WHEN: Today, Wednesday, April 22, 2020
WHERE: CNBC’s “Squawk Box“
The following is the unofficial transcript of a CNBC interview with National Economic Council Director Larry Kudlow on CNBC’s “Squawk Box” (M-F 6AM – 9AM) today, Wednesday, April 22nd. The following is a link to video of the interview on CNBC.com: https://www.cnbc.com/video/2020/04/22/full-interview-larry-kudlow-reopening-the-economy-small-business-loans-squawk-box.html.
All references must be sourced to CNBC.
JOE KERNEN: Joining us now to talk about re-opening the economy and helping small businesses, Larry Kudlow, National Economic Council Director. Larry, it’s good to have you on. This morning we saw the additional PPP funds being okayed and you wonder how long those will last? And they only last so long until you re-open, Larry. I think that’s one of the reasons that it seems like something that we need do at least attempt in some small way, if it’s possible, to do it safely.
LARRY KUDLOW: Right. I think that’s right, Joe. This thing is a bridge until we re-open the economy, hopefully, maybe I should say prayerfully in a couple of weeks. The re-opening is so important. I mean, the data itself, and I might add that all the health guidelines and the road maps for governors and mayors are based on the data. But the infection rates have come down significantly, mortality rates have come down significantly. So, we may be coming down the homestretch, perhaps May will be a transition month and an economic opening across the country. It will to be done in phases, as you know. So, here, we have the small business loans, the payroll purchasing program, to keep us going another $320 billion for that program. The last one went out like hotcakes. Some of the numbers coming from SBA suggest we may have served 30 million jobs. That’s a wonderful thing. Of course, unemployment insurance and we’ve also had direct check the treasury. So, we’re just doing our best to keep things afloat and bridge to point when the economy can begin to recover.
JOE KERNEN: Larry, you’re always an optimist, very optimistic. And I am, too. So, to set up something that might elicit more information from you, I’m going to let Andrew in. Because, Andrew, you’re worried about the economy ever being anything close to normal again. I know you want to get in and talk to Larry about that, probably.
ANDREW ROSS SORKIN: I want to ask Larry two questions. I think the biggest question, given that these loans hopefully will get out the door to the small businesses that need them—and that’s where I wanted to go, the ones that need them—you know, you talk to a lot of bankers who already processed a lot of loans that haven’t gotten into the system, the question is whether you think that enough of that money is going to get to the smallest businesses that need it the most right now given that there are larger companies that already processed through the system that may get to the front of the line this time around? What are you doing? And how should the public think about that issue right now?
LARRY KUDLOW: Well, look, it’s a good point. It’s an important point. Inside this new tranche, there’s a pretty significant effort to canvas community banks and community development. And I think that that may help, Andrew. Look, I think in the main, frankly, small businesses and smaller banks were the leaders. I know there have been controversial cases. Programs like this, gigantic programs like this put together quickly will always have glitches. But really, in the main, I think the process worked very, very well. Look, we will judge this — we’ll see how this new tranche works. We’ll see what the demand is. It was overwhelming for the first tranche. I expect it to be significant for the second tranche. We’ll see. We’re always making adjustments wherever necessary. We’re always trying to be totally fair as possible in allocating this. But I think, on the whole, it worked pretty darn well. For the first months and days, probably 10 or, 12 days, Andrew, the biggest lenders were the small community banks. And you have to believe they’re going into small local businesses. So, I think it worked pretty darn well.
ANDREW ROSS SORKIN: Larry, one other question about reopening. Obviously, you have some governors moving aggressively to reopen, and others that are taking their time, all hopefully being counseled by health experts. William Barr made a comment in the last 48 hours that the Justice Department may join in lawsuits against states that don’t open fast enough. Do you think that’s appropriate?
LARRY KUDLOW: Well, look, the Attorney General is a brilliant guy. Yes, I think it’s appropriate for the justice department to monitor this. I think he’s looking at it in terms of individual rights, and I think it’s something that needs to be assessed as we move forward. Bear in mind, again, we put out these health guidelines, I guess about a week ago. And, as I said, they’re data-driven. You have to have a downward adjustment period within 14 days. And, you must observe – you must observe the health and safety features that are so vital. Health, security, and well-being comes first. President Trump has said that many times and continues to say it. So there has to be —
ANDREW ROSS SORKIN: But, Larry, the President also made comments in the past 48 hours, 72 hours effectively almost against government. He is sending out these Tweets saying liberate certain states. He’s supporting protesters that are protesting against the government against the steps that the administration is even made public. It’s very hard to understand that.
