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Speaker 1: I'm Newt Gingrich. Please watch Journey to America, my new

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Speaker 1: documentary on PBS about nine remarkable individuals who strengthen our

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Speaker 1: country through their pursue the American Dream. Tune on Tuesday,

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Speaker 1: January fourteenth at ten pm Eastern, nine pm Central on

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Speaker 1: PBS and the PBS app. On this episode of Newts World.

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Speaker 1: The number one goal for the Trump administration and Congressional

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Speaker 1: Republicans must be to pass what I would call the

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Speaker 1: tax cuts, Jobs and Affordability app. President elect Donald J.

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Speaker 1: Trump has described it as quote one big, beautiful bill.

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Speaker 1: A powerful economic bill must be the Republican's top priority

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Speaker 1: because it is the key to the twenty twenty six election.

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Speaker 1: We know the economy, inflation, and affordability are by far

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Speaker 1: the American people's biggest concerns. Here to talk about the legislation,

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Speaker 1: I'm really pleased to welcome my guests. A great long

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Speaker 1: term friend both to me and Callista, and somebody who

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Speaker 1: I have worked with now for virtually a generation. He

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Speaker 1: served as Assistant to the President for Economic Policy and

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Speaker 1: Director of the National Economic Council under President Trump from

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Speaker 1: nineteen eighty one to nineteen eighty five. He was an

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Speaker 1: Associate Director for Economics and Planning at the Office of

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Speaker 1: Management Budget during the Reagan administration. He is now the

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Speaker 1: host of the wildly popular Cudlow on Fox Business Network

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Speaker 1: weekdays at four pm. He's a Fox News contributor probably

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Speaker 1: knows as much about economics as anybody currently alive. Larry,

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Speaker 1: welcome and thank you for joining me on Newts World.

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Speaker 2: Dagness, great, great, great pleasure.

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Speaker 1: So let me just start with what Trump called one big,

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Speaker 1: beautiful bill. Do you believe we can see this, this

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Speaker 1: kind of comprehensive legislative package in twenty twenty five?

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Speaker 3: I do.

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Speaker 2: I think you get an early start on it. I

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Speaker 2: think that's what Jason Smith from the Ways the Means

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Speaker 2: Committee wants, and so does Speaker Mike Johnson. I think

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Speaker 2: you could have it done by Memorial Day. I mean, basically,

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Speaker 2: what are you doing. You're extending the tax cuts from

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Speaker 2: twenty seventeen, and there'll be a few add ons lower

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Speaker 2: fifteen percent corporate tax and tax free cash tips for

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Speaker 2: service workers and over time, and probably some kind of

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Speaker 2: tax break for seniors. But frankly, those are simple, relatively

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Speaker 2: minor adjustments. They're all pro growth. But the whole point

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Speaker 2: here is to get the blue collar boom working this year,

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Speaker 2: not next year or the year after. Get it working

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Speaker 2: this year. And I'll say another economic point. We'll get

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Speaker 2: to the legislative strategy, and.

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Speaker 3: The payper is later.

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Speaker 2: But another economic point is, unfortunately President Trump's going to

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Speaker 2: inherit Biden inflation, which is still running at a year

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Speaker 2: on year rate of two and a half to three percent,

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Speaker 2: and of course it's been up over twenty percent during

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Speaker 2: Biden's term. It's still there now. I make that point

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Speaker 2: because if you lower tax rates and you produce more energy,

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Speaker 2: and you minimize regulations, particularly on businesses and smaller business,

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Speaker 2: that supply side package will create more goods, more goods

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Speaker 2: and services chasing the same amount of money. In other words,

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Speaker 2: it will lower inflation from the supply side. This is

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Speaker 2: one of the things that people give Paul Boker. When

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Speaker 2: you and I were in Washington in the early eighties,

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Speaker 2: Paul Boker got a lot of credit for slaying inflation,

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Speaker 2: and he deserves But Ronald Reagan deserves credit for his

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Speaker 2: tax cuts, even though they were delayed a couple of years.

