Horizon, Host: Ted Simons

May 11, 2006


Host: Michael Grant

Arthur Laffer


  • He's been dubbed "the father of supply-side economics". The creator of the famous "Laffer Curve," he's credited for sparking a worldwide tax cut movement.
Guests:
  • Dr. Terri Hedgpeth -
  • Arthur Laffer -
  • Chris Rush - Tucson artist


View Transcript
Michael Grant:
Tonight on "Horizon," it's graduation week at Arizona State. Thousands of students are graduating. We will talk to one of the outstanding graduates. Congress has approved more tax cuts; critics say many of them aimed at the wealthy. Hear from the economist whose theories laid the groundwork for such cuts. And meet the artist who uses a unique medium for his drawings. That's coming up next on "Horizon." Good evening. Welcome to "Horizon." today is the big day for more than 6,000 Arizona State University students as they donned caps and gowns and marched down the aisle to the tune of "Pomp and Circumstance." among the new grads will be 200 nurses, more than 250 teachers, over 600 engineers, and 1400 business grads, almost half of those earning their M.B.A.'s. Tonight we have an opportunity to introduce to you one of outstanding students. Blind from birth Terri Hedgpeth has excelled while winning awards and research grants, serving on boards and conferences and much more. Joining is now is Dr. Terri Hedgpeth. Am I the first to refer to you that way?

Terri Hedgpeth:
Thank you.

Michael Grant:
I am exhausted reading your resume. It is exceptionally impressive.

Terri Hedgpeth:
You are very flattering. Thank you.

Michael Grant:
One of the, in your studies, you researched technology for students with disabilities. And you were telling me about one project that has made easier to scan written product to get it into a more usable formatted for the blind.

Terri Hedgpeth:
Yes. I have been working for the past and a half years in the center for cognitive ubiquitous computing which is kind of a related center to computer science and engineering. And our director, Dr. Ponchoffen, has? His grand vision, he wants to develop assistive technologies for people who are blind and visually impaired. And so about three years ago we met with two focus groups of consumers who are blind and visually impaired to find out what it is they feel is important, what it is that they need because oftentimes, engineers tend to go off and to never-never land, developing technologies that when they bring them out and they are surprised why consumers reject it. So one of the things that the group mentioned is that even though today or the three years ago they used scanners to scan books, and they could converted it through optical character recognition software and listen to what it says, or what they scanned, it was a monotonous process because with a scanner if you are scanning chapters in textbook you have to manipulate the text book. You have it face up, face down on the scanner, close the door. Hit the button to scan. Ok. You got to scan. Open it. Take the book out. Lay it back down on the terrible. Turn the page. Take the book. Put it back down. If you are scanning 50 pages, 100 pages, an entire textbook, that can get to be a really monotonous process.

Michael Grant:
As I understand it what was developed was a camera you could keep the book laid flat, turn the pages and greatly enhance that process. And then the product then can translate either to larger type, depending upon the visually impaired nature, or it can then translate it to speech.

Terri Hedgpeth:
That's right. It's important that a system should be user configurable and be able to meet the needs of the individual users. And some need large print and some will need speech output and others need both together. And so the system, what it does is it allows you the way it works, is the camera is mounted on a stand about 13 inches above the page. And so you late book out flat on the table like this. And you just snap a picture with the, hit a keyboard on the computer or the laptop, whichever you have it hooked to, and that snaps the picture of that page. The you turn that page and snap another picture. So you are never moving the book. It stays put. And after you are finished with that, then, you send your pages that you have captured over to the optical character recognition software and it's the same scenario there. It will recognize it and send it off to word and it allows you to read it with text to speech output, or enlarged print.

Michael Grant:
So, Terri, what's next for you? I know you have several research grants. Where will you be working?

Terri Hedgpeth:
Well, in our lab, in cubic we have a lot of specializations. In assistive technology, we have area focus that is in visual processing. And we have another area focus that is in haptics which means tactile or things you can touch, hold.

Michael Grant:
Braille, for example?

