Larry Kudlow

Larry Kudlow Says Deficits Are 'Coming Down Rapidly.' He's Wrong.

Larry Kudlow says President Trump's agenda has been reducing federal budget deficits, but CBO estimates say otherwise.

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Polaris/Newscom

Larry Kudlow, the director of the White House National Economic Council, told Fox Business on Friday that the federal deficit is "coming down rapidly" thanks to the major tax reform bill passed six months ago.

If only. In fact, projections show that the deficit will continue to rise unless Congress acts to make serious spending cuts or raise significantly more revenue.

Kudlow made his false claim during an interview on Morning with Maria, which was centered on the higher-than-anticipated growth achieved by the Trump administration on the six-month anniversary of the tax bill's passage. Because of the "enormous amounts of the new tax revenues," Kudlow said, "the deficit is coming down, and it's coming down rapidly."

But according to the CBO's numbers, the federal deficit for the first eight months of fiscal year (FY) 2018 is $530 billion more than the deficit accrued in the first eight months of FY 2017. The CBO's forecast from April shows that the deficits will rise from $665 billion to $1.5 trillion by 2028.

Increased economic growth is a good thing, of course, and the famous "Laffer Curve" suggests that lower tax rates could produce higher growth and thus generate more revenue for the government.

But the increased growth generated by tax reform will not cancel out the federal government's current deficit.

"Not only are deficits not falling rapidly—they aren't falling at all," says the Committee for a Responsible Federal Budget in a fact-check of Kudlow's comments.

Source: Committee for a Responsible Federal Budget

This shouldn't be news to Kudlow. During the debate over the tax bill last year, there was not a single projection that showed the bill would reduce the deficit over the long term. That includes the Treasury Department's own analysis of the tax cuts—an analysis that Treasury Secretary Steve Mnuchin promised would show that tax reform could "pay for itself." Even after accounting for economic growth, the Treasury's assessment largely agreed with other prominent projections saying the tax cuts would add about $1 trillion to the deficit over a decade after economic growth is included.

And continued growth is not a sure bet. Federal Reserve interest rate hikes will likely put a damper on the booming growth that Kudlow's argument rests on. Kudlow said Friday that he hoped the Fed would move "very slowly" on their interest rate hikes, a tried and tested recipe for recession.

A trade war could also exert a negative effect on the growth numbers that the current administration has been touting. Tariffs and their responses have cut America's supply of cheap goods and limited the markets for American goods in foreign countries, which bodes poorly for American businesses, who will probably have to end up laying off workers and cutting production.

If genuine deficit reductions are desired by President Trump and his administration, significant spending cuts are the only conceivable way to achieve this goal. Instead, the Republican-controlled Congress spent this year eliminating spending caps to pass a budget that hikes spending on the military and domestic programs. The Trump administration falsely claimed that the budget would also reduce the deficit.

Reductions to the tax rate are always welcome, but it's dishonest to pretend, as Kudlow did on Friday, that they are a silver bullet to our nation's serious fiscal quandary.

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  1. projections show that the deficit will continue to rise

    Just the facts, Ma’am.

  2. The CBO’s forecast from April shows that the deficits will rise from $665 billion to $1.5 trillion by 2028.

    Do these models take into account the sheer strength our current president’s will?

    1. the only way to reduce the deficit is to spend more & lower taxes, obviously. in economics this phenomenon is referred to as bipartisan synergy.

  3. “CBO estimates say”

    don’t care

    1. At least you’re true to your namesake

  4. The guy works for Trump (because no other administration would have him, and therefore was willing to flip from free-trader to protectionist, and because he had been on television). His target audience consists of uneducated, broadly intolerant, economically inadequate, no-count yahoos. His character and personality deficiencies cost him at least one career and family.

    Why not spout nonsense? His boss will love him for it. The administration’s supporters don’t know or much care whether he is telling the truth or scamming them. His reputation is long gone. His character never was much to begin with.

    1. Which probably makes it sting even more when you think about how much more successful than you he is.

      1. I do not consider Larry Kudlow successful. Do you? His addictions have cost him families and more than one job, hurt others who trusted him professionally and personally. He has careened from one addiction — cocaine, religion, alcohol — to another. His economic predictions have been spectacularly bad. He hasn’t stuck with anything — his political views, his spiritual views, his families, his work, his ostensible principles — except opportunism and a clown’s role. He quite conveniently claims he can’t remember much of his pathetic life. Now he’s working in the administration of last resort, populated mainly by rejects and kooks who could never have been hired by any other administration, Republican or Democratic, and will be shunned for life by their betters because of the affiliation.

