Trump Boom Goes to Davos

Hello, folks. Welcome to Kudlow. I'm Larry Kudlow. So a big financial news today. President Trump implied that Kevin Hassett will remain as the NEC director and may not move on to become the Fed chair. We're going to have it all for you in just a moment. Our very special guest. We welcome back Treasury Secretary Scott Besson, whose plate is full, not only with the Federal Reserve, but.

Possible Supreme Court decision next week on tariffs, a trip to Davos. Lord help him. Anyway, the ice battles continue in Minnesota. The economy is booming, and I still think... The biggest midterm election issue is the booming economy. Meanwhile, we have Senator Rand Paul, one of the Senate's preeminent doctors. He's going to weigh in on President Trump's great health care plan, as the president calls it. Now.

I don't want to keep our distinguished Treasury Secretary Besant waiting, but I do want to weigh in on the Trump economic boom, which showed up again today with surprisingly strong manufacturing numbers. In the industrial production report. All right. Both consumer goods and business equipment are booming over the past two months. Production of consumer goods rising.

Almost 8% at an annual rate. Business equipment running roughly 7%. And over the past year, business investment over 10%. This is big stuff. The Atlanta Fed's GDP now is on a run rate of 5.3 percent for the fourth quarter, plus basic core retail sales over 5 percent for the year. Core consumer prices, 1.6 percent in the fourth quarter. That's all. Wages running significantly above inflation. Working folks take home pay continues to rebound under Trump after the Biden collapse.

And as I've said so many times, let's not make this economic boom story any harder than it needs to be. Tax cuts, deregulation, drill baby drill, free and fair trade, pro-growth policies. Put in place by Mr. Trump and his team and passed in the landmark one big, beautiful bill are all paying off left and right. Worker productivity running at its hottest pace in decades.

Labor is earning its pay hikes. Unit labor costs, which capture compensation and productivity, are barely rising at a bit over 1%.

Energy prices which permeate the economy are going to bring inflation even lower. And to quote our treasury man next to me here, the reprivatization of the economy is in full force. replacing Joe Biden's big government socialism. Did I get that right? Reparbonization. And I personally believe we're going to see economic numbers, OK, that could run five, six or seven percent.

At different moments. The trade gap is narrowing. Deals coming in around the world. Investors flocking to the U.S., which, as Mr. Trump has said, is the hottest country in the world. Tariff inflation virtually nonexistent. The lefty media, the mainstream economics profession, by and large, got the whole story wrong. There might even be a tariff dividend at some point. But importantly, the federal budget deficit is coming down. Growth.

solves a lot of problems. New prosperity opportunities to climb the ladder of success for everyone in society are popping up on a daily basis. And I'll bet you, President Trump, We'll work up a teaching moment for all those socialist-leaning globalist corpocrats at Davos on why Mr. Trump's America is booming and the power of free market.

capitalism, Trump style, is in full bloom. Okay, how was that? We welcome back to the show U.S. Treasury Secretary, Ms. Scott Best. Ms. Secretary, thank you for coming on. We appreciate it very much. How'd I do? Oh, Larry, you know, Larry, when I used to be a professor, I was known as a tough grader. That was a solid day, solid day, solid day. No great inflation. Well, I mean, you know, it's speaking the truth and you're going to have a chance to do it over.

Davos. OK, we have sound from today. The big news is comments by Mr. Trump about the Fed. Can we roll the tape on this? Here it comes. Hang on. I see Kevin's in the audience, and I just want to thank you. You were fantastic on television today. I actually want to keep you where you are if you want to know the truth. Kevin Hassett is so good. I'm saying, wait a minute. If I move him, these Fed guys, certainly the one we have now, they don't talk much.

I would lose you. It's a serious concern to me. So I just want to say thank you very much. You've done incredible. We don't want to lose him, Susie. But we'll see how it all works out. All right. That was Mr. Trump today on Kevin Hassett. Mr. Secretary, how do you read that? How do you read that? Well, Larry.

