Larry Kudlow Defying Critics, Cleaning House

Larry Kudlow, who took over as director of the National Economic Council (NEC) after Gary Cohn's departure last month, is so far demonstrating extraordinary leadership in being able to reconcile the disparate factions within the Trump administration, all the while promoting growth-centered policies that would only strengthen an economy already in its best shape in years.

Naturally, Mr. Kudlow's transition to his current role was made easier by inheriting an economy rejuvenated by one of the largest across-the-board tax cuts and reforms in modern American history.  Unemployment has reached its lowest point in nearly two decades; wages are up categorically; a moribund manufacturing sector is beginning to show signs of wholesale recovery; and labor participation, though still a far cry from where it should be, is nonetheless moving in a positive direction.

These measures, coupled with the continued slashing of regulations that in large part artificially retarded the Obama economy from making a full bounce back, speak volumes to the power of free-market and pro-growth policies.  To his credit, Mr. Kudlow in his short duration as NEC director has already put forth a slew of additional proposals – including a second round of tax cuts that could make permanent some of the measures of the tax reform bill, the administration's crowning legislative achievement to date, such as business investment incentives and further reductions in personal income tax.  An infrastructure bill, a re-evaluation of NAFTA and the TPP, and another stab at health care are additional policies on the docket, though each is accompanied by numerous political hurdles. 

Inasmuch as Mr. Kudlow hopes to continue the success of his predecessor, Gary Cohn, and engender a grand economic vision in accord with the president's overriding agenda and in service to the interests of the American public, he also must wage a political battle among the so-called nationalist and globalist factions within the administration.

Since the NEC was conceived by an executive order by President Bill Clinton in 1993, it has been principally wedded to a globalist culture, with an emphasis on multilateralism and strengthening the liberal global order.  While Mr. Kudlow has been at least loosely allied to a global orientation and has been a general advocate for free trade in his long career as a commentator and journalist, he has increasingly shown recourse to a more Trumpian stroke during the 2016 campaign and especially in his present directorship.  In large part responding to the populist forces that ushered Donald Trump to the White House, Mr. Kudlow has indicated solidarity with the president on a bilateral, "country-by-country" approach to free trade agreements, as opposed to the creed of multilateralism of previous presidents.  To this point, Mr. Kudlow has made overtures to Peter Navarro, director of the White House Trade Council and an economic nationalist who helped spearhead the administration's recent tariffs on thousands of Chinese products to remedy the United States' massive $50-billion trade deficit.  So far, these maneuvers have proven effective: in March alone, the Commerce Department reported that the trade gap dropped 15.2 percent to $49 billion, ending six straight monthly increases in the trade deficit.  For China, the goods trade deficit dropped 11.6 percent to $25.9 billion, unleashing the typical humdrum hysteria from the press that it could precipitate a trade war.

For his part, it has been reported that Mr. Kudlow has had a hand in mitigating some of the administration's coarser rhetoric toward China.  For example, he is said to have recommended that the president praise Xi Jinping amid elevated hostility toward China as a result of the tariffs, which eventually came in the form of a conciliatory and uncommonly amiable presidential tweet several weeks ago.

Mr. Kudlow is also said to have tried to make the president reconsider his position on the Trans Pacific Partnership (TPP), the sweeping multilateral trade deal promulgated by the Obama and Bush administrations.  While the president has yet to do an about-face on the deal, of which he pulled the United States out during his first days in office, he has periodically entertained the idea of rejoining, assuming a prioritization of the interests of the United States.  Whether that condition is feasible remains to be seen.  But Mr. Kudlow might nonetheless try to weave some of the deal's provisions piecemeal into new, bilateral agreements with TPP member-countries.  A course such as this, to which Mr. Kudlow appears at least amenable, may help geopolitically offset an additional round of tariffs on China by the administration.  As such, the administration may continue with its muscular and to date effective response to our country's long ignored trade deficit, while clamping down on its commitment to free trade amid increasing skepticism across the Western world to global institutions.

Fortunately, Larry Kudlow is no novice to Washington politics.  Indeed, he worked in the Reagan administration from 1981-1985 as associate director for economics and planning in the Office of Management and Budget.  Previous to that, Mr. Kudlow worked on a number of campaigns and has achieved success in the political, media, and financial worlds.

In addition, Mr. Kudlow served as economics editor for National Review beginning in 2001 and appeared on Firing Line with William F. Buckley, Jr. just three years prior, where he discussed the potential for finding common ground between morality and economics, contextualized to a post-Cold War neoliberal order.  In the discussion, Mr. Kudlow hit on a Tocquevillian theme in maintaining that the self-interested utility of hardworking individual actors is conducive to organically generating a morality of the common good.  It remains an interesting and most prescient conversation even two decades later, and it demonstrates, if there was any doubt, that Mr. Kudlow's economic schema sits on a strident, intellectual, and conservative foundation.

President Trump pledged on the campaign trail that he would surround himself with professionals at the top of their craft.  Mr. Kudlow fits that bill perfectly.  Given his reservoir of experience in various media over several decades, Mr. Kudlow commands a rarefied assemblage of talents.  For this reason, he is perhaps uniquely qualified at this juncture of the Trump presidency to build on the framework for economic policy set into motion by Gary Cohn and affixing it to a broader policy agenda already replete with a multitude of substantive achievements.

Paul Ingrassia is a graduate of Fordham University and a former White House intern.

Image: Gage Skidmore via Flickr.