with Kudlow’s selection. The source said the two men have been friends for years, dating back to the time they spent on CNBC sets together as economic analysts.

CNBC (“Larry Kudlow to replace Gary Cohn as Trump’s top economic advisor“):

Larry Kudlow will take the job of top economic advisor to President Donald Trump, replacing Gary Cohn.

On Wednesday, Kudlow and the White House confirmed the economist and senior CNBC contributor accepted the post of National Economic Council director. The president offered Kudlow the job on Tuesday night after other conversations between the pair on Sunday and Monday.

“I’ve known him and interviewed him for over 20 years. I’m very comfortable with him and I can’t wait to start,” Kudlow told CNBC.

[…]

Kudlow told CNBC he got a call from Trump on Tuesday night as he got into an Uber after dinner. He had a conversation with the president in the car, and the driver “had never seen anything like this,” Kudlow said.

By bringing in Kudlow, Trump adds an advisor who supports his push for lower taxes, fewer regulations and a so-called merit-based immigration system. But he may find an occasional critic of his trade policies.

The National Economic Council director advises the president on economic issues and works to implement policy goals. Cohn helped to shepherd the Republican tax overhaul, Trump’s signature achievement in office so far, through its passage in December. Kudlow also supported the tax bill, and told CNBC “there may be more action on that front.”

Trump won the presidency partly on his promises to shred or renegotiate U.S. trade deals and crack down on trade practices he deems unfair. He argued that the North American Free Trade Agreement, in particular, sapped manufacturing jobs from the United States.

On Wednesday, Kudlow told The Associated Press he opposed Trump’s tariffs but is “in accord with his policies.”

Kudlow was a budget aide during the Reagan administration. He was chief economist at Bear Stearns from 1987 to 1994. He informally advised Trump on taxes and other economic issues during his 2016 run for president.

Talking to CNBC on Wednesday, he highlighted his “strong relationships” with lawmakers in Congress. Kudlow said House Speaker Paul Ryan called him in recent days and “is very, very enthusiastic” about him taking the job.

He added he is “looking forward to working with” Treasury Secretary Steven Mnuchin and noted that trade advisor Peter Navarro was a regular guest on the CNBC show “The Kudlow Report.” Navarro, who has pushed for aggressive actions to counter China’s trade practices, sparred with Cohn over tariffs.

Kudlow said his job will be “not to rehash things but to execute” policy.

“I’m looking forward to serving the president,” he said. “The way I was brought up in the Reagan years, you talk it out and you argue it out, but once the president has made a decision, that’s it. My job is to execute. You don’t go through these endless bureaucratic things and delays. The National Economic Council is in some ways an information broker and I look forward to that role.”

We’ll see whether the Trump-Navarro-Kudlow dynamic works better than the previous team, although I’m skeptical. Kudlow is used to speaking his own mind and hasn’t been in government in over three decades.

While I was initially skeptical of his qualifications for the post, his resume is comparable to most who have served in that role. Unlike the chairman of the Council of Economic Advisors, who’s usually an academic economist with a top-drawer PhD, the National Economic Council director has typically come out of the business sector. Kudlow’s academic credentials aren’t particularly impressive–an undergraduate history degree from the University of Rochester followed by some uncompleted masters study in politics and economics from Princeton’s Woodrow Wilson School.

He spent his early career working on various campaign staffs, mostly for Democrats, and then moved to government as a staff economist at the Federal Reserve Bank of New York. He was associate director for economics and planning in the Office of Management and Budget (OMB) and an advisory committee member of at Freddie Mac during the Reagan administration. He was then chief economist at Bear Stearns.

He left that post circa 1994 to pursue treatment for drug and alcohol addiction. That seems to be when he moved into gigs with National Review, various conservative activist and media groups, and ultimately starring on various programs at CNBC.

At 70, he’s rather old for the job. But, otherwise, he seems the sort that would be chosen for this post by a normal Republican president. In this case, the fact that he’s spent the last two decades on television is likely more important in his getting the job than the more traditionally-qualifying resume points from decades ago.

As an economic forecaster, alas, he’s not very good. As Duke sociologist Kieran Healy notes, he’s literally a textbook example of a bad forecaster. The Canadian Press has more:

The book ”Superforecasting,” which analyzes the attributes of what makes someone good at predicting upcoming events, uses Kudlow’s wild misses in the leadup to the 2008 financial crisis as a cautionary example of what not to do.

One of the book’s core arguments is to fight back against your own biases when making a prediction, to seek contrasting views, and to factor everything in. Instead, it said, Kudlow’s unflappable ideological faith in earlier tax cuts convinced him there would be no big recession.

