On Sunday morning, the Trump administration dispatched Steve Mnuchin and Larry Kudlow to discuss the economy and the tariffs amid skepticism about the sustainability of the tax cut-inspired economic sugar high and widespread criticism of the President’s protectionist trade policies.
Trump went of of his way to celebrate the second quarter GDP data released on Friday and by “out of his way”, I mean he gathered reporters and aides in front of the White House for an actual press conference during which the President described an annualized 4.1% growth rate for the U.S. economy as “amazing”.
Superlatives aside, there was nothing “amazing” about the numbers. Is 4.1% good? Sure. Is it “amazing”? Well, no. Is it in any way, shape or form a historical anomaly? Absolutely, positively not.
To put that in perspective, the second quarter of 2018 would rank as the fifth best quarter under Obama.
In the press conference, Trump cited the tariffs as one reason for the relatively robust numbers. The irony of doing that during a week when multiple U.S. corporations including General Motors, Harley-Davidson and Whirlpool explicitly cited the tariffs on the way to explaining either earnings misses, guidance cuts or in some cases both, seemed completely lost on the President.
But it wasn’t lost on Larry Kudlow, who told reporters at the White House on Friday that corporate management teams are using the tariffs as an excuse to explain away execution problems. “I’m seeing some companies reporting weaker-than-expected earnings and blaming tariffs, and it’s just not true”, Kudlow said.
If Kudlow really believes that management teams are engaged in a sorta-conspiracy to mislead shareholders, then he should take those concerns to the SEC. Of course he won’t do that because, well, because he’s lying. You cannot tell, for instance, Whirlpool that rising input costs aren’t responsible for crimped margins when in fact they are. That doesn’t make any sense, and Larry knows it.
But Kudlow has entered Trump’s event horizon, which means he’s now afflicted with the same cognitive incapacity as Trump himself (to quote a good friend of mine). That’s leading Larry to make bizarre claims about the deficit and about the extent to which Trump’s tariffs actually prove that the President is a free trader. Listen to this clip from a Sunday morning interview with CNN:
President Trumpâ€™s chief economic adviser Larry Kudlow on the criticism surrounding tariffs: â€œDonâ€™t blame President Trump. He inherited a completely broken world trading systemâ€ #CNNSOTU https://t.co/d7GvqgKqFK
— CNN Politics (@CNNPolitics) July 29, 2018
Again, it’s hard to know exactly what to make of this anymore because partisanship aside, and attempts to malign this presidency aside, what these officials are saying is at odds with reality.
Pressed on his claims about the deficit (last month, Kudlow told Maria Bartiromo that “the deficit is coming down and it’s coming down rapidly”, a contention that simply isn’t true in any sense of the word), Kudlow conceded some ground. Sort of. Here’s what he told Jake Tapper on Sunday:
Sometimes in the short-run, lower tax rates do yield lower revenues. I reckon it will take us maybe a year, maybe 18 months to start turning that around. It’s no unusual.
No, Larry, it’s most assuredly “not unusual” that lower tax rates mean lower revenues in the short run. So “not unusual” is it, that it’s almost tautological. It’s like saying: “Sometimes, in the short-run, when I charge less for these apples I’m selling, it leads to people paying less for these same apples.”
To be fair to Kudlow, he’s just parroting the same old supply-side nonsense that history has shown doesn’t work, and I guess that speaks to just how absurd this has become. Appeals to policies that never work are now mitigating factors. Normally, appealing to trickle-down economics is itself the punchline, but in the Trump administration, the best thing you can say about folks like Larry Kudlow when they go on national television and make ridiculous claims is that at least they’re theoretically leaning on a mistaken view of economics, as opposed to just outright lying. The full interview with Kudlow is embedded below.
Meanwhile, Steve Mnuchin showed up on Fox in a desperate effort to convince everyone that annual growth of 3% for the U.S. is sustainable for “four or five years”.
“We can only project a couple years in the future, but I think we’re well on this path for several years”, Mnuchin told “Fox News Sunday.” To be clear, there is no way Steve Mnuchin actually believes that. And if he does, well then he’s lost to us all.
But hey, at least Mnuchin understands the difference between annual growth and annualized quarterly prints, something that is completely lost on Donald Trump Jr., and was, until recently anyway, also lost on the President.