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On Wednesday afternoon, Press Secretary Sarah Sanders made the much-anticipated announcement confirming that the former Wall Street economist, Lawrence Kudlow will replace Gary Cohn as director of the National Economic Council.
Kudlow’s professional life includes being an associate director for economics and planning in the White House during the first term of President Raegan and a Wall Street analyst in the 1990s. He has spent the past eighteen years building a career as a television and radio commentator. Currently, Kudlow is a CNBC senior contributor and was previously the host of CNBC’s prime-time The Kudlow Report.
As one of the earliest to endorse Republican Presidential candidate Trump, Kudlow defended many of the initiatives, such as building a wall along the border with Mexico and the war on ISIS. During the later months of the 2016 election, he called for unity among conservatives to rally behind Trump. He is also a fan of President Trump’s $1.5 trillion tax cuts, which boosts business investment, wages, and take-home family pay.
President Trump suggested last Thursday that he would not replace Cohn with someone who is similarly opposed to tariffs, which was the motive for Cohn’s resignation. So, when Larry Kudlow’s name became the front-runner, many eyebrows were raised, and for a good reason. Known as an advocate for free trade, Mr. Kudlow is someone who holds very similar views on tariffs as those of Gary Cohn. Kudlow recently wrote an op-ed in the National Review describing President Trump’s tariff plan as a crisis of logic, and added:
“Tariffs are tax hikes. Since so many of the things American consumers buy today are made of steel or aluminum, a 25 percent tariff on these commodities may get passed on to consumers at the cash register. This is a regressive tax on low-income families.
Meanwhile, up to 5 million jobs will be put in harm’s way. Moreover, if U.S. steel-and-aluminum-using industries sell less to foreigners, the trade deficit goes up, not down.
Trump should also examine the historical record on tariffs. If he does, he’ll see they have almost never worked as intended and have almost always delivered an unhappy ending.”
One should note that between the time of Gary Cohn’s resignation and the job offer to Larry Kudlow, there were significant changes to the proposed tariffs. Mr. Kudlow said he was encouraged by President Trump’s decision to grant temporary waivers to Canada, Mexico, and Australia. While Kudlow supports free trade, he very firmly is in favor of tariffs on China because they continue to violate our intellectual property rights and other trade issues.
The president acknowledged that he and Kudlow “don’t agree on everything,” but welcomes having a difference of opinion among his close advisers; he also stated that Kudlow “now sees the tariffs as valuable in negotiating.”
The National Association of Manufacturers released a statement, which might help settle some of the concerns over tariffs and the impact to free trade:
“President Trump has chosen a tremendous advocate for free enterprise and competitiveness in the United States to lead his economic team. Larry Kudlow is the type of bold leader manufacturing workers can count on to advance policies that will lift up everyone and leave no one behind. Larry has been a strong and consistent ally of manufacturers in America, and he will put his incomparable experience and talent to work on behalf of our entire country.
“According to a recent NAM survey, 95 percent of manufacturers in America are optimistic about the economy. That 20-year record-high result stems from President Trump’s laser focus on manufacturing and his team’s critical work, including the tireless efforts of Gary Cohn, to advance historic tax and regulatory reform. We look forward to continuing these and other key advances with Larry in the days and years ahead.”
With Kudlow as the top economic advisor, Trump continues to have a person, like Gary Cohn, who can make the rounds on cable television to defend the administration.
There may be some bumps in the road, as Mr. Kudlow has past addiction issues with alcohol and cocaine, but he has been sober for over twenty years, and he does not shy away from talking about the problems of his earlier life. However, it could come back to haunt him when seeking security clearance for the position within the White House.
At the end of the day, no matter who President Trump hires or fires, there will be those who support him and those who will be awaiting the termination or resignation notices of the new members of his staff or cabinet. As we have said many times over the past fifteen months, “only time will tell.”