Kudlow: Stimulus Payments to Americans Boost Chinese Economy


Fox Business Network host Larry Kudlow warned on Monday of the unintended consequences of stimulus payments and high government spending.

KUDLOW: These big stimulus packages passed last December and January are actually temporarily helping the economy recover, and we’re seeing that in the first quarter. But here’s something I don’t like, and I have to credit my good friend DJ Nordquist. She was our Executive Director at the World Bank, formerly CEA [Council of Economic Advisers] personnel director. She sent a memo to Kevin Hassett, Larry Lindsey, and myself to show that, unfortunately, these “stimuli” are in fact stimulating China as much if not more than the United States.

China’s GDP [went] up 18% in the first quarter, driven by exports up 38%, it is exports to the United States. It’s a new record. Meanwhile, US retail sales jumped 14% in the first quarter.

So let’s go over that. Congress, in its wisdom, has disbursed nearly $ 3 trillion in “stimuli”. The “stimuli” partly led to an increase in consumer spending and unfortunately the increase in consumer spending was spent on the purchase of all kinds of goods and gadgets, including the Apple iPhone. All of this has led to massive growth and exports from China and a larger US trade deficit with China than ever before.

This is not what people negotiated. These are major unintended consequences. Do we really want to help China in this way? Do we really want to boost China? I don’t think, and I think that from the point of view of too much public spending, which is fundamentally bad, and the increase in taxes to pay it, which is fundamentally bad, our stimulus plans Chinese are very, very bad, right? Don’t they use the money to buy military weapons for US cyber piracy threatening Taiwan etc. etc. ? Not to mention human rights and Uyghur and Hong Kong democracy. Do we really want to help China?



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