        Which part of his “success” are we to consider most impressive, in your judgment?

        1. Oh yeah it clearly bothers you

        2. His addictions have cost him families and more than one job, hurt others who trusted him professionally and personally

          Sounds like he fits right in with the urbanite bugman crowd.

          1. “3rd rate internet troll doesn’t think rich successful guy is successful”

            Lol

          2. It sounds like Lower Bumfuck, USA (except for the “professional” part, of course).

            1. It sounds like Lower Bumfuck, USA (except for the “professional” part, of course).

              Or Uptown Anthill, USA (save for the massive anti-depressant addictions, of course)

        3. Well Arty, thats white an indictment. Too bad you are a Goddamn tying commie cunt with zero credibility.

          Like all communists, you down deserve to live, as you commit treason with every breath you take.

          So breathe no more traitor.

          1. Does ranting inconsequentially at your betters — like muttering bitterly about all of this damned progress, reason, science, education, and tolerance — provide a bit of respite from your deplorable life?

            Carry on, clinger. So far as your betters permit, of course.

    2. “because no other administration would have him”

      He was in the Reagan administration, Reverend. You know the last “literally Hitler” before the other guy who was “literally Hitler” before current “literally Hitler”?

      1. He worked for the Reagan administration before he flushed his reputation, families, careers, etc. down a drain of alcohol, cocaine, Opus Dei, and repeated failure.

        1. Pretty sure that he was on TV after the Reagan administration.

          1. With Jerry Springer, Judge Judy, Morton Downey, the Kardashians, Dr. Phil, Maury Povich, and that flabby old guy with the ridiculous hairpiece who had a show about firing people from his inherited company.

            1. Which still makes him more successful than you.

              And you hate it.

            2. No, he wasn’t ever on with any of those people.

              I really look forward to the return of McCarthyism Arty. Filth like you rioting and raging and threatening everyone will soon have the general public demanding it. You and your marxist friends are playing right into our hands.

              I look forward when you are made to account for your seditious and treasonous activities. When you ask for mercy i hope to be there to ensure you receive none. And if you and your fellow travelers are stupid enough to push things into a physical confrontation, all the better. When you find out who your betters really are.

              1. Open wider, Last. Guys like me have been shoving progress down the throats of guys like you for decades, and if you get lippy we might decide to start pushing it down sideways.

                Oh, wait . . . you say you’re tired of all this damned progress? You say you aren’t going to take it anymore? No more reason, education, tolerance, modernity? You are going to change things, and it’s going to be different this time?

                Like I said . . . open wider, loser.

                1. Guys like me have been shoving progress down the throats of guys like you

                  So the Rev. is short for Revisionist?

    3. All they have to do is say “deficits are going down” once and the wankers will buy it. It will become truth, and because they don’t actually know how numbers work and can’t read too good, there will be no convincing them otherwise.

      1. Oh you’re jealous of how much more successful than you he is too. How sad.

        1. No, I’m preemptively annoyed by how often we’re going to hear “deficits are going down” come out of Trump’s weird little mouth hole alongside all the other lies he’s making America great again with.

          1. Nah, you’re jelly. You hack away at a keyboard and no one cares. You’re literally the definition of impotent.

            God are you ever jealous.

            1. The lamer and staler your bullshit psychobabble, the more you admit to having no real argument.

              1. And you’re still here haciking away, ignored or mocked.

          2. i, for one, am glad that someone is bringing up the important issue that weve all been avoiding. which is trumps weird farting asshole mouth. remember that scene from pink flamingos? was thay just a young Donald T working off a tranny hooker bill without having to explain to Fred Daddy why he needed his allowance early? THIS IS BIGGER THAN WATERGATE

            1. also id just like to point out that Donald T has NEVER DENIED this took place despite REPEATED INTERNET COMMENTS exposing the pink flamingos conspiracy. im not saying it happened … im just asking questions ….

              1. Careful…
                NYT and WaPo might actually publish this

      2. “All they have to do is say “deficits are going down” once and the wankers will buy it. It will become truth, and because they don’t actually know how numbers work and can’t read too good, there will be no convincing them otherwise.”

        No, you subnormal poof, that’s what you and your progtarded pals do. You lap up what your marxist masters throw out to you like pablum.

  5. Hope and change, baby!

  6. “The federal deficit is “coming down rapidly” thanks to the major tax reform bill passed six months ago.”
    vs
    “But according to the CBO’s numbers, the federal deficit for the first eight months …”

    Apples vs oranges.
    If you want to call BS on Kudlow, report on what the deficit did last month, a month that would more fully bask in the wonders of the tax reform bill.