Terri Hedgpeth:
Braille but more than that. We are looking at, our lab, what we are working on is virtual haptic so you can basically explore the surface of mars with your hand.

Michael Grant:
Ok. Terri, we are out of time. But just an outstanding academic career and I am sure an outstanding professional career to follow. Thanks very much for joining us.

Terri Hedgpeth:
Thank you very much.

Michael Grant:
The United States senate has passed a $70 billion tax cut over five years. The house passed that bill on Wednesday. President bush expected to sign it. Democrats who oppose the bill say those cuts are mostly been fitting the rich. Also today state GOP legislators introducing a plan to cut state income taxes. One man who undoubtedly is cheering these developments has been dubbed the father of supply side economics, Arthur Laffer, was a member of president Reagan's economic policy advisory board. He is credited, of course, with popularized what became known as the Laffer curve, a theory used to justify tax cuts. Laffer in town as part of the Goldwater institute's spring speakers series. Larry Lemmons caught up with Dr. Laffer at the Camelback Inn.

Larry Lemmons:
Just to lay a foundation first, could you talk a little bit about what supply side economics is.

Dr. Arthur Laffer:
I have a very fast primer.

Larry Lemmons:
Is it at all possible?

Dr. Arthur Laffer:
Unfortunately, it's really simple. People like doing things they enjoy and they dislike doing things they don't like. And the role of government in this world is to change incentives to change the attractiveness or the unattractiveness of activities. And what you want to do in this world is you want to make activities as attractive as possible, or little unattractive -- you want to sound, stable money. Low interest rates, no inflation so people can count on markets. You want low regulations. Not so you have no regulation so people do things wrong but you want low regulation that are pro growth, pro people. You want free trade. So if you find high quality products at low cost abroad, who would ever say no to that? It just makes no sense. And low flat rate taxes. You want government to control spending. So that you have what people need, the good schools, the good roads, all of that, good police, good fire, all of that stuff but don't go overboard. Don't throw out favors to your friends and do big welfare payments. That's what supply decide economics. To make good sound business attractive, and to make bad activities unattractive.

Larry Lemmons:
Now, someone said supply side economics is a way to run up the budget deficit. You can have the spending but at the same time you can cut taxes.

Dr. Arthur Laffer:
It's this hatred of deficits that's just silly. When you buy a house, you get a mortgage or not? If you have to buy a house with cash, deficits are good. Running a budget, borrowing money is not bad. If you can borrow money at 5\%, and lend money at 10\%, how much should you borrow? Now, switch those numbers. If you can borrow at 10\% and lend at 5\% how much should you borrow? Zero. It depends upon the circumstances. If you have really fantastic uses of your money, and the costs are relatively small, then, it's ok to borrow but if you don't, if you have poor uses of the money and high costs, then don't worry borrow. That's time you pay the money back. That's all you do. Deficit borrowing by the government should be used judiciously depending upon the returns of the resources versus the cost of taxes. Sorry.

Larry Lemmons:
So what is the Laffer curve? I know that you didn't actually coin that term. It has been attributed to what you had apparently --

Dr. Arthur Laffer:
To moi.

Larry Lemmons:
Could you describe then that curve and.

Dr. Arthur Laffer:
Sure. It's simple. There are two effects taxes have. You know, if you raise taxes, it's true; you do collect more money per dollar of tax base. That's true. But if you raise taxes, it reduces the incentives to do an activity and if you get a smaller tax base. It's like any other price. If you raise the price of candy, the companies will make more profit per candy bar but there will be less candy bars sold. Sometimes had you raise tax rates, the output effect is larger than the tax rate effect on the income. And you will actually collect less revenues. Sometimes you will collect more revenues. If you are at zero taxes, the government's going to collect zero revenue. If you raise tax rates even though you cost a little bit in output you will still collect more revenue. But let's say you are 105 tax rates so every time come in the office instead of getting a check you get a bill. How much are you going to work, Larry?

