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Forbes® Best Business Mistakes: How Today's Top Business Leaders Turned Missteps into Success by Bob Sellers

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Chapter 29. ARTHUR LAFFER

One of Time magazine's "Greatest Minds of the 20th Century"

Member of President Reagan's Economic Policy Advisory Board

Popularized the Laffer curve and supply-side economics

Arthur Laffer tends to stir things up wherever he goes—and he does it with a smile. When I spoke with him, he had just gotten off the air with MSNBC, talking about—what else?—economics and politics.

When I saw him, he was grinning. "I don't think I gave them exactly what they wanted," he chuckled. "At one point they wanted me to bash Clinton, but I supported Clinton!"

Indeed he did, and that stirred up a lot of Republicans who always thought he was one of them. After all, didn't he help write Proposition 13, the late-1970s populist voter initiative in California that limited how high property taxes could rise in the Golden State?

Didn't he promote the so-called Laffer curve and supply-side economics, which held that reducing federal taxes spurs economic growth and increases federal revenues? Didn't President Ronald Reagan's belief in that theory give him a driving argument to drastically cut tax rates for most Americans and American businesses in the early 1980s? Wasn't he literally a Reagan economic adviser, for goodness' sake?

Yep. That's the guy. Then how could he stand up for Clinton? "For one thing," he says, "he cut a lot of government spending as a share of GDP and brought us into surplus. And he cut capital gains taxes."

Of course, Laffer's support of Clinton may have had something ...

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