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    Howard Jarvis Taxpayers Ass'n Releases Statement Signed By 38 Prominent Economists:

  • Massive CA Budget Deficit Is "Direct Result Of Excessive Spending By Our State Government"
  • CA Budget Crisis Only Solvable With "Spending Restraint [and] Policies Yielding Enhanced Economic Growth And A Large Tax Base"

    (March 7, 2003) -- The Howard Jarvis Taxpayers Association (HJTA) in conjunction with the Pacific Research Institute has released a statement signed by 38 prominent economists stating that tax increases to solve the state's budget crisis -- even temporary tax increases -- would inflict serious harm to the California economy.

    The signatories include Milton Friedman, Nobel Laureate in Economic Science; Art Laffer, member of President Reagan's Economic Policy Advisory Board; and former U.S. Secretary of State George Shultz.

    The statement, which says "[t]he massive California budget deficit is the direct result of excessive spending by our state government," warns that "the California budget crisis can be solved only through spending restraint and the implementation of policies yielding enhanced economic growth and a large tax base." posts the text of the economists' statement verbatim below with its signatories:


    February 24, 2003

    The massive California budget deficit is the direct result of excessive spending by our state government: State spending increased 37 percent over only two years because of a revenue windfall from taxes on incomes and capital gains. New taxes will not solve our budget problem because the Legislature and Governor always face powerful pressures to preserve and expand spending programs, and new revenues from higher taxes would reduce the immediate need for fiscal discipline. This political pressure for higher spending means also that any new taxes imposed "temporarily" would be likely to prove permanent, so that even ostensibly temporary tax increases would increase uncertainty and impose other adverse economic effects. In short: Just as every California family must live within its means, so must California government learn to do so as well.

    The California budget crisis can be solved only through spending restraint and the implementation of policies yielding enhanced economic growth and a larger tax base. In the short term, spending must be disciplined; tax increases are inappropriate because they would facilitate greater government spending at the expense of private spending, that is, at the expense of the economy in the aggregate. Over the longer term, spending discipline must be maintained; tax increases would induce individuals, businesses, employment, and investment opportunities to locate elsewhere. Instead, the long-term tax burden must be reduced, state-owned assets that could be used more productively in the private sector must be sold, and many regulations that increase the costs of creating and operating businesses and that reduce employment opportunities and wages must be reformed or eliminated.


    James C.W. Ahiakpor, California State University, Hayward
    William R. Allen, University of California, Los Angeles
    Charles W. Baird, California State University, Hayward
    Richard A. Bilas, California State University, Bakersfield (Emeritus)
    Don Booth, Chapman University
    Thomas E. Borcherding, Claremont Graduate University
    Henry N. Butle, Chapman University
    Darin G. Clay University of Southern California
    John Cogan Hoover Institution, Stanford University
    Henry Demmert, Santa Clara University
    Milton Friedman, Hoover Institution, Stanford University (Nobel Laureate)
    Joe Fuhrig, Golden Gate University
    Gary Galles, Pepperdine University
    Peter Gordon, University of Southern California
    Dale M. Heien, University of California, Davis
    John M. Heineke, Santa Clara University
    David R. Henderson, Hoover Institution, Stanford University
    Jeffrey Rogers Hummel, San Jose State University
    Mark Jackson, San Jose State University
    Daniel Klein, Santa Clara University
    Robert Krol, California State University, Northridge
    Arthur Laffer, Laffer Associates
    Clay LaForce, University of California, Los Angeles (Emeritus Dean, Anderson School of Management)
    Tibor R. Machan, Chapman University
    Michael L. Marlow, Calif. Polytechnic State Univ., San Luis Obispo
    John G. Matsusaka, University of Southern California
    Lawrence J. McQuillan, Pacific Research Institute
    Tom Means, San Jose State University
    Robert J. Michaels, California State University, Fullerton
    Lydia D. Ortega, San Jose State University
    Aris Protopapadakis, University of Southern California
    Alan C. Shapiro, University of Southern California
    Stephen Shmanske, California State University, Hayward
    George P. Shultz, Hoover Institution, Stanford University (former Secretary of State)
    Edward Stringham, San Jose State University
    Shirley Svorny, California State University, Northridge
    Paul J. Zak, Claremont Graduate University
    Benjamin Zycher, Pacific Research Institute

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