Larry Lemmons:
Even if you had 100\% --

Dr. Arthur Laffer:
I used 105 just to go overboard. I want to make it cost them so they can see the point. If you cut tax rates at those very high rates, obviously, you are going to increase output and increase revenues. And that's all it is. You do that relationship; you have you have this relationship between tax rates and totals revenues. Obviously, that's really simple and simplistic. It depends on how long it is. Which tax you raise. All those other things. But it just shows the principle that raising tax rates does not always raise revenues, and it never, ever, ever raises as much revenues as the percentage increase in taxes. If you raise tax rates by 5\%, you will never get 5\% more revenue. You may get 4\%. But you won't get five. There will always be that output effect and that output effect is serious.

Larry Lemmons:
Isn't there a question about where, at what point, do you get a maximized revenue?

Dr. Arthur Laffer:
Of course. Of course.

Larry Lemmons:
How do you find out where we are at any --

Dr. Arthur Laffer:
You have to do the best you can with the estimates but you never want to be where you maximize revenues. You never want to be there. That's not the goal of government is to maximize revenues. The only thing is that if you are in that prohibitive range, there is no argument against cutting tax rates. None. Now, in capital gains, for example, we know a cult in capital gains rate has in every single instance raised revenues. Why on earth would you tax the higher rate if it's costing the government revenues and hurting people? It makes no sense. And there are a number of other taxes where we also know the more broad-based the tax, the less leakages there are. The better the tax system. That's why you come out to the conclusion that the best taxes is a low flat rate tax that encompasses all taxes.

Larry Lemmons:
I know you voted for Bill Clinton twice. Didn't you?

Dr. Arthur Laffer:
I thought he was a great president. Not a good man. But I did think he was a great president.

Larry Lemmons:
Would you describe the fruits from the Clinton years, the late 1990's, we had a huge budget surplus and then, of course, when George W. Bush came into office he started cutting taxes and it's really a long side more of the supply side economics theory. So can you talk about that transition and how you saw, how the economy has changed?

Dr. Arthur Laffer:
We had a horrible situation at the end of 1999, while Clinton was still president. Had nothing to do with Clinton's policies but we had the Y2K project and we had a 1970's redux. There was that huge run up on the NASDAQ if you remember, interest rates rose. The price of gold rose. The dollar fell on the foreign exchanges, we had that wild flurry and then the fed in early 2000 did what they should have done, they contracted that monetary base back. There was no Y2K problem. It was all a phony. And then you got the market collapsing back down. It came back down to where it should have been and then we had September 11. Now, here is president George W. Bush sitting here with a collapsed economy, huge drop in revenues, and a huge increase in need for defense expenditures. Now, the question I would ask is, do you think he should raise taxes on the last three people working? Is that the smart thing to do in a down turn? No, it's not. Thank goodness Bill Clinton had provided Bush with the wherewithal to be able to borrow. It's a classic time of where you should borrow. Bill Clinton had had surpluses and cut government spending so much and done such a good job that bush had the fiscal freedom to be able to run a deficit and do what was right. And that's exactly what bush did and has done. He's done a great job on that. And this economy is the best performing economy ever. And he owes a lot of that to Bill Clinton's great economics, but he did the right thing with those options at hand. He had to do the defense spending. He had to. We had a real problem. And he couldn't raise taxes during a down turn. That's just silly. That makes no sense. So he did the right, two right things. He cut the tax rates; increased defense spending and he ran a deficit. But that's the type of circumstance that I mentioned earlier that you really think a deficit is appropriate.

Larry Lemmons:
What about the overall economy now? Where should we be going from here?

Dr. Arthur Laffer:
What has happened here, and my view is this economy is the best performing economy that has ever been on planet earth. There's nothing been even close to us today. You know, the first thing is, do you remember the old Latin phrase, the doctor is always use --

Larry Lemmons:
No, I don't.

Dr. Arthur Laffer:
It means first of all do no harm.

Larry Lemmons:
I have heard that.