We've run a very robust process, 11 candidates down to five, down to four. And one thing I do want to say about the move from five to four, the one who did make it from five to four was vice president. Fed Vice Chair Mickey Bowman, she's fantastic. Vice Chair for regulation, President Trump, and I both agreed that she was doing a fantastic job where she is. We thought her highest and best use was to stay there. We're determined that President Trump will select a Fed chair to work.

well with her on more financial deregulation. In terms of today's remarks, we had the final interview of the candidates. Rick Reeder was in the Oval yesterday with the president. And look, Kevin Hassett has... Been a great colleague, continues to be a great colleague. Your old job, NEC director, one of the most powerful financial jobs in the government. So I understand President Trump has him in the Oval.

in the building every day. And if that's the president's prerogative, then so be it. Not to, I guess earlier in the week, I can't remember. There's so many comments about it. But we might have it in the I might have it on the full screen. Yeah, here it is. A Reuters story. Trump says he has no plans to fire Feds Powell despite the investigation. Get to that in a second. The Powell Awards.

He also said he'd ruled out U.S. Treasury Secretary Scott Besson for the role because he wants to stay where he is. And then he said the two Kevins are very good. So the inference here before I get to the subpoena. and all of this Jay Powell stuff. The inference is that Kevin Warsh is now the front runner for the spot.

Only the president knows, Larry. As you know, it's his prerogative. He has been thinking about this almost since day one of Trump 2.0. He's frequently expressed his disappointment with... Chair Powell. And so we run a process and it will be the president's decision in the next. couple of days or weeks, I'd expected that we would here have a decision either before he leaves for Davos or when he returns. I'm sure a lot of people were surprised at the subpoena for Jay Powell and the goings on.

Last weekend, I guess the subpoena came out Friday night and the Fed was ready with their little video. Many of us, including myself, believe that Jay Powell has done more to damage Fed independents than any chair. in recent memory, that's my personal view anyway, and has done very badly in Fed policy. You've written critically about it in the Wall Street Journal and elsewhere. But the issue now, the president said he... He's not calling for Jay Powell's firing.

He kind of did a little plausible deniability last weekend in an interview late Sunday night saying he didn't know about the subpoena and the and the investigations of the Fed cost overrun. There is no, as far as I know, perhaps correct me if I'm wrong, Mr. Secretary, there is no grand jury and panel. There are no charges being brought. I'm not sure what there is here.

except a little side war going on. Maybe you can enlighten us, because you're coming to the point, January 31st, big date, I think, Steve Myron's position comes due. And he's going to go back to the CEA. But there's an open seat. That would be the moment to appoint the Trump chair.

Well, Larry, a lot to unpack there. First of all, I'm not going to comment and can't comment on the ongoing investigation, if there is one. I don't know. much about it. What I can tell you is that as far back as beginning of last summer, I've been calling for the Fed to conduct its own internal investigation into a lot of the deficiencies that the institution has had.

Larry, as you know, I know, and everyone, especially in the financial markets, knows, the Federal Reserve occupies a special place with the American people. It has a tremendous amount of sway and influence over their life, but there is no accountability. So I think the Fed has to be like Caesar's wife, beyond reproach. And we have seen, we recently saw a... governor resign over an ethics violation. And that was put out three, four months after she left.

in my opinion, deficient. We have seen these cost overruns, and I think it would just be much better if the Fed came forward and they got these issues out in the open rather than, you know. having a tight hold. I do think we need some transparency here because, again, I don't know anything about construction. Seemingly, not many people at the Fed do.

The way the Fed works, there are no appropriations. They just print the extra $700 million, whether it turns into an extra billion, an extra billion and a half. They just print it. I can't do that if I want a new. chair in my office at Treasury, I have to go through the appropriations process. Well, transparency, accountability, compliance.

were not Jay Powell's strengths. I mean, these are... You know, we've had on the show, Scott, we've had what I would call middle-of-the-road people, Mohamed El-Erian, a very smart guy. He's called for... He's called for Powell to resign several times because he has run the Fed so badly. Apart from policy, he's just run the Fed badly. And you mentioned the insider trading scandals. I think there are four or five.

