Trump, Biden economic advisers disagree on nation's outlook
The director of the White House National Economic Council said Wednesday the Trump administration is not opposed to any further assistance to state and local governments.
“Let’s make it smart. Let’s make it targeted,” Larry Kudlow told more than 330 members of the National Conference of State Legislatures during a virtual presentation.
Kudlow’s comment came in response to a question about the prediction by Moody’s Analytics Chief Economist Mark Zandi that the nation could sink into a double-dip recession without further federal aid to state and local governments.
President Trump is sending mixed signals on that issue. He urged Congress Wednesday to go big on an emergency stimulus aid package while tweeting Thursday, “Democrats only want BAILOUT MONEY for Blue States that are doing badly. They don’t care about the people, never did!”
Kudlow described Zandi as “a smart guy,” and “a longtime friend” who he sometimes disagrees with, but did not say whether he agrees with Zandi’s prediction.
“Our view has always said, we will spend or we will cooperate on bipartisan agreements on assistance, spending, regulating, taxing, and so forth if it's done smart,” Kudlow said.
The president’s top economic advisor played down the current deadlock between congressional Republicans and Democrats on a topline dollar amount for the aid, saying, “I don't think the topline numbers are near as important as what the specific actions are. And again, I don't want to get in the middle of the current negotiations.”
Kudlow’s comments came as he and a top economic adviser to former Vice President Joe Biden offered starkly different views on how the nation’s economy can recover from the COVID-19 pandemic to NCSL members.
Kudlow said he’s “kind of the optimist right now” and expecting “a very strong V-shaped recovery.”
“The numbers coming out of this deep pandemic contraction look pretty good,” Kudlow said. “Our job is not done. But as you know, unemployment has fallen to 8.4%.”
This recession has been different from those in the past. Kudlow described it as “a national catastrophe” that is “not a permanent episode.”
Kudlow cited a new U.S. Census Bureau estimate that household income reached a record high in 2019. “America was prospering before we were interrupted by the virus,” he said. “And we're hoping we can at some point return to that. It won't happen overnight. But I think we're basically moving in the right direction.”
Ben Harris, senior economic adviser for the Biden for President campaign, said he wished Kudlow’s prediction of a V-shaped recovery was true.
“Some industries are still getting slammed,” Harris said. “There’s a lot of pain in the economy right now."
Harris cited predictions that 20% of small businesses will close and that “this economic pain will get worse.”
The Biden spokesman said the issue for states is not how well they have managed their resources in dealing with the pandemic as much as it has been “that they haven’t been given enough resources in the first place."
“Make no mistake,” Harris said. “We are in a deep recession.”
Harris acknowledged that Biden’s Build Back Better plan is costly when asked about a study released Monday by the nonpartisan Penn Wharton Budget Model produced by the University of Pennsylvania’s Wharton School.
That analysis found Biden’s proposals would produce $5.37 trillion in new spending over 10 years but it would be partly offset by $3.375 trillion in additional tax revenue.
The Penn Wharton study predicted federal debt would decrease by 6.1% over the next 30 years while by 2050 the nation’s GDP would increase an additional 0.8%.
“Almost 80% of the increase in taxes under the Biden tax plan would fall on the top 1% of the income distribution,” the study said.
Harris pointed out that Penn Wharton’s study couldn’t compare Biden’s plan to Trump’s plan because Trump doesn’t have one.
“Now is not the time -- we’re in the midst of this terrible crisis -- to thinking about cutting back on spending,” Harris said. “Hopefully, we can do that in a year or two after the economy's back on track, when fewer people are out of work. When people have the money to go ahead and start feeding their families. That's the time to start worrying about these long term budget problems.”