Transcript: Larry Kudlow on "Face the Nation," April 7, 2019

Kudlow says border closures off the table for now

The following is a transcript of the interview with White House economic adviser Larry Kudlow that aired Sunday, April 7, 2019, on "Face the Nation."


MARGARET BRENNAN: Welcome back to "Face the Nation." We're joined now by Larry Kudlow, the director of the president's National Economic Council. Larry good to have you here.

I want to ask you, the president tweeted Saturday night about what's happening at ports of entry along the southern border saying that traffic is going to be snarled and that there could be commercial delays. There's almost two billion dollars in commerce that crosses this border every day. How much of an impact is this going to have?

LARRY KUDLOW: Well I don't know. I mean I don't think we're going to have an- an official shut down. I think the president's been quite clear on that. He's seen some things on the Mexican side, guarding their border in the south, that he likes. So we seem to have some cooperation. Things may be improving slightly. It's an impossible situation. All these people coming across- it was 100,000 people now, illegals in the last month or so. It's got to be dealt with, the drug trafficking, the humanitarian problems, the economic problems among other things. So, we looked at this with great care, my colleague Kevin Hassett and I. And there are ways to protect the economics and commerce if- if we went into that mode which we're not--

MARGARET BRENNAN: But you're talking about a complete shutdown--

KUDLOW: Yeah.

MARGARET BRENNAN: --which is not happening.

KUDLOW: Which I think is not happening.

MARGARET BRENNAN: But these congestions at the ports.

KUDLOW: We wanted to protect freight and truck lanes--

MARGARET BRENNAN: Right.

KUDLOW: --if we could and that is- but again, based on the president's view we're not going to go there, a whole hog.

MARGARET BRENNAN: But for the congestion that the president said is happening, you know, that drove up prices of avocados, certain consumer goods, do you see an economic impact to any of this?

KUDLOW: No, nothing significant at the moment. Nothing significant. The worst case scenarios are off the table for the moment.

MARGARET BRENNAN: When will--

KUDLOW: But I will say- I will add, people should take his- I mean, this is a key issue for him. Border security, the wall and so forth, immigration reform. And when he talks about getting tough if he has to--

MARGARET BRENNAN: Those 25 percent tariffs on Mexican produced autos.

KUDLOW: That- you know I- we're not there but people should take it quite seriously. Mexico should take it quite seriously. This is a major issue. This is yes drug trafficking and humanitarian. This is an economic issue as you hinted at and this is a national security issue. So they should take the president quite seriously.

MARGARET BRENNAN: But on that threat of potentially putting tariffs on autos doesn't this hurt the new NAFTA, the USMCA, that hasn't even passed yet but you're leveraging threats against Mexico.

KUDLOW: Well at the moment I mean again the president has said national security border security is a major priority. The United States cannot continue the way it's been--

MARGARET BRENNAN: Even if it comes down to compromising passage of the USMCA.

KUDLOW: Well--

MARGARET BRENNAN:  Canada and Mexico still have to approve it too.

KUDLOW: I agree. I think in the wholeness- in the fullness of time this will all be worked out and it will not interfere with the UMCA- USMCA. That's our hope in any event. But you do have to set priorities. Sometimes you've got to make tough, short term trade offs. I- I'm not expecting an interference, okay? And we are somewhat optimistic about a USMCA vote. It's a very important trade deal, pro-growth in the United States, autos, domestic content. New economy stuff is very important. I- IP rights and patents and so forth, financial services. Bob Lighthizer, our ambassador for trade, has done a fabulous job. It's great for blue collar workers and farmers. We broke through on dairy. I mean we'd really love to see a vote to- because we think we can win that--

MARGARET BRENNAN: When?

KUDLOW: But I'm just saying USMCA is a very important priority.

MARGARET BRENNAN: Can you get the USMCA past a Democratic controlled House and into law before 2020?

KUDLOW: Well look I'm--

MARGARET BRENNAN: It seems more difficult.

KUDLOW: I agree. I'm going to play that from the optimistic side. Speaker Pelosi has been very good- very fair. In fact, Bob Lighthizer addressed the Democratic conference. The speaker let him do that. That was a terrific gesture. He's been meeting with individual groups. We believe who will get a vote. And if we get a vote we will win. I don't want to put timing on it. It's completely up to her but she's been quite cooperative so far so I'm going to play this from the optimistic side.

MARGARET BRENNAN: On China, president says we're four weeks out from a possible epic trade deal with them. What has actually been agreed upon?

KUDLOW: Well you know, all these negotiations we just get closer and closer. It's really interesting. We made good headway last week when Vice Premier Liu He was here. This coming week, there'll be a lot of teleconferencing among the top tier people to continue the discussions. We're closer than we ever have been before. A lot of very difficult topics for the first time are on the table and being resolved. I think that's terribly important. The talks have been productive. I think the president here too expressed- I was in the room, whatever Thursday- guarded optimism, may- maybe more than guarded optimism so we're- we're gaining on it.

MARGARET BRENNAN: Chinese say there's an IP agreement, intellectual property agreement. Is there?

KUDLOW: I can't go into details on this but we've made great progress on the IP theft. We've made good progress on the forced transfer of technology, on the ownership. There are issues outstanding, not least of which are going to be enforcement related issues. But in each and every place, (A) they've acknowledged their problems. That was a very big hurdle. And (B) what wasn't on the table is on the table, and (C) we're getting closer and closer.

MARGARET BRENNAN: Larry, the- the Fed as you know is supposed to be apolitical. Herman Cain, former presidential candidate, the president says he wants to appoint him to the Federal Reserve Board. How is he qualified for that job?

KUDLOW: Well you know, besides being a successful businessman which is very important. You know there was a time with the Fed- I started my career long time ago at the New York Fed. In those days, you had farmers on the board, businessmen and women on the board, small  bankers on- it wasn't all economists--

MARGARET BRENNAN: Economists.

KUDLOW: Okay, so that's one point. Second point, specifically, Herman Cain for many years was on the board of the Kansas City Federal Reserve Bank.

MARGARET BRENNAN: In more of a civic role. And- but you saw these sexual harassment allegations--  

KUDLOW: He was chairman--

MARGARET BRENNAN: --that derailed his presidential bid.

KUDLOW: Before we get to that, he was chairman of the Kansas City Fed and he is therefore intimately acquainted with Fed operations. And I want to make this generic point. People say this is political. I don't think it's political. There may be a policy difference. We believe, the president believes, you can have low unemployment and a strong economy as we are having- the numbers came out great on Friday, without inflation.

MARGARET BRENNAN: Is he going to pass a background check?

KUDLOW: Without inflation. Well look, he's being vetted by the White House. He'll be going through his hearings in the Senate Banking Committee. I- I'm not here to comment or litigate any of that. There are allegations out there but there are lots of allegations in Washington that don't pan out. My--

MARGARET BRENNAN: Well they derailed his presidential bid.

KUDLOW: My principle point is he is qualified. He was the chairman of the Kansas City Fed. He knows a lot about the subject.

MARGARET BRENNAN: Alright, Larry Kudlow always good to have you here.

KUDLOW: Thank you, Margaret.

MARGARET BRENNAN: We'll be right back with our panel.