    1. Easy enough to find

      May 2018 (most recent) deficit: $146M
      May 2017: $88M
      May 2016: $52M

      Seems clear.

      1. And yet there was a surplus last month. This isn’t a fair comparison unless we disregard the notion that debt offerings are planned well in advance of the actual deficit. These graphs aren’t as helpful as you think.

        1. Since when is cherrypicking individual months either way a good way to evaluate the deficit? The fact is that even under the projections of the OMB (an executive office) the deficit has/will increase every year from 2017-2022 and will be over $1 trillion in FY 2020. Kudlow’s claim is straight up bullshit, there’s zero reason to defend it.

          1. Take it down a few notches. I was just stating that Chandler Bing didn’t really demonstrate anything there

            1. Also good to see so much faith being placed in the CBO again. Remember when Obamacare subsidies was going to cut the deficit?

              The CBO operates under the same mentality as rating agencies: tax increases are good, but tax cuts are bad. They don’t calculate for any anticipated additional economic growth, so there estimates are not flawless

              1. I specifically referred to the OMB because I knew you were going to say this about the CBO. The OMB is an executive office headed by Mick Mulvaney.

          2. projections are just that – projections. I’m not defending Kudlow’s claim, just asking that it be skewered with actual, current results rather than with a lazy mishmashing of stats.

            1. The 2018 data isn’t purely based on projections as most of the fiscal year is in the books, and the deficit is clearly increasing compared to last year. There’s really no way to slice the data to back up Kudlow’s claim (and I think I read that he backtracked and claimed the deficit will come down in the future, which is itself a projection).

          3. I didn’t cherrypick at all. I did exactly what was requested, find the last month, and compare it to the year before. I threw in one more year, for fun.

            You can do that for every month so far this year. April had higher receipts than April 2017, because the taxes due were related to the 2017 tax year. But, the increase in April surplus is swamped by the increase in deficit in every other month.

          4. Oh shit!
            If he hits $1 trillion he’ll almost match Obama’s yearly average!

            (But seriously… I hope Trump avoids that particular accomplishment)

      2. Thanks. Now where did I put my pitchfork?

      3. Happy, cherrypicking data, just like a progtard.

    2. Isn’t odd that the criticism here is being squarely placed on the tax cuts? How does taking less of your money increase deficits?

      1. Kudlow credited the tax bill with bringing down the deficit, maybe that’s why the article talked about the impact of the tax bill. But no, I’m sure it was cause cosmotarians wanted to virture signal to leftists.

        1. The CBO operates under the same mentality as rating agencies: tax increases are good, but tax cuts are bad. They don’t calculate for any anticipated additional economic growth, so their estimates are not flawless. Not disputing the deficit.

          But, yeah, this is a lot of virtue signaling. It’s cute that we pretend that it’s not, though.

          1. They’d have to have a shred of evidence that tax cuts outside of any Laffer relevancy cause enough economic growth to offset themselves. They don’t, never have, and won’t in the future.

            At some point you should really consider why you trust the ideas of people who lie so frequently.

            1. Totally not virtue signalling. Just agreeing with an economically ignorant progressive talking point

              1. That subtracting income isn’t actually equivalent to adding income? That talking point?

                I guess you’re acknowledging that reality and basic logic have a liberal bias?

                1. So, look your more libertarian than me, because I’m not ignorant about economics. Nor will I virtue signal against good policy. If you don’t get the positive benefits of corporate tax cuts than you clearly are dumb

                  1. Increasing borrowing by the US treasury to finance stock buybacks? I fail to see the positive benefits.

                    1. Of course you do, you incorrectly characterize it for political purposes, so there was never any chance you’d understand.

                    2. That’s exactly what happened.

                      Congress increased borrowing to finance the tax cut as they were increasing spending.
                      Much of that money was given to corporations.
                      Wage growth is lower than before the election.
                      That money went to stock buybacks.

                      Net benefit: None to median wage earner.
                      Great benefit to trust fund kids living off of investment earnings, like all those coal miners’ kids in Kentucky.

                    3. “Much of that money was given to corporations.”

                      See? That’s exactly what I meant when I said “you incorrectly characterize it for political purposes, ”

                      You busted out that ” much ” because you realized you were doing exactly what I said you were, and needed some deniability.

                    4. Individual cuts are temporary. Per theory, they shouldn’t change long term growth. Pretty much irrelevant for the forecasting.

                      You don’t have any theory, except tax cuts cause growth. No matter how many times that fails to materialize.

