Supply-Siders Wary of Schwarzenegger; Choice of Economic Advisers at Issue

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Byline: Donald Lambro, THE WASHINGTON TIMES

California gubernatorial candidate Arnold Schwarzenegger may not be getting the right economic advice he needs to turn the state around, say some supply-side tax-cutters who are questioning the Republican movie star's selection of advisers.

Since Mr. Schwarzenegger announced his candidacy for governor in the upcoming recall movement to oust Democratic Gov. Gray Davis, tax-cut activists have worried that his early decisions to seek advice from former Republican Gov. Pete Wilson and his aides and from business tycoon Warren Buffett have sent the wrong signal to voters.

"The Wilson crowd passed tax increases in 1991 that hurt the state a lot in the last recession. Wilson's record is pretty poor on fiscal issues," said Stephen Moore, a tax-cut crusader who heads the Club for Growth and a Schwarzenegger supporter.

Still, most supply-siders rationalized the decision by saying Mr. Wilson and his people knew how to win elections because he was the last Republican to occupy the governorship. But when Mr. Schwarzenegger decided early last week to name Mr. Buffett, a Democratic foe of Republican tax-cutting policies, to be his senior economic adviser, the tax-cutters became nervous.

Then, when Mr. Buffett proposed Friday that one of the solutions to California's problems was to raise property taxes, saying they were too low, conservative supply-siders began questioning the way the Schwarzenegger campaign was choosing its economic team.

"Raising property taxes? There's a political winner," Arthur Laffer said sarcastically. Mr. Laffer, who is an economic consultant in San Diego, is the legendary godfather of the supply-side tax-cut movement adopted by President Reagan.

"Schwarzenegger is a smart businessman. He's got all the attributes to be a great leader. Now he needs a program" to cut taxes, Mr. Laffer said.

But in a personnel turnaround Friday that has become the hallmark of Mr. Schwarzenegger's campaign strategy, he named George Schultz as another top economic adviser. …