And they all came up at the last minute. Nothing was ever really done. And Larry, if I could interrupt you, four or five out of 19. is a tremendous number. Tremendous number. If you or I were the CEO of a Wall Street firm and that happened, we'd be kaput. It's failure to supervise. But again...

You know, I'm not calling for any removals. I'm just calling for some sunshine. Well, sunshine would be very important. So you have said, though, that the subpoena, whatever it stands behind the subpoena, and there's a lot of. unknowns about that. It does create something of a mess. So Powell's up in arms. You've got people, Republicans on the Senate Banking Committee, who are saying they're not going to confirm a new Fed chair until all this is

cleared up, whatever that may mean. And I want to come back to the January 31st. Steve Myron. leave of absence from the CEA in that seat, that goes, that ends. I mean, it expires on the 31st. Steve can continue until someone else takes that seat. You're certain of that? Yes. Because some people have disputed that, actually. No, no, no. That was a self-imposed deadline. So that's not when this seat actually, for all intents and purposes, that's when it expires. No, no, no. This is a very...

long seat. This is the Adriana Kugler seat, which I believe has 14 years left in it. So there's no pressure to appoint a chair in that spot. No, no, no. The idea was...

that we would get the process underway to give the market great certainty, to give the market some forward guidance on forward guidance. show who the chair is going to be, get them nominated, get them moved along. And then when Chair Powell scheduled to leave in May, vacated. the market would have great clarity and certainty. Do you think the president himself will step in and say to his Justice Department,

Meet with Jay Powell and settle this thing and let's move on because he's only got a couple months left and we need to move on with a new chair. Will he intervene, do you think? I think we're just going to let this take its course. Take its course, meaning there could be a grand jury? We'll see what happens. It sounds to me like there were some unanswered inquiries. So perhaps if the D.C. District Attorney, or excuse me, the D.C. U.S. Attorney gets some answers.

and the answers are satisfactory, then we can move on. Do you think, I mean, is it a criminal? Cost overruns, I mean, for better or worse, and it's worse. I get this. We're all against cost overruns. I'm sure it could have been done better. But it is kind of the coin of the realm in Washington, D.C. If we threw everybody in the poking for cost overruns, Washington would be a ghost town. Maybe that's not so bad, but that's the reality of the thing. I mean, has he been singled out here?

Larry, I can just tell you, incompetence is not a good look for your defense, but... Probably is construction and competence. The position of Fed chair is really two positions. You're called upon to run monetary policy, and then you're also called upon to be the CEO slash COO of the sprawling. And part of my argument has been that it hasn't been managed well for decades. And the bureaucracy has taken over. It's sprawling. You've got legions of economists. You've got reserve banks.

all over the place, you know, a lot of kind of cross responsibilities. I'm told that at the Reserve Banks, 40% of the people in each building do not work. For the president of the Reserve Bank, they report to other Reserve Banks. So it's, you know. There's a word for that I won't use on your show. It needs work. It needs work. It needs a lot of work. It needs some pruning. And you could make each one of these reserve banks the center of excellence. One could be for payments. One could be for...

St. Louis does great economic research. You could do that, but it does need a thorough overhaul. And again, like I said, I've been calling for an internal investigation or an internal review. So perhaps this will push that idea along. So there's no telling. One cannot assume that this subpoena given to.

Given to Jay Powell and the Fed will be removed. We don't know that yet. You're saying we don't know that. It's not a yes and it's not a no. Larry, I can't comment because I haven't seen it. I haven't spoken to... I haven't spoken to Janine, so. Do you think that in view of what Mr. Trump has said about Kevin Hassett and yourself and Kevin Warsh, does this make Kevin Warsh the odds-on favorite to be the next chair? You know, again, we'll see.

that President Trump hasn't shared his thoughts with me. What I can tell you is he's been very deliberate. He has asked exactly the questions that I think... You and I and the markets would want to ask, who can bring the board along with them? Who has the gravitas?