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Speaker 3: His tax cuts produced a boom.

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Speaker 2: In the economy, and that supply side growth helped to

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Speaker 2: vanquish inflation. So bringing it up to here, in mister

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Speaker 2: Trump's second term, I want to see a blue collar boom,

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Speaker 2: and I wanted to start in twenty twenty five.

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Speaker 1: There's a significant energy component that alone is going to

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Speaker 1: start bringing down costs. If you add to that the

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Speaker 1: incentives to start businesses, the incentives to expand businesses, there's

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Speaker 1: no reason that this economy can't take off, and that

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Speaker 1: you couldn't have four or five percent growth in the

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Speaker 1: Reagan recovery. He was astonishing, as you know, because you

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Speaker 1: were right there, how fast the growth rate changed, and

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Speaker 1: how many new jobs, how much greater opportunity who's created

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Speaker 1: literally almost overnight.

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Speaker 2: When the tax rates finally kicked in, the lower tax rates,

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Speaker 2: which wasn't until January of nineteen eighty three, I mean

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Speaker 2: some of them. There were small impacts in eighty two

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Speaker 2: but not much, and eighty one but not much. People

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Speaker 2: waited for the tax cuts to kick in. They waited,

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Speaker 2: and then yes, as you say, the economy started booming.

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Speaker 2: I mean, I don't know that you'll get twelve percent growth,

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Speaker 2: but as you say, you know you could have a

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Speaker 2: period of maybe six or eight quarters where economic growth

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Speaker 2: jumps to four or five percent before it might settle

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Speaker 2: down to say, three to three and a half percent.

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Speaker 3: There's no reason why you can.

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Speaker 1: The Reagan recovery lasted a very long time.

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Speaker 3: We just kept growing eight years worth. They're absolutely right.

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Speaker 1: There's been two fascinating studies of the gap that has

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Speaker 1: grown up between Canada and the US in terms of

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Speaker 1: gross domestic product and the gap that's going up between

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Speaker 1: the US and Germany. And we're simply despite Biden, in

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Speaker 1: the last four years, we have generally been moving towards

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Speaker 1: being better and better economically. And I think the breakthroughs

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Speaker 1: in computing and the breakthroughs and going into space and

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Speaker 1: expensively and materials technologies, you're just going to see a

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Speaker 1: continuing deflationary effective technology, which if you encourage people to

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Speaker 1: invest in it, is going to lead to really dramatic

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Speaker 1: increase in what's available and a dramatic decline on what

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Speaker 1: it's going to cost.

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Speaker 2: Yeah, you know, it would be very healthy deflation. It

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Speaker 2: would come down because of economic growth and product improvements, innovation,

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Speaker 2: jumpyteri and gales of creative destruction.

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Speaker 3: It's a productivity led deflation.

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Speaker 2: We saw that by the way in the nineties, after

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Speaker 2: you and your Congress persuaded Clinton on a capital gains

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Speaker 2: tax and welfare reform, you had what I call good

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Speaker 2: deflation and you had a massive productivity boom. It was

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Speaker 2: really the information revolution, which spanned a long time. Well,

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Speaker 2: we're probably in the throes of an ai revolution right now,

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Speaker 2: and the applications for that probably just in the early stages.

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Speaker 2: But the key is we have to incentivize people a

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Speaker 2: to work, but b to invest in it. And that

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Speaker 2: comes back to this tax cut package, which is so important.

