For investors who feared that President Trump’s tariffs on US metals imports portended a broader trade war, the appointment of economist Lawrence Kudlow to head the President’s Economic Council is welcome in the extreme.
For the past 30 years, Kudlow has been the most prominent advocate of tax and regulatory incentives for market-based growth, and a convinced free trader. The former chief economist at President Ronald Reagan’s Office of Management and Budget and later at Bear Stearns, Kudlow went on to host a popular prime-time television show on CNBC, where he remains a prominent contributor.
A life-long supply-sider, Kudlow believes passionately in the primacy of individual initiative, entrepreneurial creative and free markets as the foundation of economic well-being. I’ve known Larry Kudlow for 30 years, worked with him at Bear Stearns, and appeared regularly on his CNBC show. Trump couldn’t have made a better choice.
The choice of Larry Kudlow to replace departing Economic Council head Gary Cohn, the former president of Goldman Sachs, also shines a benign light on President Trump’s operating style. Kudlow is a friendly but firm opponent of the Trump tariffs. Along with economists Arthur Laffer, one of the founders of supply-side economics, and Stephen Moore, Kudlow published a critique of the tariffs March 3, entitled, “Tariffs are taxes.” Kudlow and his co-authors wrote:
“Even if tariffs save every one of the 140,000 or so steel jobs in America, they put at risk five million jobs in industries that use steel. These producers now have to compete in hyper-competitive international markets using steel that is 20 percent above the world price and aluminum that is 7 to 10 percent higher than the price paid by our foreign rivals.”
Trump’s decision to put Kudlow in the key White House economics slot despite this dissent shows that Trump wants a diversity of advice rather than an ideological echo chamber. The president is a pragmatist with more in common with Franklin Roosevelt than Ronald Reagan, as I wrote after the November 2016 election.
Larry Kudlow will fit in splendidly. He has vast market and political experience and will bring an authoritative and familiar voice to the policy-making process. Kudlow also has credibility among the Republican mainstream and will be an effective behind-the-scenes advocate for supply-side policies. As an old Wall Street hand, Kudlow will give the president a clear reading of how markets react to his initiatives.
Of course, I’m partial to Kudlow. As a matter of full disclosure, Larry helped bring me on board at Bear Stearns in 1993. We had worked together in Russia in 1992, traveling to Moscow to advise the nascent Russian Republic after the fall of Communism. When Larry moderated his CNBC show I appeared regularly, sometimes debating Peter Navarro – now Kudlow’s White House colleague – about China. Kudlow has extensive global experience and a practitioner’s knowledge of what makes foreign economies work. He is a national security hawk, but foreign leaders will find him a well-informed interlocutor.
Trump is on a roll. Replacing the gentlemanly but diffuse Rex Tillerson with Mike Pompeo at the State Department brings the “Trump Doctrine” a big step closer to fruition, as I wrote yesterday in this space. Kudlow’s appointment advances the president’s growth agenda. This is shaping up to be a highly successful administration.