Actor Names Economic Team
The panel advising Arnold Schwarzenegger includes business leaders and academics largely pushing a strong free-market philosophy.
By Thomas S. Mulligan and Jerry Hirsch
Times Staff Writers
August 21, 2003
The economic team that Arnold Schwarzenegger introduced Wednesday is studded with prominent California business names, entrepreneurs and financiers who have helped develop such companies as Intel Corp., Oracle Corp. and Dole Food Co.
The tilt was decidedly Republican, and some experts familiar with the appointees questioned whether they would bring any less of a hard-line anti-tax ideology than such Republican rivals as Bill Simon Jr. and state Sen. Tom McClintock.
But team member Edward E. Leamer, a UCLA economist, supports tax increases and spending cuts to help restore California's credit rating. He acknowledged that this puts him at odds with Schwarzenegger.
As a group, the advisors are "very free-market oriented," said Lee Ohanian, an economist at UCLA's Anderson School of Management. "There's a defining theme: California's economy is overburdened with taxes and red tape, and it's time to put free-market forces to work to create jobs."
The 23-member panel, which Schwarzenegger dubbed the California Economic Recovery Council, is co-chaired by Reagan administration Secretary of State George P. Shultz and legendary investor Warren Buffett.
It isn't clear what role, if any, the team members would play in a Schwarzenegger administration, but their task at the moment is to help the candidate develop a credible plan for overhauling the state's finances and closing the $38-billion budget gap.
Geographically, the group has heavy representation from Southern California and Silicon Valley, but no Inland Empire members, nobody from north of the Bay Area and only one member from the Central Valley.
Besides Buffett, the business luminaries include David H. Murdock, head of Dole Food and developer Castle & Cooke; Robert A. Day, head of TCW Group, the huge Los Angeles investment management firm; venture capitalist Arthur Rock, a founder of Intel Corp.; and financier F. Warren Hellman, who heads San Francisco investment firm Hellman & Friedman.
Small business is represented by Larry Flores, president and chief executive of El Tapatio, a supermarket chain, and by Orange County restaurateur Carlos Olamendi.
The academics are mostly conservative economists with Republican political experience, including Shultz and Michael J. Boskin, a former economic advisor to President George H.W. Bush. Both are fellows at the Hoover Institution at Stanford University, a bastion of free- market economics.
Other academics are UCLA's Leamer; economist James L. Doti, president of Chapman University in Orange, and Eugene F. Fama, finance professor at the University of Chicago.
After watching Schwarzenegger's speech and reviewing his list of advisors, Steve Levy, director of the Center for Continuing Study of the California Economy in Palo Alto said: "If this was supposed to be a bipartisan approach, what you got today was an economic agenda that is indistinguishable from Simon and McClintock, the traditional Republicans in the race."
The group's political pros include Republican Assemblyman John Campbell of Irvine; Julie Meier Wright, president of the San Diego Regional Economic Development Corp. and an official in the administration of former Gov. Pete Wilson; and Republican Bill Jones, former California secretary of state and the lone Central Valley member.
Raymond J. Lane, a partner at the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, is best known from his previous job as president of Oracle, the giant maker of database software. He served as a technology advisor to George W. Bush during his presidential campaign but described himself as "not a political type."
"I agreed to serve because I think California is at the end of the line with regard to the markets' confidence in our fis- cal management," Lane said Wednesday. "Putting it simply, California will not be able to pay or borrow a year from now without a serious fiscal plan put forth to Wall Street. When we default on debt and cannot borrow, it will be too late."
Hellman, who in July publicly decried the recall election, still called it a "terrible idea." But he added: "If the recall happens, I have to be with somebody," and Schwarzenegger "is closest to my beliefs." He said he agreed to serve after the actor called him last week.
Wright, who was Republican Wilson's chief official for business retention as secretary of Trade and Commerce, said people should not read her participation in the advisory group as an endorsement of Schwarzenegger. "I will carry this message that California has to improve the business climate to any candidate who will listen," she said.
Leamer also said he was interested in getting his message across, even if it conflicts with Schwarzenegger's views.
Leamer advocates rolling back spending to the level of California's 1999-2000 fiscal year budget over a three-year period. In the meantime, he endorses tax increases to help the state restore its credit rating.
"I know Schwarzenegger won't go for a tax increase," Leamer said. "He was very clear about that, but it is my objective view about what should be done. To his credit, at least he listened to me."
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