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Speaker 1: And I think one of the most powerful offsets they

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Speaker 1: could include would be to go back and reinstate the

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Speaker 1: nineteen ninety six welfare reform bill which turned employment offices,

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Speaker 1: which had been dependency officers, turned them in basically to

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Speaker 1: employment officers, and getting people out to work to get

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Speaker 1: a job led to the largest reduction of children and

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Speaker 1: poverty and history. Because their parents, who are going to work,

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Speaker 1: their income was going up. It saved enormous amounts of money,

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Speaker 1: and of course it's a double win. You don't have

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Speaker 1: to pay for food stamps, you don't have to pay

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Speaker 1: for Medicaid, and by the way, that person's now got

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Speaker 1: a job and they're paying taxes, So it was a

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Speaker 1: huge part of what was going on. And I think

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Speaker 1: if they do this wisely, they can produce a package

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Speaker 1: that will be among the most revolutionary in American history.

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Speaker 1: And I think Trump certainly has the daring personality to

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Speaker 1: go out and try something on this scale, and frankly

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Speaker 1: with people like you who've already been through it, and

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Speaker 1: your point about when the deal went into effect, I

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Speaker 1: remember vividly. I was a junior congressman and because they

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Speaker 1: didn't have the tax cuts in eighty two, as you

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Speaker 1: pointed out, people waited to invest because they wanted the

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Speaker 1: tax break. Starting in January eighty three, the economy did

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Speaker 1: not have enormous growth. We lost twenty six seats. Well,

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Speaker 1: Trump had the same experience because the Republican leaders in

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Speaker 1: the Congress, we're determined to do Obamacare, repeal Obamacare before

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Speaker 1: they would get to the tax bill. They failed to

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Speaker 1: repeal Obamacare. It cost so much time. They didn't actually

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Speaker 1: get the tax bill through till December of seventeen, and

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Speaker 1: that meant that eighteen did not have a boom, and

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Speaker 1: we lost forty seats and we got Nancy Pelosi. And

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Speaker 1: so I'm really concerned as I look ahead to making

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Speaker 1: sure we keep the House in twenty six, because the

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Speaker 1: last thing we want is to have the Democrats in

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Speaker 1: charge of the House recreating the Pelosi anti Trump model.

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Speaker 1: And I think that the difference in Trump's ability to

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Speaker 1: get things done will be enormous, depending on whether or

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Speaker 1: not we're in a position to actually make sure that

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Speaker 1: we are able to continue to grow, continue to make

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Speaker 1: people happy, keep our word, and in the process, we

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Speaker 1: have to grow the majority. We can't just defend it.

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Speaker 1: It's too narrow, it's too small. We have to grow

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Speaker 1: the majority. And fascinatingly, there are thirteen seats currently held

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Speaker 1: by Democrats that Trump carried, and there's another Batche's eats

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Speaker 1: that are available that he got within five percent of.

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Speaker 1: So my hope is that when the bill's written, Iy've

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Speaker 1: sort of taken the artist's luxury here as a writer

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Speaker 1: suggesting that it ought to be I would say Tax Cuts,

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Speaker 1: Jobs and Affordability Act, because I think that captures everything

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Speaker 1: people were worried about economically.

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Speaker 2: But it is one big, beautiful bill, one big beautiful

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Speaker 2: you gotta admit it.

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Speaker 3: It has a good marketing ring to it.

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Speaker 1: That's right, you know, and if you do that, and

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Speaker 1: then you put into the border stuff you need and

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Speaker 1: other things, so it does be on a pretty big bill.

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Speaker 1: You will remember that President Reagan gave a Oval Office address,

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Speaker 1: shifted the dynamic in the House. People thought Tip O'Neil,

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Speaker 1: the Democratic Speaker, was going to beat us by about

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Speaker 1: twenty five votes. Reagan gave that speech, the American people

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Speaker 1: got awake, they got on the telephone, and we carried

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Speaker 1: forty six Democrats, So it was a swing of seventy

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Speaker 1: something votes because Reagan got through to them that this

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Speaker 1: was about their pocketbook, it was about their family budget,

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Speaker 1: and they were excited. And when Tip said after he

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Speaker 1: was defeated that it was all this one speech and

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Speaker 1: that created a title wave, Well, that's not the Trump style.

