Kudlow: ‘I don’t expect’ China will sell US debt

National Economic Council Chairman Larry Kudlow said Tuesday he does not foresee China selling U.S. debt and that the administration is seeking long-term adjustments to the tax code to alleviate businesses hurt by the coronavirus pandemic. 

“I don’t believe they’ll sell our debt because those are the crown jewels of their foreign exchange reserves,” Kudlow said on Fox News’s “Mornings with Maria.”

“And, of course, they would lose even more money by doing that. It’s like catching a falling knife,” he added. “So I don’t expect that to happen under normal market conditions.”

Kudlow also said Tuesday that President Trump wants to see a 7.6 percent cut in the U.S. payroll tax, hoping it will help staunch economic pain caused by the COVID-19 pandemic.

Kudlow said that in an effort to make up for the economic activity lost during the shutdowns enacted to curb the spread of the virus, the administration is mulling a payroll tax holiday, a capital gains exclusion for several years and a tax deduction for business spending at restaurants.

“I know the president wants to see those folks that go back to work to get a 7.6 percent cut in their payroll tax so their after-tax take-home pay goes up,” Kudlow said.