”As the months passed, the economy weakened and worries grew, but Kudlow did not budge. There is no recession and there will be no recession, he insisted,” says the book, by Canadian Philip Tetlock and Dan Gardner.

”Through the spring and into summer, the economy worsened but Kudlow denied it. ‘We are in a mental recession, not an actual recession,’ he wrote, a theme he kept repeating until Sept. 15, when Lehman Brothers filed for bankruptcy, Wall Street was thrown into chaos, the global financial system froze, and people the world over felt like passengers in a plunging jet, eyes wide, fingers digging into armrests.”

He wasn’t, of course, the only one to get it wrong.

FILED UNDER: Economics and Business
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. SKI says:

    Tryiong to wrap my head around the transition from this:

    Kudlow’s academic credentials aren’t particularly impressive–an undergraduate history degree from the University of Rochester followed by some uncompleted masters study in politics and economics from Princeton’s Woodrow Wilson School.

    AKA, some economic courses but no degree, to this:

    He spent his early career working on various campaign staffs, mostly for Democrats, and then moved to government as a staff economist at the Federal Reserve Bank of New York.

    How on earth do you get a “staff economist” job at the Fed without, you know, being an actual economist?




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  2. Daryl's other brother Darryl says:

    As an economic forecaster, alas, he’s not very good.

    Which makes him perfect for a White House that operates on Alternative facts.
    Kudlow believes in the Laffer curve more than Laffer himself, I think. Hopefully this all-in effort by Republicans, on trickle-down economics, will be it’s final dying gasp and the country can move on to more realistic economic policies. We will all be better off for it.




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  3. teve tory says:

    It makes sense that he was a chief Economist at Bear Stearns, considering they declared Super Duper Bankruptcy.

    Bush Boom Continues

    By Larry Kudlow
    December 7, 2007 10:24 PM

    There is no recession. Despite all the doom and gloom from the economic pessimistas, the resilient U.S economy continues moving ahead’”quarter after quarter, year after year’”defying dire forecasts and delivering positive growth. In fact, we are about to enter the seventh consecutive year of the Bush boom.

    The pessimistas are a persistent bunch. In 2006, they were certain a recession was just around the corner. They were wrong. Instead, the economy posted two consecutive quarters of near or above four-percent growth.

    Earlier today, a doom and gloom economic forecast from Macro Economic Advisors was released predicting zero percent growth in the fourth quarter. This report is off by at least two percentage points. These guys are going to wind up with egg on their faces.

    Here are the facts: Americans are working. The 4.7 percent unemployment number remains at an historical low. On a three-month rolling basis, the U.S. economy has added over 100,000 jobs. Meanwhile, the household job count shows that an average of 303,000 jobs have been added in the last three months. This is noteworthy because it suggests that the job market is turning around.

    Hours worked are growing more than 1-percent annually, while workers’ wages are running 3.8 percent, a full percentage point ahead of inflation. As for this week’s productivity report, it was nothing short of spectacular: the 6.3 percent productivity gain was the best in four years. A rise in productivity is good for growth. It’s good for profits. And it’s good for low inflation.

    Speaking of inflation, business inflation is down from 3.5 percent just over a year ago to 1.5 percent today. Meanwhile, oil prices have retreated to $88. And, to top it all off, last night we received a tremendous new number showing household net wealth has headed even higher. It stands at a record $59 trillion dollars. That’s more than seven percent above a year ago.

    Another factoid worth considering is that mortgage refinancings are soaring at lower rates. Since June, they are up nearly 70 percent, while mortgage rates on 15 and 30-year loans are down nearly a 100 basis points. That is a very positive, very welcome development that ought to cushion the plunge in home sales, and maybe even prices.

    Down in Washington, Democrats are stuck with a Keynesian message of economic pessimism, spending increases, and tax hikes to finance their big government proposals. Unfortunately, they still refuse to acknowledge that tax rates have a profound effect on behavior. This kind of tax and spend, big government, Walter Mondale approach may come back to haunt them at the polls next year.

    The GOP, on the other hand, has a positive supply-side message of limited government, lower spending, and lower tax rates. And while it’s true that the recent Republican-led Congress failed to adhere to its fiscal lodestars, the statute of limitations is quickly running out on that score.

    Incidentally, Democrats have not offered a single spending cut proposal during their time at the helm. Not one. That’s just one reason why’”not to mention what I expect to be continuing growth in 2008′” I believe the economic pendulum will soon swing in favor of the GOP.