You know, everything you would want done, who can bring some order to this sprawling institution is one of the things he's looking forward to. And also, as you said in your riff just then, Who is going to have an open Greenspan like mine that we could be going through a productivity boom like we did in the 90s and not just throw the brakes on things because they're alarmed by a high GDP number?

that I agree with you. I think GDP is going to surprise on the upside, but the important thing is it's going to be non-inflationary, disinflationary growth back to the 90s, and we could have kind of a... seven, eight percent nominal GDP number. I know. I know. Real growth could be five or six percent. OK, just one last question. I want to get back to the economy and tariffs and so forth. Are you concerned that if this whole.

I'm going to call it a legal matter with Jay Powell, whatever. If it's not settled, his term as chair will end in May, but he will stay on as a member of the board. Which would be, I would think you would agree would be not optimal. Well, look, I get that done. I think it was about 18 months ago. I came out with this idea of a shadow. that the president would have nominated someone back in August, September. I got pilloried in the media, the press.

You know, I said, no, Moss. So I think on the on the backside, it would also be a good idea not to have a shadow fed chair by someone who has stayed on. Yeah, because. That's happened, and it'll be Chair Powell's decision. I believe that... The candidate who President Trump nominates will be confirmed quickly. I think it will be someone who is substantial, who cares about the integrity of the Fed, but cares about the dual mandate.

It comes to a census. Well, markets will respect and world leaders will respect. And when we talk about what happened with these subpoenas, you know what? I was wrong. Markets didn't care. Markets went up. The bond market. The dollar went up. Bond rates went down. Bond rates went down. Stock market went up. And the move index, which measures bond market volatility, is at a multi-year low now.

Multi-year low. So markets were unfazed by it. It's the strongest economy in 40 years. Let's go there. I want them to really go to Davos and just lay it out for all our little globalist friends. Corporal Kratz and whoever else. I've been to many of those. This is a booming economy.

The economics profession was wrong. The government forecasting has been wrong. It's not a small thing. His speech at Detroit was so upbeat and optimistic. This is really something. Let's move on to rosier scenarios here. Larry, as you know better than anyone, Trump economic policy is a three-legged stool, trade, tax, and deregulation. And taxes, one big beautiful bill, done. July 4th, full expensing for CapEx, and we added full expensing for factories, ag structures.

So we are seeing a CapEx boom. CapEx booms are always followed by employment booms. We're seeing a productivity boom, too, on trade. We have done these fantastic trade deals, and we are taking in, as you said earlier, substantial tariff income. We had a fiscal contraction. for the calendar year 2025. So the budget deficit went down. That big GDP number that we got, 4.3% for the third quarter, the private sector GDP...

You were nice enough to mention my idea. We're reprivatizing the economy. The private sector GDP was actually 4.7, but we had 0.4 of government contraction. We are paying, we are stabilizing the debt, the deficit, the GDP. And calendar year 2024 was 6.9%. Calendar year 2025, 5.4%. So, you know, we are on a trajectory to get to my 3% deficit to GDP, and we will just keep bringing debt to GDP down, and that's the important number.

Growth solves a lot of problems. You and I have talked about this for years. Growth solves a lot of problems. For years. But what we're seeing kick in now is the third leg of the stool, and that's the slowest moving, and that's DREG. So the substantial DREG that... We have pushed at Treasury, the OCC, the Fed, the FDIC. I've seen estimates from Oliver Wyman that that created $2.5 trillion.

of extra lending capacity by the banks. So the banks have been able to lend to American businesses for this big AI boom at Treasury. We have had a big push for small banks and community banks. because they bolster Main Street. We can have the parallel prosperity. Main Street, Wall Street can both do great. It doesn't have to be one or the other. We are seeing... As you mentioned, energy deregulation. So we're going to have very inexpensive energy. I think oil prices could continue.

to go down, and then we're able to build things in America again, Larry. We are deregulating on the environmental side, and we have really gotten out of the ability to build things. That was a great thing. We could talk about the... mess in Minneapolis, but I was in suburban Minneapolis or the countryside in Minnesota, some of their great factories there. The place called Cambria makes countertops, things like that, Winnebago.