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Speaker 1: And furthermore, we don't have three networks. Back then, if

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Speaker 1: Reagan gave an Oval Office address, it was on all

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Speaker 1: three networks simultaneously. He could blank at the country. But

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Speaker 1: what Trump does brilliantly is rallies and town hall meetings.

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Speaker 1: And my hope is that he will do about two

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Speaker 1: and a half months visit all of the districts. I

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Speaker 1: just described the thirteen that actually voted for him, in

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Speaker 1: the next twenty or twenty five that he got close to.

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Speaker 1: And if he's out there saying to people, do you

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Speaker 1: want more money in your pocket? Do you want life

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Speaker 1: to be more affordable? Do you want better jobs? Get

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Speaker 1: your congressman to vote with me. I think that he

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Speaker 1: will blow this thing straight through.

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Speaker 3: Well.

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Speaker 2: I think the basic principle here is if you delay

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Speaker 2: the tax cuts, you're going to delay the boom, and

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Speaker 2: you're going to delay the kind of Republican victory in

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Speaker 2: the mid term, very very important. Delay is the enemy

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Speaker 2: if you move now, and it's not that hard. You know,

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Speaker 2: the House is put together Energy Bill HR one, Border

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Speaker 2: Bill HR two. Jason Smith's got a tax bill up

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Speaker 2: his sleeve. They've been working on it for a year. Again,

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Speaker 2: it's just extending the tax cuts with some add ons.

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Speaker 2: They can get it done by a Memorial Day, by

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Speaker 2: late May some such and that will work. These things

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Speaker 2: take a few months to kick in and withholding raids

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Speaker 2: have to change and you have to adjust business and

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Speaker 2: corporate tax schedules. But you know, by the summer you'll

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Speaker 2: see the results of this. And I think you have

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Speaker 2: to have a coalition here. You're the legislative genius. But

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Speaker 2: just on this thought, you want to pull together your

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Speaker 2: tax cutting supply siders, your border closing people, who is very,

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Speaker 2: very terribly important, but also you're going to have your

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Speaker 2: limited government spending cutters. The PAGO has got to offsets

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Speaker 2: the spending's got to be part of this coalition. And

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Speaker 2: I think you can do that. I think Trump can

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Speaker 2: orchestrate that. I think the leadership in the House and

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Speaker 2: Senate can do that. There's a coalition there that can

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Speaker 2: work together. But I don't see any other obstacles to this,

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Speaker 2: and I think it would be an enormous mistake.

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Speaker 3: To delay the tax cuts, as you had pointed out,

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Speaker 3: But it would be an enormous mistake.

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Speaker 1: I'm nuw Gingdrich. Please watch Journey to America, my new

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Speaker 1: documentary on PBS about nine remarkable individuals who strengthen our

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Speaker 1: country through their pursuit of the American dream. From Albert

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Speaker 1: Einstein to Hetty Lamar Dozell make Kalilazad, we explore how

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Speaker 1: individual stories help shape our national identity. Watch Journey to America,

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Speaker 1: premier on Tuesday, January fourteenth, to ten pm Eastern, nine

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Speaker 1: pm Central on PBS and the PBS app can you

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Speaker 1: put your finger on what I think is going to

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Speaker 1: be the most complicated part of this bill, and that's

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Speaker 1: the offsets, which, legitimately, I can say this with some

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Speaker 1: pride because, as you know, while I was Speaker, we

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Speaker 1: passed the only four balanced budgets in the last century.

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Speaker 1: I'm pretty happy to be a fiscal hawk, but I

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Speaker 1: think there are ways we can get offsets in here

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Speaker 1: that every fiscal conservative will be very happy with. Why

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Speaker 1: are some Republicans so determined to have two bills? What

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Speaker 1: do they say to you about this whole idea of

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Speaker 1: doing the tax bill later and doing a simple bill

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Speaker 1: on the border initially. What do you think is driving then?

