Kudlow: Trump might use other funding to pay for federal unemployment

Read the Full Transcript

• Judy Woodruff:

  And now, for the Trump administration's view of these negotiations, we are joined by Larry Kudlow. He's the director of the National Economic Council.

  Larry Kudlow, welcome back to the "NewsHour."

  We just heard our Lisa Desjardins say this is like a staring contest. There doesn't seem to be any tangible progress. What do you see? Do you see any — the two sides any closer together?

• Larry Kudlow:

  Well, thanks for having me back on, Judy.

  Look, they are negotiating right now, as we talk. They're up on the Hill, Chief Mark Meadows, Secretary of Treasury Steve Mnuchin, and the Democratic leadership and the Republican leadership of both houses and both parties. So they are talking.

  I think it's fair to say that the tone has probably improved a bit. They are going through a number of lists of items that divide them, see where compromises are possible.

  But, no, I think the reporting was accurate. I don't think any deals have been made. Chief Meadows has said, if nothing is achieved by Friday, we might conceivably walk away from it. That is, the Trump people might walk away from it.

  And the president has said repeatedly — and he said it again today — that he can do a lot of important things on unemployment extensions, on preventing evictions, on a payroll tax cut. He can do many things by executive order or presidential fiat. And he doesn't necessarily need these negotiations.

  So, we will see how it turns out. At the moment, I don't think I have much new to report.

• Judy Woodruff:

  Well, let me ask you about what the president is saying there.

  Just clarify something, first of all. We heard Lisa say some Democrats say they think the president is just bluffing about acting unilaterally. You're saying he's serious?

• Larry Kudlow:

  I think he's quite serious.

  And I myself have been engaged in a lot of the drafting of these orders, and particularly the payroll tax cut. But we are, again, looking at the eviction stuff, student loans, and various unemployment, employment reforms, and possibly added benefits for reemployment.

• Judy Woodruff:

  Well…

• Larry Kudlow:

  So, this is a very serious matter.

  Right now, the lawyers up in the White House Counsel's office are poring over a payroll tax cut draft.

• Judy Woodruff:

  Well, let me ask you about that, a number of things.

  But, on the payroll tax cut, as you know, a number of Republicans oppose this. All the Democrats oppose it. Does the president have the authority to cut the payroll tax, which, after all, goes to Social Security and Medicare?

• Larry Kudlow:

  Yes, of course.

  But our lawyers think he does have the authority. A lot of people have the authority. Certainly, as you know, we have deferred payment of the income tax.

  In the legislation last March, there was a business side payroll tax holiday. A lot of people think he has the authority to defer the payroll tax on the workers' side.

  I don't think Republicans oppose it. I think the issue was rather lukewarm. I think, right now, Republicans on the Hill are looking to put more economic growth incentives into a potential package.

  I think many of them would welcome the payroll tax. It creates a terrific incentive for hiring, for new employment, and for people to return back to work.

  You know, if you tax something less, you will get more of it, and I think that thought is uppermost in Republican minds.

• Judy Woodruff:

  Well, I have actually heard several Republican senators say they're against it, including, I believe, the majority leader, Mitch McConnell.

  But what I want to ask you, also, about, Larry Kudlow, is unemployment benefits. The president mentioned that he thought he might be able to do something by executive order. How would he do that? Where would the money come from? I know there's some unspent money from what was passed in the spring. Is that what the White House is looking at?

• Larry Kudlow:

  There may be some repurposing of unspent funds, Judy.

  I can't say. I'm not a lawyer. They're combing through a number of things. I don't want to give away, I don't want to negotiate here. I'm just saying, it's something we are worried about, first of all.

  I mean, look, the economy is doing much, much better. We all still believe in the V-shaped recovery. We had very good news today on unemployment claims dropping for — again. We have seen a housing boom, a manufacturing boom, inventories at rock bottom.

  It looks to us like a self-sustaining recovery. But there is still hardship, there is still heartbreak, as we deal with the virus. And we want to make sure that people have a good, constructive unemployment plan, with, I might add, added benefits for returning to work.

  So we are looking at all that carefully.

• Judy Woodruff:

  Well, just to clarify, this is the 20th straight week when over a million Americans have filed for unemployment benefits.

  Over 30 — what is it, 33 million Americans have lost their jobs. So, for you to say the economy is doing better, I think, you know, that needs to be in perspective.

  But I do want to ask you, are you saying that there's money that was appropriated that you're saying the president, that the White House believes that he could then create unemployment benefits, what, $600 a week, which is what was flowing up until last week?

• Larry Kudlow:

  Well, I don't want to put numbers on it, and I don't want to give away any of the legal drafts. I'm just saying it is something he is looking at very carefully, along with the eviction and along with the payroll tax and along with some student loan breaks as well.

  These are all part of what our counsel is looking at, Treasury, NEC, OMB and so forth.

• Judy Woodruff:

  And…

• Larry Kudlow:

  And, yes, we have been very keen on that.

  I just want to say one thing, Judy, though. I appreciate the context of the jobs. As I said, there is still a good deal of hardship going on out there. However, jobs have come back by nearly eight million in the last couple of months. Unemployment claims have fallen substantially from the highs of this winter.

  And a lot of people have gone back to work, and some of that was because of a bipartisan rescue package last March, which really helped the job story and really helped deal with the virus.

  Unfortunately, we can't seem to find any more bipartisanship. And that is a problem, which is leading the president to act on his own.

• Judy Woodruff:

  But I'm sure you don't deny that, until there's a vaccine, until there's a — some sort of a solution that is not in sight right now, many small businesses will remain closed. Businesses are just not operating anymore and they can't employ people.

  But, very quickly, Larry Kudlow, I want to ask…

• Larry Kudlow:

  Well, I think, Judy, on that last point, if I may — you know, you mentioned that.

  Look, we have spent an inordinate amount of money on vaccine research. Right now, there are six or seven companies that are in stage three, phase three of a vaccine, which are…

• Judy Woodruff:

  Correct, but it's…

• Larry Kudlow:

  Experts are suggesting may come before the end of the year.

  So, I'm really proud of that and hopeful and prayerful that we can get that done.

• Judy Woodruff:

  Right. And I know everyone shares that hope and that prayer.

  But, just quickly, on the divide on schools, as you know, the Republican proposal is to make two-thirds of that money contingent on schools being physically open, in-class experience.

  A lot of teachers, a lot of parents just are not prepared to send their children back to school. Why have, if you will, a punitive approach in terms of giving money to schools?

• Larry Kudlow:

  Well, look, I mean, we have offered over $100 billion.

  And so many groups — I mean, there's divisions here, like everything else, but so many groups of doctors and experts and psychologists and psychiatrists have said, the very best thing for our kids is to get them back in school.

  Now, there may be some mix that is acceptable, Judy, in terms of in the school, as well as by computer. But, no, we think the overwhelming weight of the evidence is what's good for the kids, K-12 in particular, get them back to school.

  And, by the way, it has economic impact, because a lot of parents can't afford additional care at home. So, from an educational standpoint, from a psychological standpoint, so many professional groups have said, get those kids back to school.

• Judy Woodruff:

  Right.

  And in just a few words, how long is President Trump prepared to wait before he acts unilaterally on this?

• Larry Kudlow:

  Well, I will let him make that decision.

  All I want to say to you this evening — and I appreciate coming on the program — is, he's working very hard at it, and we're looking at all of our executive options.

• Judy Woodruff:

  Larry Kudlow with the Council of Economic Advisers, thank you very much.

• Larry Kudlow:

  Thank you.