Those factories are booming. And at Winnebago, they told me that they had added a whole new line of business of batteries for their trailers and motor homes because of the 100 percent expensing. Wouldn't have been economic to do it. but they're doing it. That's all we're seeing this boom. Yeah, if you can get your deregulation, and I think to some extent...

These banks have been overcapitalized for a variety of reasons. And here, too, Jay Powell and his woke and he went along with Biden, no loans to fossil fuels and so forth and so on. Crazy stuff. Anyway, you can get banks to loan to small and medium.

medium-sized businesses, that'll put another couple of points on the economy. Well, I think that's what we're seeing now. I think it's out of the box. The other thing that we're going to see is the other part of the tax bill is the president's signature. Policies for working Americans, no tax on tips, no tax on overtime, no tax on Social Security, interest deductibility of American-made cars. And I'm also the IRS commissioner. Watch out, Larry.

But the bill was done on July 4th. We did not give guidance on how to change your withholding for 2025. So I can see that there are well over 100. Maybe $150 billion of refunds to come to working Americans could be up to $1,000 per taxpayer, maybe $2,000 for a two-income family house. And then working Americans are going to change their withholding, and they will see a fill-up, a natural increase in their weekly, monthly wages. So it's really going to kick in. But again...

We're also seeing inflation come down, the three-month core goods inflation. 1.1%, Larry. I know. 1.1%. As you said, the tariff inflation was the dog that didn't bark. It just never barked. The economics professions, they've got a lot to account for, perhaps in another interview. Speaking of tariffs...

So the Supreme Court, we're all waiting for the Supreme Court on emergency tariffs, so-called IEPA. If they rule against you, Secretary, you're ready, you, Scott Greer and the rest, you're ready with a backup plan? Larry, I think it's very unlikely that the Supreme Court is going to rule against the president's signature economic policy. Amy Comey Barrett, I had the privilege of sitting in the Supreme Court hearing. Amy Comey Barrett actually came out and said.

said, if you have to do the refunds, it'll be a mess. And as President Trump has said, there's more at stake than just a tariff income. He has used IEPA to bring in trillions of dollars of overseas investment, and that could all be at risk of being reversed. So I am very confident that the Supreme Court is going to allow the signature economic policy and not throw a wrench into things. We have paid down the, we are.

bringing in substantial revenue. We are bringing in trillions and trillions of dollars of investment. You know, as you said, the economy is hot. And one of the reasons is this massive overseas investment. I mean, I can't. My other thought here, not a lawyer that I am.

But you're conducting foreign policy. The president is commander in chief. He's conducting foreign policy at the same time. He's conducting trade policy. The two are inextricably linked. You cannot separate the two. And I just don't I just sense the court doesn't want to.

get in the middle of that, maybe some guardrail someplace, I don't know. But that's why I think it's going to guard you away. But you could go 301, unfair trading practices, 232, national security, if you had to. If we had to, but Larry, I... Again, I am confident that the Supreme Court does not want to overrule the president, does not want to unleash chaos. And when we talk about it is an emergency authority, what has the president used it for?

The fentanyl crisis. These 20%, 25% tariffs, Mexico, Canada, China, because of the precursor chemicals. And Larry, guess what's happened? Fentanyl deaths. precipitously dropping, saving our American, American children. That's a wonderful thing. On October 8th, the Chinese announced rare earth export controls on any good that had a Chinese... a trace of Chinese rare earth materials in it, 0.01%, and it would have brought global trade to a halt.

President threatened 100% tariff on China. The Chinese, who had gone dark on us in terms of communications, immediately came to the table, and we were able to negotiate a one-year extension because of why, Larry? What did the president say this week? The Iranian people are being ruthlessly murdered by that brutal regime.

