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"That's part of the deficit calculation, as you well know," Kudlow added. "I believe a combination of faster economic growth over the next bunch of years, Jake, as well as (being) much tougher on spending will still get that deficit down." On July 13, the White House Office of Mangement and Budget updated the budget estimates it released in February. "The 2019 deficit has been revised to $1.1 trillion," the report said, "almost entirely related to increases in spending" from the Bipartisan Budget Act of 2018 and the subsequent omnibus spending bill. That $1.1 trillion number is $101 billion higher than the deficit estimate released in February.
The report also projected that under the president’s policies to cut spending and grow the economy, the deficit will fall from 4.4 percent of GDP in 2018 to 1.4 percent of GDP in 2028. "The Administration will continue to work with Congress to enact fiscal discipline through spending restraint," the report said. "Is President Trump ever going to try to reduce the deficit?" host Jake Tapper asked Kudlow on Sunday. "Yes, yes, of course," Kudlow responded. He said growth in Gross Domestic Product, which increased a strong 4.1 percent in the second quarter, is "going to be a major, important factor" in reducing the deficit.
Tapper noted that the Republican tax cuts "are raising the deficits" at the moment. "Sometimes, in the short run, you know, in order to invest in the economy, lower tax rates do yield lower revenues," Kudlow agreed. "I reckon it will take us a year, maybe 18 months to start turning that around. It's not unusual. I look at it as a good investment in America's future prosperity and healthy economy. "Some of the numbers I have seen -- heaven forbid, even the CBO, they're suggesting we have already paid for two-thirds of the corporate tax cut. I think that, by the end of...fiscal year '19, the corporate tax cut will be paid for. By 2020, it will be more than paid for. "And, of course, we inherited a tough deficit situation. Any time you have slow growth -- I mean, the prior administration had a very slow growth period, OK? That really damages the budget deficit."
Although the economy was emerging from the 2008 recession when Obama took office, "They never got the snap-back we should have gotten," Kudlow said. "You got a new sheriff in town with -- with more incentives to invest." On the topic of trade and tariffs, Kudlow said Trump is a "free-trader" who "want to have no tariffs...no non-tariff bariers and no subsidies." "That's his view in general. That is also my view," Kudlow said. "This is a tough, hard thing to do. You know, people say, well, President Trump's tariffs are damaging this, that and the other thing. I say, don't blame President Trump. He inherited a completely broken world trading system, including a World Trade organization, most particularly China, but not only China. "OK? He's trying to fix it. Other U.S. presidents in both political parties, Dems and Republicans, even-handed have never pushed the way he's pushing. "And he believes -- and I agree -- if we can work these things out and improve the trading system, it will be to the benefit of the United States economy, our exports, our farmers, our industry, and, by the way, will probably help the rest of the world too. "So you just got to him a chance to get this policy in place."
WH Economic Adviser: 'We Are Going to Be Tougher and Tougher on Spending'