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Speaker 2: The biggest argument I've heard to two bills is, I

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Speaker 2: guess i'd call it the complexity argument, that it's too

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Speaker 2: complex and would take too long to patch together the

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Speaker 2: tax cut piece.

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Speaker 3: And it's again an argument that I.

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Speaker 2: Didn't understand because eighty percent of what should be doing

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Speaker 2: is merely extending the twenty seventeen legislation. You're not reinventing

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Speaker 2: the wheel.

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Speaker 3: Now.

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Speaker 2: You'll also have some add ons on tips and overtime,

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Speaker 2: and that's good in the corporate tax cut, but the

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Speaker 2: bulk of it is just an extension, and in fact,

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Speaker 2: Mike Crapo is going to run the Senate Finance Committee.

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Speaker 2: I mean he argues that you have to use a

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Speaker 2: current policy baseline, which is what Obama used back in

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Speaker 2: twenty twelve, and you don't have to rescore the existing

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Speaker 2: tax cuts. Popular legislation need not be rescored. I mean,

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Speaker 2: they have the current services spending baseline that's never scored,

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Speaker 2: and so why should you have to score tax cuts

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Speaker 2: as a revenue loser when, in fact, I might add,

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Speaker 2: those tax cuts have probably brought in almost fifty percent

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Speaker 2: higher revenues than were estimated a bunch of years ago.

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Speaker 2: So the argument is this idea of complexity, and I

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Speaker 2: think it's a straw horse. I think it's a red herring.

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Speaker 1: They've had people in the Senate side working on this

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Speaker 1: for a year in the Senate Finance Committee. The ability

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Speaker 1: that those guys in the same room and have a

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Speaker 1: genuine bicameral House Senate Republican package, I would think could

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Speaker 1: be a matter of a month or two if they

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Speaker 1: worked at it. These are smart people. Crapo used to

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Speaker 1: serve in the House. He understands the rhythm and I

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Speaker 1: must say that Jason Smith has become a really articulate,

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Speaker 1: effective shair of ways and means. So I think I'm

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Speaker 1: with you on that part. And I think you raise

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Speaker 1: an important point, which the fact I'm going to go

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Speaker 1: back and work on, which is normally CBO would start

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Speaker 1: with the current services budget, which would mean they would

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Speaker 1: assume the extension that it shouldn't cost anything because it's

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Speaker 1: built in the current law.

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Speaker 3: Right. See, that's the thing.

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Speaker 2: This current law becomes current policy, and that's what the

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Speaker 2: baseline should reflect. This is Mike Crapo's argument new and

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Speaker 2: it's a brilliant argument made, I might add by a

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Speaker 2: Harvard lawyer. Okay, don't forget that he's a very smart fella.

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Speaker 2: He's out there someplace in the Dakota's or Idaho or

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Speaker 2: I don't know where those places are, but he is

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Speaker 2: one smart guy. He ran the Banking Committee and now

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Speaker 2: he's going to be running the Finance Committee. And it's

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Speaker 2: a brilliant argument. We should treat tax policy the way

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Speaker 2: we treat spending policy. Current law's current law policies don't change.

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Speaker 2: You don't have to rescore everything. It's not necessary. But

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Speaker 2: what they do is they never rescore the spending. All

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Speaker 2: they want to do is rescore the tax revenues. But

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Speaker 2: even that's phony because CBO and Joint Tax always wrong,

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Speaker 2: as you know, NWT. I mean, go back and look

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Speaker 2: at their estimates before the bill in.

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Speaker 4: Twenty sixteen, at the bill in twenty seventeen. They look

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Speaker 4: at their updated estimates in twenty eighteen, twenty two, twenty four,

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Speaker 4: they're like, they've missed by fifty percent on revenue.

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Speaker 3: They miss carpet revenues. I don't know.

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Speaker 2: I think it's close to one hundred percent. They missed

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Speaker 2: the repatriation revenue. We made over a trillion dollars of

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Speaker 2: repatriation money coming back to the US because we stopped

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Speaker 2: double taxing it and we put a reasonable.