                    5. Why are you changing the subject?

                    6. I’ve been consistent. There is little in the tax bill that will boost real growth. By using the treasury to borrow money to benefit corporations, it leads to a temporary boost in share prices.

                      Which is not growth. It’s taking money from the treasury and routing it to shareholders.

                    7. You clearly don’t work in finance or anything that requires understanding economics

                2. Tony, you know nothing of economics. So shut up and learn to obey.

          2. Once again, no one, not even Trump’s administration, the OMB (an executive office), or a serious third-party analysis is projecting the deficit to decrease as a result of the tax bill. It’s baffling that you think acknowledging this constitutes virtue signaling (ironically, to me it seems that denying reality to fit some ideological or anti-establishment narrative seems to be a much more obvious example of virtue signaling).

          3. The CBO includes dynamic effects. The effect on the budget of borrowing money to finance share prices is not very high, however.

      2. I get your point, and we all agree that spending is too high… but your 2nd question is pretty moronic. It decreases revenue, thus making the deficit higher.

        1. Because it’s the government’s money. It belongs to them

          1. I never said that. But the liability is ours, the people, the ones whose representatives agree to spend more money than they take in every single year.

            You don’t get to have it both ways. You don’t get to imply that it’s not the government’s money (correctly) but that the liability is all theirs and not “ours.”

            1. Ehhh you might want to rethink that.

              1. Sorry but that’s how republican government works (the system not the party.) We’re accountable for putting irresponsible representatives into office. We’re responsible for not holding them accountable to the contract that says these are the things they can do on our behalf.

                1. Who’s we kemosabe? I didn’t vote for these people.

                  I see what you’re trying to do, and I reject it. Save the group responsibility claim for those who are actually responsible.

                  Sorry. That’s how being an adult works.

                  1. Who is responsible for our government?

                    1. The people who voted it in.

                      Elections aren’t magic.

                    2. I don’t know what point you’re trying to make other than you don’t want to be held responsible for bad government. None of us want to be responsible, but we are.

                    3. The point is that spending is the problem. Not revenues.

                    4. No, we aren’t. Losing an election doesn’t magically turn my objections into agreement.

                      Feel free to accept responsibility if you like, I lost an election, that’s not a rubber stamp to do whatever you like and then claim I am responsible. That’s a clown opinion.

      3. How does taking less of your money increase deficits?

        Get someone with an education to try to explain it to you.

        If no one in your town has an education, just keep up the good work.

        1. Get someone with an education to try to explain it to you.

          You must be referring to the doubling of the cost of Medicare/Medicaid services in the last ten years.

          1. I’m sure you’re aware of the baby boom, right?
            Also, I’m sure you’re aware of the medicaid expansion, which was fully funded when it was passed?

            1. Medicaid expansion was not fully funded. You clearly don’t know how Medicaid is funded.

              1. Partially from the payroll taxes on >$200k, partially from cutting the excess funding given to Medicare Advantage. A little bit based on increasing the threshhold for deducting medical expenses from 7.5% to 10%.

                But yeah….I clearly don’t know.

                1. 40 cents on the dollar borrowed. Don’t forget that part.

            2. I’m sure you’re aware of the baby boom, right?

              The baby boom has nothing to do with Medicaid expansion, where most of the price increases have taken place (PS–you can find those increases within the same Treasury statements you cited above).

            3. Also, I’m sure you’re aware of the medicaid expansion, which was fully funded when it was passed?

              Also, I’m sure you’re aware of the 8% average annual increase in Medicare/Medicaid costs for the last 35-plus years, which rendered that “fully funded” designation as a brief anomaly?

        2. “Get someone with an education to try to explain it to you.”

          I love that you admitted this.

      4. How does taking less of your money increase deficits?

        By continuing to spend (borrow) the money they used to take from you.

        1. Which means that spending is the problem. Not revenues

          1. You’re correct and after I posted my response, I figured that was the point you were trying to make.

          2. We certainly aren’t going to increase revenues to the point that we aren’t running a deficit. But to cut taxes and then soon thereafter to increase spending and somehow claim that deficits aren’t worse than before takes a special kind of liar.

  7. ” Kudlow made his false claim ”

    The dishonesty at Reason is simply sickening.

    Kudlow knows we still have yearly deficits. Clearly he’s talking about the the yearly deficit relative to projections.

  8. I agree with one of the statements passed in a comment: “He quite conveniently claims he can’t remember much of his pathetic life”.

    1. A lifetime of booze, blow, and superstitious fantasy has consequences.

      1. A lifetime of booze, blow, and superstitious fantasy has consequences.

        The hicklib’s epitaph.

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