Brutal regime. And the president has come out and said that he is going to put a 25 percent tariff on anyone who buys Iranian goods. Those are all emergency powers, as you said, that they. conduct foreign policy, economic policy, and no one does it better than Donald Trump.

The Trump boom. I hope he broadcast the Trump boom when he goes to Davos. I know you're going to urge him to do so. Well, Larry, you could have helped me write my speech because that's what it's about. Treasury Secretary Scott Besson, thank you for your time. We appreciate it very, very much. Great to see you. As always. All right, folks, coming up next up, Senator Rand Paul, one of the Senate's preeminent doctors, is going to give us his thoughts on President Trump's.

great health care plan to use Mr. Trump's view. Again, we thank Treasury man Scott Besson very much. New Year, same extra-value meals at McDonald's. So now, get two snack wraps, plus fries, and a medium-soft drink for just $8. For limited time only, prices and participation may vary. Prices may be higher in Hawaii, Alaska, and California, and for delivery.

Kentucky Senator Mr. Rand Paul, Senator Paul, thank you. So what do you think of the new plan? I know it's not detailed, detailed, but, you know, direct to consumers, price transparency, get rid of the middlemen. There's a lot of interesting... things in there that I think you yourself have espoused down through the years. What do you think of the president's health care outline? You know, one of the best ideas that I've worked with President Trump on is this idea of association health plans.

This would be the idea that if you're an individual employer, an accountant, doctor, lawyer, small business. and you're able to join a collective purchasing agency like Amazon or Costco or Sam's Club, this is an idea that actually would allow competition, wouldn't cost any government money, and the president has previously supported it.

the plan that was released this week. I guess someone left it out, but he has supported it in the past and I think would be a better idea than a lot of the subsidy ideas. I'm not really for government funding this. I'm for trying to get the competition to work to bring prices down. The other thing you can do to bring prices down, doesn't cost the government anything, is only 10% of people with insurance products that buy insurance are allowed to buy HSAs. I would make the law.

that anybody who wants an HSA can have it. So 100% of America would be eligible. And then I think through market forces, you drive prices down. But some of the plan that was released this week includes... something called CSR subsidies. These are subsidies that were originally passed by President Obama. So this is an idea of President Obama's. And the court struck it down.

The first Trump administration said we're not paying it and didn't defend it in court. And now the second Trump administration wants to pay these subsidies. So some of that confuses me, frankly. They also want to give money to people to put in their HSA, which would be great if the government had money, but the government has no money. The government's $38 trillion in debt. We're $2 trillion in debt just this year. We don't have any money to give people.

So what we should be doing is trying to institute market forces to bring insurance prices down, but we shouldn't be doing sort of Obamacare-lite kind of ideas. And some of what I saw in this plan, frankly, is Obamacare-lite. Can you get rid of these middle? Middle level people, these so-called benefit managers. that seem to get paid on both sides, actually on three sides, government, insurance, and consumers. Why do we need it? Why can't you just go direct to the consumer?

In 1996, the court settled a case with the independent pharmacies, and in that case... They dictated that the only way you can give discounts is by this complicated formula of moving market share. So the drug rebate system we have now is not from the marketplace. It's from a court. This court settled.

verdict now rules the whole place, and it's so complicated that the PBMs, the pharmacy benefit managers, actually do bring the price down because you wouldn't hire them. Let's say you had a business, you had 1,000 employees, why would you hire them?

hire a PBM if they don't work. So the PBMs actually do work to bring the prices down. Everybody's just mad. And Big Pharma's been running ads against the PBMs for three years now. So it's very, very confusing. But everybody's pointing fingers at each other. But ultimately, if you let people join Amazon to let Amazon bid for your drug prices, drug prices will go down. If you let people join Costco or Sam's Club to buy their insurance.

