Veteran financial guru and former Ronald Reagan adviser Larry Kudlow said that the Trump White House estimates of economic growth of 3 percent to 3.5 percent are actually “too conservative” and the economy is poised to expand much faster than that.
“With Reagan, we put up 4% growth rates coming out of a deep recession," Kudlow, who was a senior economist in the Reagan White House, told CNBC.
"The Trump people, who are cutting tax rates, particularly on businesses but every place else, rolling back regulations, rolling back Obamacare are penciling in a 3% to 3.5% growth of real GDP” for the first year, said Kudlow, a radio talk-show host and CNBC senior contributor.
The U.S. economy’s expansion slowed in the fourth quarter, and annual growth failed to reach 3% for an 11th straight year, MarketWatch recently explained.
Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of 2016, the Bureau of Economic Analysis said last month. Real GDP increased 1.6 percent in 2016, compared with an increase of 2.6 percent in 2015.
“So give Trump a little common-sense credit. The guy is cutting taxes and regulations and so forth and he's just saying 3 percent to 3.5 percent. I think he's being too conservative," said Kudlow — host of "The Larry Kudlow Show" and author of "JFK and the Reagan Revolution: A Secret History of American Prosperity," written with Brian Domitrovic and published by Portfolio.
Kudlow, a Newsmax Finance Insider, said that during the early years of the Obama presidency, there was increased spending, higher taxes and more regulations. The nation struggled to hit 2 percent growth as a result, despite rosy predictions by Barack Obama.
Kudlow also said the Obama White House constantly overestimated economic-growth predictions. He said Trump’s predictions are more "real" and grounded in economic reality. “Not the pie in the sky,” said Kudlow, who served as the Trump campaign's senior economic adviser.
Former U.S. Labor Secretary Robert Reich disagreed with Kudlow in a spirited debate on the merits of cautious budget planning. “You and I can debate the facts but we haven't seen a growth in the 3.5% to 4.5% rate for a very long time and I think that it's a rosy scenario. Why not be cautious?" asked Reich, the nation's 22nd Secretary of Labor and now a professor at the University of California at Berkeley.
"Because if your growth estimates are way out of line or if they are overly optimistic, your budget is going to be overly optimistic and you're not going to make a responsible budget,” said Reich, Labor secretary under President Bill Clinton.
Trump has vowed to "push the economy into higher gear with an aggressive combination of tax cuts, reduced regulations and more government spending on public works. Yet economists say it will take time before the U.S. reaps any benefits," MarketWatch reported.
Most predict the economy will grow around 2% or a bit faster in 2017. If Trump’s approach works, the payoff is unlikely to come until the end of the year or early 2018, MarketWatch reported.
To be sure, Kudlow claims Trump has the prefect strategy to foster such growth by "incentivizing" the economy.
“The backbone of the Trump plan, something we haven't done in I don't know how many years, is to slash tax rates for large and small companies. This is hugely important. It's been the biggest obstacle to growth and productivity,” Kudlow said.
“Productivity shifts when policy shifts. We've had anti-growth policies for a number of years and I'm going to include some Republicans in the 2000s as well as some Democrats," Kudlow said.
"You're getting pro-growth incentives and those pro-growth incentives are going to keep the backbone of the labor force, which is more or less the 25 to 54-year-olds, they are going to come back and work. Their anticipation is slumped, incentives, lower tax rates that pays more to work. They are going to come back,” Kudlow predicted.
While his first few weeks have certainly been volatile and controversial, Trump will be a demanding leader who applies the best of his negotiating skills to push for U.S. growth, bestselling author David Horowitz recently told TheStreet.com.
Trump won’t be an ideological purist like Republicans who support free trade but don't fight for fair trade, Horowitz said.
“If you just say, ‘well we're for free trade and we're not going to look at the deals that we make’ -- that's not a good idea,” he said. “We've had an anti-business president now for eight years who doesn't take a hard-nosed attitude towards these deals. Trump is going to get better deals for us, which is still free trade.”
Horowitz's new book, "The Big Agenda: President Trump's Plan to Save America," reveals Trump's "first 100 days strategy" to roll back Obama's legislative and executive record.
Horowitz's new book is the first book about the Trump presidency and has soared to the top of the Amazon bestseller charts, becoming the No.1-selling book on the web. Trump will also lead the way in making infrastructure spending to boost the U.S. economy, Horowitz said.
“If the economy grows as it will under Trump, there's going to be a lot more money to spend,” he said.
"Big Agenda: President Trump's Plan to Save America" is available at bookstores everywhere – or get your copy on Amazon – Click Here Now
Larry Kudlow is a senior contributor at CNBC. His new book is “JFK and the Reagan Revolution: A Secret History of American Prosperity,” written with Brian Domitrovic.
To find out more about Larry Kudlow and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com
(Newsmax wire services contributed to this report).