Though it has been a mixed-bag of reaction over the $38.5-billion deal on the spending bill reached late Friday evening, CNBC host Larry Kudlow saw it as a significant change in course of U.S. economic policy.
On his Saturday radio show on WABC in New York, Kudlow said despite money remaining in the budget for the likes of Planned Parenthood, there is a broader message to take away from the deal – the shift from big government to limited government.
“These are big changes in the whole direction of U.S. economic policy,” Kudlow declared. “We are moving now from the proliferation of a very big government model of spending and taxing and borrowing to a much more moderated limited government model with lower spending and lower taxing.”
The former associate director for economics and planning for former President Ronald Reagan’s Office of Management and Budget recounted an instance at a breakfast with Speaker of the House John Boehner prior to the 2010 election, which he explained to Kudlow and other business leaders that the Speaker’s plan was “to stop the bad stuff.”
“That was the key message – stop the spending, stop the taxing, stop the regulating,” he continued. “Change direction in the course of fiscal policy – change direction from government domination direction and allocation of resources to private-sector freedom. That’s what we are slowly witnessing, OK? The halls of Congress move slowly. The legislative process moves slowly, but gradually and slowly. We’ve already seen an extension of the tax rates and now a very significant, near-historical reduction in budget cuts and budget spending, which will serve us well.”
As to whether or not the averted government shutdown and big deal will cause the markets to react differently, Kudlow explained that remains to be seen.
“Now whether the stock market reacts to that with joy, on Monday morning with a big rally, I do not know,” he added.