Prices will go down and you don't need any government expense. And then legalize HSAs. You'd fix the problem with no new government spending. I mean, one last thing. How about just a menu of prices? You know, you come up to New York, Senator, I'll buy a good meal at an Italian restaurant and they'll have a menu and they'll figure out what your appetizer is going to cost, what your entree is going to cost. And if you want a cannoli.

for dessert. Why can't we just have that in health care? The interesting thing is you do, you have a menu that's explicit everywhere that you pay cash. So if you want LASIK surgery, a nose job, or a boob job, they will tell you the price on the phone within the first 20 seconds. They put it on billboards. If you mandate, and they're going to do this, it won't work, but they're going to mandate that you put the prices out.

The Medicare price is fixed. The Medicaid price is fixed. The insurance price is fixed. The only person that is uncertain about the price is the one in the individual market, which is 8% of the market. Making the price transparent doesn't help them. You have to let them join a buying co-op or a buying collective to bid prices down. But mandating transparency doesn't work if the prices are not fluctuating.

All right. Well, we'll see how this thing shakes out. There's going to be a lot of work to be done. Kentucky Senator Rand Paul, thank you, sir. Appreciate it very, very much. All right, folks, coming up next here on Kudlow, we're going to talk about politics, Byron York, Mark Halpern. Wow. Minnesota, booming economy. I still think the booming economy is the number one, the number one midterm election issue. But we'll see. Two experts coming. I'm Kudlow. Stick around, please.

This is Ainsley Earhart. Thank you for joining me for the 52-episode podcast series, The Life of Jesus. A listening experience that will provide hope, comfort, and understanding of the greatest story ever told. Listen and follow now at foxnewspodcasts.com or wherever you listen to podcasts.

...politics, Byron York, Fox News contributor, Mark Halpern, editor-in-chief of Two Ways. Thanks to both of you, Mark. Good to see you. I begin with you. I begin with the Minnesota story. I don't like them. I hate the Minnesota story. I mean, shooting it. ICE agents and obsessing about them and talking about insurrection. I mean, people should just follow the law, if you ask me. They are trying to enforce the law. You've got all these left-wing Democrats now that want to end ICE.

How do you read this thing? I think it's insanity. Well, it's the tale of two Americas bitterly divided. The New York Times is obsessed today with whether the agent was knocked over or simply hit by a car. I don't I don't understand the posture of blue America towards this. And I do think that you can't be the.

White House, you can't be the federal government, and go into these states and be surprised if you go into a blue state with no coordination. So I think it's in everybody's interest for the president to make another run at coordination, as far-fetched as that seems to some. And I think people in blue states should recognize that the Tenth Amendment doesn't mean the federal government can't enforce the law.

Yeah, there you go. The federal government can't enforce the law. The federal government supersedes local law. I mean, that's what I was. I'm a lawyer. That's what I was taught. Byron, you're not going to like this, but I so I have to say it.

The economy is booming. It's growing at 5%. It may grow faster than that. I'm saying that's more important. Now, I know you don't agree, and no one agrees, but I'm going to keep saying that. If you grow this economy at 5%, 6%, 7%, the inflation rate's coming down. Middle America's wages are beating prices. That's going to determine the midterm elections. If that turns out to be the case, you're absolutely right on that. It was interesting. There was a new poll out.

Great if true. There was a new poll out today. It was from CNN. It was people asking them the question, how would you rate the economy? The number of people who rated it somewhat good. or very good, was ever so slightly higher now than it has ever been since December of 2021. That was when Joe Biden started having his effect on the American economy. So there is some slight improvement now. thing we've talked about is you have these good...

these good economic indicators, and you have more, you know, bigger tax refunds coming and more growth coming in 2026, everyone hopes. And if that does happen, yeah, it will help the president and the Republican Party. absolutely no doubt about it. But right now, prices haven't really gone down. Wages haven't gone up enough to meet those price increases. And people are still feeling it. So it's no surprise that they feel that way.