    There’s no recession coming. The pessimistas were wrong. It’s not going to happen. At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). Goldilocks is alive and well. The Bush boom is alive and well. It’s finishing up its sixth consecutive year with more to come. Yes, it’s still the greatest story never told.

    Note that the month that was published, the Great Recession began.

    Also note that he’s still a supply sider, which at this point means he’s clinically delusional.




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  4. James Joyner says:

    @teve tory:

    It makes sense that he was a chief Economist at Bear Stearns, considering they declared Super Duper Bankruptcy.

    They went bankrupt 14 years after his departure; I don’t think we can blame him. Lots of financial firms went under when the bubble burst.

    But, yes, he was spectacularly wrong on the bubble as an economic pundit.




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  5. becca says:

    @teve tory: Kuddles was fired from one job because of his monumental cocaine use. Maybe that’s his Trump connection.




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  6. teve tory says:

    My comment didn’t blame Kudlow for their bankruptcy. Rather, if his employment typified their hiring practices, it’s a miracle they made it so long, and that James Cayne managed to escape with so much loot.




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  7. teve tory says:

    But Trump didn’t want him for his credentials, Trump wanted him because he was an arrogant loudmouth on business television. I wouldn’t be surprised if the next secretary of state was Sean Hannity, or the next Surgeon General was Michael “Savage” (not his real name).




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  8. CSK says:

    Will Kudlow be able to explain to Trump what the difference is between a trade surplus and a trade deficit is? Because Trump clearly has no idea.




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  9. dmichael says:

    The post is too kind to Kudlow who is a fraud. For a summary of Kudlow’s greatest hits, please see: http://nymag.com/daily/intelligencer/2018/03/new-trump-economist-kudlow-has-been-wrong-about-everything.html.




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  10. James Joyner says:

    @dmichael: In what sense is Kudlow “a fraud”? At best, Chait’s piece argues that Kudlow is something of a supply-side hack. That’s essentially what Tetlock and Gardner, quoted toward the end of the OP, charge: He knows one thing and that thing is wrong.

    My initial reaction to the news was “Seriously, that dude from TV?” But it turns out that he has fairly standard credentials for this particular post. That he shares an economic philosophy fairly consistent with Trump’s is, well, to be expected from a Trump appointee.




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  11. Lounsbury says:

    @SKI:
    He has a policy education in Economics, and for central bank work at senior level, he was likely more an overseer of real proper economists, for which role one can do perfectly fine with a generalist economics and policy training.

    This presuming that was his role, more managerial and policy than actual number processing economist. (of course in saying this,I merely note the background is plausible although not perhaps brilliant)




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  12. MarkedMan says:

    @James Joyner:

    In what sense is Kudlow “a fraud”?

    Are you sure you read the article? He is no more of an economist than Sean Hannity is an investigative journalist. He worked on some campaigns, worked that into a Reagan admin appointmen, used his government connections to leverage a position at Bear Stearn’s, snorted all his success up his nose, and then got on the wing nut gravy train. He has spent the last 25 years parroting whatever nonsense the Koch brothers and the frat house libertarian buffoons have come up with. He’s never had an original thought in his life, never actually studied economics, and he’s been wrong about every single major trend in the last 25 years. Not just the 2008 crash. Every single one. And has never shown the slightest interest in evaluating or learning from his myriad errors.

    I was about to lump him in with Sam Brownback from Kansas, another moron who was wrong about everything but learned nothing from the disasters he inflicted on his home state, but I have to concede that while Brownback obviously believes the supply side jumbo jumbo he spouts, we have no reason to think that Kudlow actually believes his nonsense. It gets him a TV show, and no doubt the Koch’s and other right wing hobbyists fly him to cool places in their private jets and pay for him to speak to rooms full of other boobs on the billionaire hobbyist welfare train, but that doesn’t mean he believes what he says. He could be more of a Jim and Tammy Faye than a Sam Brownback. But regardless, he is not the least bit qualified to hold an economic post. This is just one short step away from Trump picking his personal pilot as head of the FAA




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  13. gVOR08 says:

    I confess I had not been aware of the existence of a National Economic Council in addition to the Council of Economic Advisers. Having done some quick WIKI, I still don’t know the difference, except that the Chair of the CEA is a cabinet level position, until Trump said it wasn’t. The Chair of the CEA is one Kevin Hassett, who is at least a credentialed economist, but has spent many years at AEI and wrote Dow 36,000. So with Kudlow we apparently have two supply side hacks in what appear to be redundant organizations. Can anyone enlighten me on the differences in their roles? Or in the chaos of the WH is that even a relevant question?




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