Oxnard : Economist Offers Dire Prediction

Arthur B. Laffer, the conservative economist who helped form U.S. economic policies during the 1980s, predicted devastation for California if the state Legislature approves a multibillion tax package under consideration.

Appearing at a fund-raiser at the Radisson Hotel in Oxnard for Assemblyman Tom McClintock (R-Thousand Oaks), Laffer ridiculed Republican Gov. Pete Wilson for not standing firm against tax increases during the current budget crisis.

A former USC professor who is now an economic consultant in La Jolla, Laffer is best known for his Laffer Curve of supply-side economics.

His theory of supply-side economics, which was the basis for President Ronald Reagan’s 1981 Economic Recovery Act, asserts that cutting taxes can stimulate business activity enough to eventually offset the tax reduction and increase government revenues.

Laffer predicted that the proposed state tax-package would cost far more than the estimated $1,200 per family, would cause property values to drop 30% statewide and would send the state’s unemployment rate soaring.

“If you give spendthrifts more money, they don’t spend less, they spend more,” Laffer said.

About 150 McClintock supporters attended the $125-a-plate event.

McClintock was hailed by Laffer as a visionary conservative. He predicted that the five-term assemblyman could rise to the governorship and the White House.

Laffer also used his acerbic wit to mock President George Bush for acceding to pressure for tax increases. Laffer repeatedly referred to Reagan as the “real president” who, he said, told him he decided to invade Grenada because “I thought, what would John Wayne do?”