WASHINGTON, February 14, 2019 — National Economic Council Chairman Larry Kudlow on Thursday rejected the idea that the combination of a rising federal budget deficit and an increasing number of Americans unable to make car loan payments bears any resemblance to conditions seen before the 2008 financial crisis and ensuing “great recession.”
According to the New York Federal Reserve, more than seven million Americans — an even greater number than in the period before the 2008 crisis — are at least 90 days behind on car loan payments, and the federal budget deficit is at its highest levels since the period immediately following World War II.
Additionally, new mortgage applications are down despite interest rates being at their lowest levels in a decade.
But Kudlow rejected the idea that the deficit is rising. He instead noted that the deficit as a share of the nation’s Gross Domestic Product is falling and suggested that thanks to continued growth, the overall deficit will decrease as well.
“As a share of GDP, deficits are hovering around 4 percent, there’s no change,” he said, adding that “growth, growth, growth” would cause the GDP share number to drop first, followed by the deficit itself.
“You’ll see the GDP share first, then you’ll see the overall number,” Kudlow said.
Kudlow was asked how the current situation differs from the months prior to the 2008 crisis, in which he predicted continued economic growth as a result of low marginal tax rates under then-President George W. Bush would generate deficit-busting tax revenue.
He said “all this is different” from 2007, citing lower tax rates, a “significant rollback in regulations,” and more and more men and women starting their own businesses, the latter of which he called “a great sign that people are participating [in the economy].”