LARRY KUDLOW: Well, I don’t know. I don’t think it’s that hard, Andrew. I think the President’s point is that certain states are ready to move. They meet the guidelines of testing, they meet the guidelines of hospitalization capacity, they meet the guidelines of social distancing, and they have numbers that show flat and declining infection rates. So, some states will go faster than others. This whole thing is going to be phased in over a period of time. I think in the month of May, that will be the transition. Some states may move earlier than May. Good for them, if they’re ready. Some states will take longer. You have hot spots in New York and elsewhere. Chicago may take a little longer. But I think that if there is popular support inside states, if it meets the health and safety criteria, then they will be ready to go.
BECKY QUICK: Hey Larry, I heard the President speaking the other night saying that the administration is considering making businesses not liable if their customers or employees get sick once people come back to business, once work gets started again. If that’s the case, how do you ensure that businesses won’t skimp on things like making sure the health and safety situations are front and center and that those are the most important issues?
LARRY KUDLOW: What was the — Becky, I’m sorry, I missed part of that. What was liable, you mentioned?
BECKY QUICK: Well, there are discussions, the President said, about potentially saying that businesses wouldn’t be liable, they wouldn’t be held liable if their customers or employees get sick when they come back. If that’s the case, how do you make sure the safety standards are still being met and being held so stringently?
LARRY KUDLOW: Well, look, there’s a couple of things there. First of all, safety standards will be met there will be constant monitoring state by state. I think the states do a very good job. I have a lot of confidence in the states and the cities for that matter. And I’ve been on the conference calls with governors and mayors and so forth. So, I have confidence in that. That’s point number one. Point number two, a point that is very important here regarding safeguarding, guard railing liability insurance lawsuits, which I am quite concerned about. There was a good editorial in the “Wall Street Journal” today about this subject. Businesses, particularly small businesses that don’t have massive resources, should not be held liable — should not be held to trial lawyers putting on false lawsuits that will probably be thrown out of court. You have to give the businesses some confidence here that if something happens, and it may not be their fault – I mean, the disease is an infectious disease. If something happens, you can’t take them out of business. You can’t throw big lawsuits at them. And I think liability reforms and safeguards are going to be very important part of this. Some of this we can do probably on a regulatory basis. Part of it may require some additional legislation. But that’s a very important point here. Someone has to defend the businesses.
JOE KERNEN: Larry, I’m sorry to interrupt, oil suddenly jumped, the market is now up over 400. I want you to comment on oil. I don’t know whether this is a delayed reaction. The President Tweeted something about Iran. But suddenly oil is up 15% and the market seems to be responding, I guess they go in sync now. What do you make of oil, Larry? In all your — you’re an economics guy. What happened there?
LARRY KUDLOW: Demand collapsed, Joe. The coronavirus worldwide caused a collapse in demand through no fault of anybodys. This virus has just pushed us into a big economic contraction. I think in the United States, rig count is way down. Demand is way down. Production is falling. There is not much we can do about that. The President asked us to look at potential forms of assistance. We have a number of options, nothing has been decided yet. But it’s just – parcels, there’s a lot of deflation out there as we go through this contraction. My own view is we’ll come out of this soon. The economy will reopen. The economy will restart. We’ll propose regulatory tax and investment policies to help out as best we can. We want to reward work, we want to reward businesses, we want to reward effort. I’m hoping this oil slump will prove to be temporary. Not many people are driving right now, as you well know. And there’s a glut of oil, that will, I hope, take care of themselves. Markets will take care of themselves over time.
JOE KERNEN: Alright, Larry. When we saw the Trump Tweet about Iran, I was like, wow, in normal times this would have mattered. It didn’t happen right away. But I don’t know whether you attributed it to that. But Larry, thank you for being with us this morning. And we’ll be paying attention to everything. I watch the Taskforce at night, to keep up with what’s going on. I look forward to when you’re there. Maybe it will be tonight.
LARRY KUDLOW: Stay well. Stay well.
JOE KERNEN: You stay well, too. Thank you.
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