WATTERS: Larry, when you hear the Democrats talk about how bad things are for regular working class people, it is not true. We know they are going to lie and we know they are going to spend, but how do you at the same time count the great economic achievements for the middle class but at the same time acknowledge that paychecks have to get bigger and you hear the concerns of working-class Americans?

KUDLOW: Listen we have always heard the concern of working-class Americans, actually the President told campaign in 2016 was about lowering tax burdens for middle-class Americans and small businesses, getting rid of needless and costly regulations that have damaged small businesses. Creating millions of jobs with their energy packages that made us independent and, most of all, to renegotiate bad trade deals which permitted unfair trading practices and which damaged and across jobs in manufacturing and farming and elsewhere. This rift that I'm hearing from the other side of the aisle is a great example of cognitive dissonance. I know you are not really in the economic game, you know what I say cognitive dissonance, you know what that is. I'm just saying that because you know in Washington, no one lies, is just a bit of cognitive dissonance.

Here's the deal, when you see middle income wages for production workers rising faster than their managers -significantly faster - weekly wages for middle income and lower wage earners are raising 5%. The manager's wages are rising 2%, the bottom 10% of the workforce are getting the largest gains, substantially faster. These are gains, growth, substantially faster than the top 1%. This is what I'm hearing that the middle class lives paycheck to paycheck. I don't know exactly what that means, I believe certain presidential candidate live paycheck to paycheck. That's beside the point. If the paycheck is fatter, which is exactly what is happening here, and they will not acknowledge

WATTERS: People do live paycheck to paycheck. They string out things and they have to really budget. but I think the president has a firm grip on those realities but the point is.

KUDLOW: Paychecks are getting fatter, here is the statistics, this is not our staff, this comes from the Bureau of Labor Statistics and the Census Bureau. We do not control those agencies. They are the ones that are telling us, after tax, after inflation, the average family in the United States about $66,000 a year, has increased their take-home pay, to use Ronald Reagan's rates by $5000 in three years.

WATTERS: That the statistic we use on Watters World. I'm very familiar.

KUDLOW: You can reduce it all, the prior 16 years under Republicans and Democrats, that after tax was basically flat, we are up $5000. That's a direct consequence of lower taxes and regulations and better trade deals and better energy. For example, at some point, the cognitive dissonance have to give way to the actual facts. Like I say, we do not control the Bureau of Labor Statistics. We don't control the Census Bureau. Not only the blue-collar boom, this is a woman's boom. I don't know if you saw Ivanka Trump's event. Women are among the best beneficiaries, women who dominate the labor force, women who have had a huge increase in wages. It is women at the margin who are coming back into the labor force, women have power, economic power and I don't hear them talking about that. Let's going to African-American unemployment, overall unemployment 3.6%. Look at the African-American, Asian, women, how about the snowflakes, the millennials.

Jesse Watters, are you a millennial?

WATTERS: No but thank you. I appreciate that.