Arthur Laffer Shows Off His Curves
“The Godfather of Supply-Side Economics,” world-renowned economist Arthur Laffer, delivered remarks to a sparse crowd of students in the HUB auditorium Monday afternoon.
The event was hosted by the College Republicans to kick off TRUTH week, which is aimed at promoting conservative principles in what the College Republicans consider a dominant liberal environment in higher-education. Before attending the event, I knew three things about Dr. Laffer:
- He was one of Ronald Reagan’s main economic advisers during the 1980s.
- He’s well known for the Laffer Curve, which deals with finding an ideal tax rate between 0% and 100% that will bring in the most revenue.
- He’s a far right corporatist.
All three of these were confirmed yesterday, but Laffer was much more reasonable and hilarious than I had anticipated. First, though, Laffer did make some interesting claims that didn’t really surprise anyone in the audience who had a working understanding of his ideology.
- The main point of his speech was to present a unilateral opposition to raising taxes of any kind. He made the typical supply-side argument that any redistribution of wealth or tax increases will stunt economic growth and that the income-effects sum must equal zero. These are concepts that Laffer championed during the Reagan presidency.
- He said he moved from California to Tennessee simply because Tennessee does not have an income tax (although California’s highest income tax rate is 11%, which wouldn’t seem to be too much of a problem for a man who makes $40,000 just for a speaking engagement).
- Laffer believes that the $3.5 trillion that the Obama administration has spent over the past four years in stimulus spending has been crippling to the economy and accentuated what he describes at the worst depression since the Great Depression.
- He disparaged the Occupy Penn State and Occupy Wall Street efforts and said that the best way to combat the economic turmoil would be to create more high-paying jobs. If there were enough high-paying jobs to go around, Laffer said, then the occupiers would be employed and wouldn’t be bothered with protesting. The only way to do this, he claimed, was to lower taxes.
- He believes that all federal taxes should be eliminated aside from several sin taxes, and we should instead replace them with payroll taxes or a couple low-rate flat taxes.
- Laffer doubts the sincerity of the “Buffett Rule,” proposed by mega-billionaire Warren Buffet. Buffet said the government should raise his taxes, because he would happily pay more–his “fair share.” Laffer claimed that most of Buffet’s wealth was tied up in stocks and bonds which would be considered nontaxable income. He cited the fact that Buffett’s taxable income last year was only $40 million, compared to Buffett’s net worth–upwards of $50 billion.
However, not all of Laffer’s presentation was focused on espousing Republican ideas. In fact, much of it was refreshingly bipartisan and level-headed. For instance, Laffer voted for Bill Clinton twice and described him as a “really, really great President.” He also stated that “W. was as bad a president as we’ve ever had.” referring to former President George W. Bush. However, Laffer went on to describe many of the policies that President Bush advocated later in his presidency as ones that strayed from classical conservative principles.
In one of the most interesting moments of the event, Laffer began a lengthy discussion about how much respect he has for Barack Obama. You would be hard pressed to find a Republican in this political environment to compliment President Obama for anything, policy related or not. Laffer went on to say that President Obama is “one of the greatest American stories.” Laffer said, “He’s wonderful,” but quickly added “His only problem is, he’s wrong.”
Laffer also told the crowd stories from when he advised Arnold Schwarzenegger during his tenure as governor of California. He described one of the first times he met Governor Schwarzenegger for breakfast using one of the best Terminator accents I’ve ever heard. He joked that the Governor was curious as to why all economists were short and he compared Laffer’s stature to Danny Devito.
After Laffer’s speech, he took questions from the audience. In a telling moment, one student asked Laffer about his thoughts on mandatory drug-testing for welfare recipients. Laffer just laughed at the question and said he honestly didn’t care about or know enough about issues like that, and that he was simply concerned with making sure people didn’t need welfare in the first place.
For such an important economist and one with significant political connections, Laffer came off as a funny and down-to-earth individual who genuinely cares about influencing public policy for what he considers the greater good. Because most of the auditorium was empty when the talk began, Laffer ushered students to sit in the first few rows making for an incredibly intimate discussion. While I personally find many of Laffer’s ideas to be inhumane and ineffective, everyone can agree with his final point.
“This is not the day for social issues,” Laffer said. “This is the day to bring prosperity back to the United States.”