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Speaker 3: Rate on it. They're all wrong, They're always wrong. Jd.

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Speaker 3: Vance had it right in the debate.

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Speaker 2: He said the experts get it wrong, and that's exactly right.

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Speaker 1: I think this will be one of the Trump revolutions,

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Speaker 1: will be turning around those two institute or even potentially

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Speaker 1: replacing them. We have to farm out congressional estimates to

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Speaker 1: three private sector firms and have all three there in

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Speaker 1: public because, as you correctly point out, these two institutions

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Speaker 1: are consistently wrong.

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Speaker 3: They're just wrong. They're just wrong.

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Speaker 2: I mean, it's like the governing philosophy in Washington amongst

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Speaker 2: the bureaucracy civil servants. If government spends your money, it's okay.

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Speaker 2: But if you spend your money, it's not okay. So

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Speaker 2: government takes a little more of your money, it's just fine.

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Speaker 2: We call that economic growth stimulus. But if you get

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Speaker 2: to keep more of what you earn, it causes huge

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Speaker 2: deficits which drive down in the economy and drive up

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Speaker 2: interst rates.

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Speaker 3: It's just utter nonsense. But I think people see through that. Miss.

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Speaker 2: Trump is a transformational figure, and he is going way

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Speaker 2: back to twenty fifteen when a bunch of his.

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Speaker 3: First work on his tax cuts.

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Speaker 2: He has always been on the supply side, and he

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Speaker 2: will remain on the supply side.

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Speaker 3: He likes me, but he loves our laffer. He loves

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Speaker 3: our laffer.

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Speaker 1: But I think part of this is because he was

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Speaker 1: a real businessman. He understands incentives.

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Speaker 3: You know.

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Speaker 1: Jack Camp used to say, how long does it take

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Speaker 1: for this policy to have an impact? He said, well,

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Speaker 1: drop a twenty dollars bill on the pavement and see

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Speaker 1: how long it takes somebody.

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Speaker 3: To pick it up right exactly.

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Speaker 1: You know. And I think you're going to see people

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Speaker 1: leaning forward once the bill is clear, and once it's

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Speaker 1: out in the open, even before it passes, you will

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Speaker 1: see businesses begin to move towards investment and move towards

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Speaker 1: expansion because they'll see the kind of environment where it's

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Speaker 1: going to pay them to be aggressively pro American and

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Speaker 1: to produce in the United States.

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Speaker 2: Yes, so I appreciate you plugging my show.

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Speaker 1: Well, first of I want to thank you, but I

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Speaker 1: also want to say I love going on your show.

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Speaker 1: People can watch Cudlow on Fox Business Network weekdays at

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Speaker 1: four pm. They can also visit FoxBusiness dot com. And

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Speaker 1: you do an amazing job. I'm so grateful that you

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Speaker 1: would take the time to be with us today.

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Speaker 2: No, thanks, dud, I can spend another hour with you.

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Speaker 3: You're terrific.

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Speaker 1: Thank you to my guest Larrycudlow. You can learn more

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Speaker 1: about President at Trump's plan to work with Congress on

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Speaker 1: our show page at neut world dot com. Newtrald is

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Speaker 1: produced by Ganglish three sixty and iHeartMedia. Our executive producer

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Speaker 1: is Guarnsey Sloan. Our researcher is Rachel Peterson. The artwork

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Speaker 1: for the show was created by Steve Penley. Special thanks

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Speaker 1: to the team at Gingish three sixty. If you've been

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Speaker 1: enjoying Newtsworld, I hope you'll go to Apple Podcast and

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Speaker 1: both rate us with five stars and give us a

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Speaker 1: review so others can learn what it's all about. Right now,

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Speaker 1: listeners of news World can sign up for my three

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Speaker 1: free weekly columns at gingishtree sixty dot com slash newsletter.

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Speaker 1: I'm new Gingrich. This is newts World.