THAT IS VERY CLOSE TO A 1% GAIN.
LARRY KUDLOW, NATIONAL ECONOMIC
COUNCIL DIRECTOR IS WITH US NOW.
LARRY WELCOME, BACK, ALWAYS GOOD
TO SEE YOU, SIR.
>> THANK YOU, STU.
APPRECIATE IT.
STUART: THE PRESIDENT PLAYED
HARD BALL.
DID HE BEAT UP THE CANADIANS TO
WIN THIS ONE?
>> I WOULDN'T SAY BEAT UP.
SOMETIMES HARD BALL WORKS.
HE HAS BEEN STEADFAST IN HIS
VIEW.
NAFTA HAD TO BE FIXED.
IT IS ALMOST 25 YEARS OLD.
DIFFERENT ECONOMIC AND TRADING
WORLD.
IT NEEDS TO BE UPDATED,
MODERNIZED, THE WHOLE THING.
HE STOOD STRONG.
STUART: THE PRESIDENT'S
OBJECTIVE WITH ALL OF THESE
NEGOTIATIONS IS TO INCREASE
TRADE, GET MORE CROSS-BORDER
FLOWS OF GOODS AND SERVICES.
SO, CAN YOU TELL US, IN WHAT WAY
THIS DEAL WITH CANADA INCREASES
TRADE BETWEEN THE TWO COUNTRIES?
HOW DOES IT DO IT?
>> YOU KNOW, IN A GENERAL SENSE,
WHEN YOU LOOK AT THE MARKET
OPENINGS, FOR DAIRY FARMERS,
WHEAT, MANUFACTURING,
AUTOMOBILES AND SO FORTH, WHAT
YOU GOT HERE IS A PRESERVATION
AND STRENGTHENING OF THE SUPPLY
CHAINS, WHICH IS WHAT BUSINESSES
WERE REALLY WORRIED ABOUT.
THAT WAS THE HEART OF NAFTA.
TARIFF-FREE SUPPLY CHAINS AND I
THINK NOT ONLY HAS THAT BEEN
PRESERVED, IT HAS ACTUALLY BEEN
EXPANDED.
U.S. FARM COMMUNITY AND
MANUFACTURING COMMUNITY
BENEFITED.
I THINK ALL THREE COUNTRIES
BENEFITED FROM THAT.
I WOULD ALSO SAY IT SENDS AN
IMPORTANT MESSAGE TO CHINA WHERE
WE'RE TRYING TO NEGOTIATE ON
TRADE.
NORTH AMERICA IS TOGETHER AND
THE USA IS MOVING WITH EUROPE.
WE'RE MAKING PROGRESS WITH
EUROPE AND JAPAN.
SO YES, ALL OF THESE THINGS ARE
DESIGNED TO LOWER BARRIERS.
TARIFF BARRIERS, NON-TARIFF
BARRIERS.
SUBSIDY BARRIERS.
STATE-OWNED ENTERPRISE BARRIERS.
ALL WRITTEN INTO THE NAFTA
CONTRACT.
STUART: NOW THAT YOU LINED UP
CANADA, MEXICO, SOUTH KOREA,
TALKING WITH JAPAN, TALKING WITH
THE EUROPEANS, THIS IS PUTTING
PRESSURE ON CHINA.
WOULD YOU SAY A DEAL WITH CHINA
IS IMMINENT?
>> I WOULDN'T SAY THAT I THINK
THERE ARE DISCUSSIONS GOING ON,
BUT NO, I WOULDN'T SAY IT WAS
IMMINENT.
I WOULD SAY FRANKLY AS THE
PRESIDENT HAS SAID, HE IS NOT
BEEN SATISFIED WITH THE PROGRESS
OF THOSE TALKS, REALLY HASN'T
BEEN MUCH PROGRESS RECENTLY.
HE HAS ADMIRATION FOR PRESIDENT
SHE AND THEY MAY, MAY PERHAPS
MEET AT THE G20 IN BUENOS AIRES
LATER THIS YEAR BUT, NO, WE'RE,
NOTHING IS IMMINENT ON CHINA BUT
WE ARE WILLING TO TALK IF IT IS
SUBSTANTIAL AND SIGNIFICANT AND
SERIOUS.
ALWAYS WILLING TO TALK.
STUART: IN THE TALKS WITH CHINA
SO FAR HAS PRESIDENT TRUMP OR
THE NEGOTIATING TEAM MADE ANY
CONCESSION OF ANY KIND, ANY KIND
OF MOVING BACK, CHANGING OUR
POSITION TO BE A LITTLE MORE
ACCOMMODATIVE?
HAVE WE DONE THAT AT ALL OR IS
IT HARD BALL, HARD BALL, HARD
BALL ALL THE WAY DOWN THE LINE?
>> STUART, I DON'T THINK
WE'RE -- YOU KNOW THE
CONVERSATIONS HAVE NOT BEEN
SUFFICIENTLY DETAILED FOR ME TO
MAKE A COMMENT ON THAT.
IT IS NOT ABOUT CONCESSIONS OR A
ACCOMMODATIONS.
AT THIS POINT I'M NOT SURE WHAT
IT IS.
WE MADE OUR ASKS ON YOU KNOW,
MARKET OPENINGS AND TARIFF
PRODUCTIONS AND SO FORTH ON
TECHNOLOGY TRANSFERS AND I.P.
THEFT.
WE MADE OUR ASK BUT WE HAVEN'T
HAD ANYTHING BACK.
STUART: WHEN IT COMES TO THE
TECHNOLOGY TRANSFERS AND THEFT
OF OUR INTELLECTUAL PROPERTY,
WHAT ARE YOU ASKING CHINA TO DO?
