Larry Kudlow, President Donald Trump’s top economic adviser, says Republicans will hold the House this fall and the economy will be a big reason why.
“These are very good times and the midterms will be a report card on that,” Kudlow, the director of the National Economic Council, said in an interview, dismissing concerns that relatively flat wages and a soaring deficit will cut into enthusiasm for the economy.
“The confidence indices are telling a very important story, and POTUS is polling in the low to mid fifties on the economy,” Kudlow said just before returning to the White House after some time off. “The great blue wall has crashed. I think GOP will lose seats but keep the House.”
Republicans are counting on faster growth and a low jobless rate to help them hold off expected Democratic gains in swing districts where Trump polls poorly. Democrats need a net gain of 23 seats to retake the House.
But so far, the economy has not played a major role in special elections, with Republican candidates talking more about guns, immigration and other hot-button social issues while painting Democrats as liberal extremists.
Trump himself often touts strong economic numbers — including the second-quarter growth rate of 4.1 percent — but also gets repeatedly sidetracked by the Russia investigation and stories like the recent tell-all book from his former top aide Omarosa Manigault Newman.
Republicans also have to deal with a tax-cut bill that focused on lowering corporate rates and remains widely unpopular with the public. A poll in June by POLITICO and Morning Consult found that just 37 percent of voters supported the tax cut, down from 44 percent in April.
Democrats are also hammering at any signs that Trump’s tariff battles with China and his levies on steel and aluminum are costing U.S. jobs while driving up prices for consumers. And they note that when adjusted for inflation, earnings are flat over the last year, if not slightly lower.
Kudlow rejected that measure of wages and said workers were feeling better about the economy in ways that will help the GOP.
“All you have in [the Consumer Price Index] is a bump up in oil prices,” he said. “And energy prices are already coming down. The dollar is strong. The more important measure is real disposable income and it’s booming.”
Kudlow added that he continued to see real momentum in talks with European Union leaders to avoid a tariff war and lower existing levies.
“We set up a process and they are coming back here. And I’ll be going to Brussels,” he said. “I grabbed ahold of this and I’m not letting go.”