This is a long time. I keep trying to convince my very good friend, Byron York, who is politically much smarter than I am, that the economy really will matter and does matter. Because I'm just saying numbers are coming out that nobody expected. profession was wrong. The tariff inflation story was wrong. You're hitting on all cylinders, even today. Manufacturing is starting a big comeback. Wages are rising faster than prices and so forth and so on. I'm just saying.

Look, law and order. ICE, let them do their job, send the illegals who are violent, you know, criminals, send them home. And meanwhile, economic opportunity is going to make this a historic election for Republicans. Mark, that's my simple take. Could be. Look, on one side, I ask everybody in business and government, are the fundamentals of the economy strong? To borrow John McCain's disturbed line. Yes, they are strong.

Almost every fundamental strong. And there's plenty of positive economic data. But, Larry, there are two things on the other side. People are still not enthused about the economy, despite, as you said, some polls showing it up. And the other thing is there's still a lot of uncertainty in the economy. There's uncertainty about the Fed, there's uncertainty about the tariffs, uncertainty about AI, uncertainty about electricity.

things on both sides but i think every president should go for five plus and i know there are people say that's impossible we can't get over 2.5 but they've got to go for five plus it's the only way to save the country Oh, I love that, Mark. I love that. Five plus. I mean, that's the Kudlow scenario. Goes back to Ronald Reagan. Byron, York, we had a very distinguished pollster on it. I'm going to have to get it the other night who said, you know, you just.

Everyone you don't like, you can't throw them in jail. That's sort of the Jay Powell story. We don't like them, but you can't throw them in jail. You can't bust them. Let's get through that. I had Scott Besson on for quite a while. It's unresolved. Don't they have to resolve that, get it out of the way?

Yeah, I think they do. I was stunned when I found out that it was actually happening. We've had some journalism suggesting that it was not really a misunderstanding, but certainly not much communication between the attorney's office in Washington. and the Fed. So it's a crazy idea. It has made a lot of Republicans...

on Capitol Hill, very uncomfortable, and they're going to have to confirm whoever is Donald Trump's next Fed nominee, and they're not going to be happy if this continues to go, provided there's nothing to it. If there is something to it, they should really get this out.

out very quickly. Interesting. Thank you, gentlemen. Mark Halperin, Byron York. We appreciate it. Coming up, we're going to talk to Congressman Wesley Hunt. He's running for the U.S. Senate from the great state of Texas, which doesn't have many taxes. I'm Kudlow. We'll be right back.

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Congressman Wesley Hunt. Wesley, thank you. We're a little short because of the Scott Besson interview, but how's the race going? Tell us how the race is going, both the primary and the general, for the Senate race in Texas, please.

Well, sir, the race is going absolutely wonderfully, as you can probably imagine. I have actually offered a debate with both Jasmine Crockett. I've actually offered four debates to to to John Cornyn, and both of them have turned them all down. Just kind of give you an idea.

of what it would look like to debate me on the stage. The primary is going great. Again, you have John Cornyn, who has spent $70 million on this race, is currently polling in the 20s. It's a 24-year incumbent, and the people of Texas are looking for a different direction.

It is time for the next young leadership group to lead this America First movement into the future. I always talk about J.D. Vance being 41 years old, our secretary of state being in his early 50s, our secretary of war being in his.

Forties. Quite frankly, it takes young guys to keep up with the 79 year old President Trump because he is one of one. But what he's also doing is setting up the future of this country with young America first fighters, because in three years, what's going to happen when he is gone? He needs.

us to carry on the mantle. And that's why I'm running for United States Senate. Yeah, you're going to do very well. We owe you. We owe you. Have you back so we can do some more next week. Thank you, Wesley. I'm sorry I was short today, but good luck and God bless. Folks, I'll be right back with. Well, the holidays have come and gone once again. But if you've forgotten to get that special someone in your life a gift...

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Great interview. Looks like Kevin Walsh, the next Fed chair. But I still think Jay Powell, you're going to have to remove the Jay Powell subpoena in order to get Kevin Walsh.