>> THERE WERE A NUMBER OF THINGS
BUT ONE OF THE KEY THINGS, STU,
IS OWNERSHIP.
UNITED STATES COMPANIES
OPERATING IN CHINA, INSTEAD OF
JOINT VENTURES WERE THE CHINESE
OWN THE MAJORITY, WE SHOULD OWN
THE MAJORITY.
WE SHOULD OWN ALL OF IT.
THAT IS ARE WITH THE TECHNOLOGY,
THE FORCED TECHNOLOGY TRANSFERS
OCCUR.
THEIR BOARD, THEY OWN THE
COMPANY.
YOU HAVE TO PUT YOUR BLUEPRINT
ON THE TABLE THAT IS
UNACCEPTABLE.
WHY SHOULD WE GIVE UP OUR
TECHNOLOGICAL JEWELS, INNOVATION
AND SO FORTH.
THAT ASK HAS NOT BEEN SATISFIED,
NOT NEARLY AS FAR AS I KNOW.
STUART: OKAY.
"NEW YORK TIMES" PAUL KRUGMAN,
HE HAS GOT A NEW COLUMN, IT IS
OUT TODAY.
THE ECONOMIC FUTURE ISN'T WHAT
IT USED TO BE.
HE SAYS WE'RE IN THE MIDST OF
THE GREAT SHORTFALL.
THAT ECONOMIC GROWTH ISN'T
NEARLY AS STRONG AS IT SHOULD BE
AFTER THE GREAT RECESSION.
YOUR REACTION TO THAT, PLEASE,
LARRY.
>> HE AND HIS FRIENDS HAD EIGHT
YEARS TO WORK ON IT.
DIDN'T DO SO WELL.
PRESIDENT TRUMP COMES IN,
MR. KRUGMAN AUTOMATICALLY
DECLARES, WHAT A PERMANENT
RECESSION AND BEAR MARKET IN
STOCKS?
I MEAN HE IS A NEVER-TRUMPER.
THAT IS PUTTING IT MILDLY.
LOOK, THE STATE OF OUR ECONOMY,
IS PRETTY DARN GOOD.
I MEAN I THINK ANY OBJECTIVE,
EMPIRICAL VIEW, WHEN YOU TAKE A
LOOK AT JOBS, UNEMPLOYMENT,
WAGES, YOU KNOW, TAKE-HOME PAY,
FATTER PAYCHECKS, BLUE-COLLAR
JOBS, BUSINESS INVESTMENT IS
BOOMING FOR THE FIRST TIME IN
MAYBE NEARLY 20 YEARS.
AFTER TAX, AFTER INFLATION
INCOME IS RISING.
AND THE GDP NUMBERS OVERALL ARE
RISING.
WE'RE RUNNING BETTER THAN 3%.
YOU KNOW, ALL OF THESE THINGS,
THEY SAID IT COULDN'T BE DONE.
THAT IS REALLY TO ME, THE
BIGGEST STORY OF THE YEAR, STU,
I HAVE TO TELL YOU THIS.
MAYBE YOU HEARD ME SAY THIS
BEFORE.
REALITY IS, WE'RE IN AN ECONOMIC
BOOM THAT MOST PEOPLE,
ESPECIALLY OUR CRITICS SAID
WOULD BE IMPOSSIBLE.
IF WE, LOWER TAXES FOR
INDIVIDUALS, CORPORATIONS AND
SMALL BUSINESS, ROLLING BACK
REGULATIONS.
ENERGY FREEDOM.
IT IS WORKING.
STUART: YOU WOULD AGREE, LARRY,
SURELY, WHEN YOU ARE EXPANDING
AT A THREE TO FOUR% GROWTH RATE
YOU SHOULDN'T HAVE A NEAR ONE
TRILLION DOLLAR DEFICIT?
>> I THINK YES, LOOK, I ACCEPT
THAT.
AND WE SPEND TOO MUCH, BUT LOOK,
GROWTH IS GOING TO BRING THAT
DEFICIT DOWN QUITE A BIT.
I MEAN THE SHARE OF THE DEFICIT
TO GDP WHICH IS REALLY THE
DEFICIT BURDEN, YOU WAIT, THAT
IS GOING TO COME DOWN -- GROWTH
RATE IS COMING UP.
REAL GROWTH WILL BE BETTER THAN
3%.
NOMINAL GROWTH FROM WHICH
REVENUES ARE DERIVED IS PROBABLY
COMING IN 5 1/2%.
THOSE ARE BIG NUMBERS.
MORE THAN ANY OTHER SINGLE
VARIABLE, THOSE NUMBERS BRING
THE DEFICIT DOWN AND BRING THE
DEFICIT BURDEN DOWN.
WOULD I STAY WITH THAT.
LOOK, TO MR. KRUGMAN AND OTHERS,
I RESPECT THEM I SUPPOSE.
THE REALITY IS, THEIR FORECASTS
HAVE BEEN WRONG.
THEY HAD THEIR CHANCE WITH BIG
GOVERNMENT REGULATING AND TAXING
AND SPENDING.
WE'VE TAKEN A DIFFERENT PATH.
WE'RE FREE ENTERPRISE.
WE REWARD SUCCESS.
THAT IS WHAT PRESIDENT TRUMP HAS
DONE.
WE ARE GROWING BIG TIME.
THEY COULD, ONCE IN A WHILE LOOK
AT THE DATA, STU AND
ACKNOWLEDGE, AT LEAST FOR THE
MOMENT THE UNITED STATES IS
DOING RATHER WELL AND BY THE WAY
GOOD TRADE DEALS HELP US EVEN
MORE.
STUART: IT IS HIGHLY UNLIKELY
THAT WILL BE THE LEAD STORY IN
"THE NEW YORK TIMES" TOMORROW
MORNING, SIR, BUT NICE TRY.