FILE- In this Nov. 16, 2018, file photo graffiti has been painted on a sidewalk by someone opposed to the location of an Amazon headquarters in the Long Island City neighborhood in the Queens borough of New York. Amazon said Thursday, Feb. 14, 2019, that it will not be building a new headquarters in New York, a stunning reversal after a yearlong search. The online retailer has faced opposition from some New York politicians, who were unhappy with the tax incentives Amazon was promised. (AP Photo/Mark Lennihan, File)

White House Economic Adviser Larry Kudlow spoke with Brian Kilmeade about his meeting with President Trump and New York Governor Andrew Cuomo discussing Amazon pulling out of a three billion dollar deal to build a headquarters in Queens, New York, the impact of the tax cuts on high tax states such as New York, why he feels optimistic about a new China trade deal and President Trump winning the war on border security.

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BRIAN KILMEADE, FOX RADIO ANCHOR: He's White House economic advisor, Larry Kudlow. Larry, this is role reversal, I'm usually calling into your radio show. How did this happen?

LARRY KUDLOW, DIRECTOR OF THE U.S. ECONOMIC COUNCIL: Hi Brian, how are you buddy?

KILMEADE: Good, I know you're the busiest guy in America and certainly with a lot of responsibility on your shoulders, first off they just made an announcement. Amazon is pulling its deal out of New York, they say with so much controversy they'll go somewhere else. What's your reaction?

KUDLOW: Well, it's too bad, I mean speaking as a New Yorker or former New Yorker whatever I am, I think it would have been a very good think for New York City and New York State. I know there was some controversy, you know we just President and I just met with Governor Cuomo and that topic did come up, it's - it would have really helped New York, that's all I can say. So, I - it's too bad, it's too bad it didn't work out.

KILMEADE: Here's what Governor Cuomo said after that meeting.

(BEGIN AUDIO CLIP)

GOVERNOR CUOMO: The President understands it, he got away with it when he had total control, they did it when they did that tax bill that gave a big tax cut to the rich. And the way they paid for the tax cuts for the rich was by increasing the tax on democratic states believe it or not. Lawrence Kudlow was in the meeting, he is the President's director of the National Economic Council, he understands New York and he understands the economics also.

(END AUDIO CLIP)

KILMEADE: So, do you want to - do you understand that? Did the President just try to give a tax break for the rich?

KUDLOW: Well, no, I mean look I understand that some upper end people, some wealthy people will wind up paying more because of the limit to the deduction, state local write off. Yes, I understand that, I think Governor Cuomo raised that with a lot bigger and we talked about it for awhile. I don't know if anything can be done about it, I'm going to go back to New York at some point in the near future and sit down and noodle with the Governor and see if there's anything that could ameliorate the situation. But you've got to remember and we've said this to the Governor, New York State is an extremely high taxed state and it rates like out of 50 states Brian, individual taxes and property taxes and say taxes in New York rank near the bottom, almost - close to 50. He did say, I will put this because I like to find good things to say about folks, they did cut their corporate tax and their rating moved - they're like the seventh now in the country on corporate taxes, which is good.

KILMEADE: Right.

KUDLOW: And I did suggest respectfully to the Governor that he might think about cutting other taxes so that the state and local deductions wouldn't be so important. Really, the beat here is not just President Trump who is actually sympathetic to the issue but a lot of people said in 2017, why should low tax states or middle tax states have to subsidize the highest tax states, why? And I think that there is unfairness there and so we tried to even the playing field. Now again, I'm not attacking the President - the Governor of New York, I think he's done some good things, we have our disagreements and our agreements, maybe there's a way out of this, maybe not Brian we'll see.

KILMEADE: Governor Cuomo also went on to say that if you heard New York and California you heard the country.

KUDLOW: Well look...

KILMEADE: On the economy, on the economy.

KUDLOW: Yes, look the bill in its entirety, let's just step back for a minute, what did we do? We slashed business tax rates for large and small companies and we gave a 100 percent expensing for new equipment that has created an economic boom. It is the best economy in several decades and a whole lot of people are doing better, right? I almost said getting rich, I guess getting rich is not a good thing anymore. I like it when people get rich.

KILMEADE: So do I.

KUDLOW: I would prefer...

KILMEADE: And the numbers don't lie Larry look, you have a five year low or a fifteen year low in unemployment rate. We know the growth has exceeded expectations, the one thing that surprised me and surprised experts is that you brought in less revenue, down .4 percent, $3.3 trillion, raising the deficit annually to 872 billion. Usually when we have this type of growth the deficit gets paid down, what happened?

KUDLOW: Well give it a chance, I mean the CBO numbers and we always tend to disagree, they're always low balling economic growth. But they themselves have said that revenues have come in 1.2 trillion above their original estimates. So, what's supposed to happen should happen with the supply side tax cuts and roughly 80 percent now, 80 percent of the $1.5 trillion tax cut has been paid for. So, CBO is giving credit to that, now the deficit will come down in the next few years as a shared GDP, right now it's around four percent, which by the way is not a catastrophe. It will come down a lot and the level of the deficit will come down, we're going to have a very tough budget coming up. So, give it a chance, you've got to have a little patience but even CBO acknowledge that GDP is stronger and revenues are higher.

KILMEADE: Larry we understand too that the economy, the President saying optimistic things about the U.S. - China deal. Do you feel the same optimism the President expressed yesterday?

KUDLOW: I do, I mean I've been on the phone to the folks in Beijing and the vibe is very good. All the issues are on the table and being discussed, they're hard at it. They're going to meet with President Xi tomorrow, which is a very good sign and I think President Trump and President Xi at some point in the future Brian, I don't know why, but those two are going to get together and also work on the deal. So, you know I would say stay tuned, I'm modestly optimistic on this, I like the vibe.

KILMEADE: Twenty seconds left, is the President going to sign this bill, would you recommend he does? The border bill?

KUDLOW: They're working on it as we talk down in the Oval - we'll see, it's up to him, very complicated. But I'll tell you this in 20 seconds, he has won the war in explaining to people why we must have solid border security including a wall. He has won that war and that is huge in terms of America's future.

KILMEADE: The numbers gone up 14 percent over the last three months in terms of the public supporting it. Larry Kudlow always great, stay healthy, keep working hard.

KUDLOW: Thanks Brian you too buddy.