Dr. Arthur Laffer:
Just don't do damage. This thing is doing so well, shhh. Do nothing dramatic, nothing drastic. You have got a great fed chairman in there, Ben Bernanke. You have got nice tax rates. Make them permanent. Make bush's tax cuts permanent. Don't do anything radical in this society today. Period. Don't do any restrictions on immigration. Don't do any restrictions on trade. All of those things can hurt the economy. Don't do wage and price controls. Don't do an excess profits tax, don't do gas lines -- all of these bone head ideas these people come up with can only knock you off this wonderful platform. And then what we want to do from here on out is very marginally change policies. It's not like when I came in with Reagan. You know, those days we had an economy that was in the garbage.

Larry Lemmons:
Yes, the Carter years.

Dr. Arthur Laffer:
Carter years were terrible. When we came into office, the prime interest rate was 21.5\%, Larry. We had the highest marginal tax rate with 70\%. I mean, it was a disaster. Capital gains tax rates on real capital wanes were way over 100\% because 17-18\% inflation, we taxed nominal capital gains at 50\%. It was crazy. We had wage and price controls. All of that stuff. We needed something radical then. Reagan and Clinton and W. Have done a great job of bringing the economy to its proper place.

Larry Lemmons:
You left out --

Dr. Arthur Laffer:
I did leave out someone and I meant to leave him out. I meant to leave him out. He took us back a little bit but he was in office very short period. Thank goodness. But you know, brought us to -- now you just don't want to do something drastic. Enjoy this while it lasts. It's great. 4.7\% unemployment. When I am in France I am on a board of one of the largest companies. I am the only American. The unions are striking all the time. We don't have a union problem. We don't have strikes anymore. We don't have race riots. When you go to Germany the unemployment rate is well over 10\%. Enjoy. Keep this going as long as possible.

Larry Lemmons:
I just wanted to interrupt you because I know you don't have a whole lot of time here. Can you talk about, then, Arizona? You know we have a huge budget surplus right now.

Dr. Arthur Laffer:
You have a great surplus. Because of the nation.

Larry Lemmons:
Could you talk about, what do you think would be the wise --

Dr. Arthur Laffer:
Let me tell you when I came in and worked with you people, and I worked with you people very closely as you may know when Fife Symington was elected governor. We were going to get rid of the income tax in Arizona over the full eight years. His term in office was interrupted, in fact, disrupted in his fifth year. We were two-thirds of the way there. Getting rid of the state income tax with no offset. We were running surpluses. The economy was booming. It was working beautifully. You should go back and continue those policies. Whether our democrat or republican, it doesn't really matter. Kennedy did it. And Reagan did it. Those are good democrat and good republican. Clinton did it and w. Is doing I good democrat and a good republican. This is just common sense economics. I think that Arizona should get rid of its income tax. With their surpluses cutting the rates. None of these rebate stuff. Just cutting the tax rates down and bringing business into Arizona and keeping your prosperity going. You have been very blessed to be neighborly with California, where economic policies are stupid. Can you not see from what we do, the mistakes you should not follow? If you don't -- see, those mistakes go back to your own history. Look at what happened under Babbitt, and follow forward. Did you see what your tax rates were when fife took office? It was incredible. The prosperity you have had since then has been amazing.

Larry Lemmons:
Thank you, Dr. Laffer, for speaking with us today.

Dr. Arthur Laffer:
Thank you. My pleasure.

Michael Grant:
Tucson artist has found an unusual medium for his drawings. Artist Chris Rush searches for old do you means to use as his canvas. Our producer gives us a profile of the artist.

Chris Rush:
There is nothing more beautiful Atlantic an object that has been affected by time and many hands. There's something about that is a beauty you cannot reproduce. So for me to be part of that and add some layer to it is really very rewarding. My name is Chris Rush. I was born at Jersey shore. Lived there most of my childhood. I spent one year out here in Tucson when I was a teenager. I went to Morano High, future farmers of America and their scary blue and gold jackets. And I ended up a jewelry designer for the big houses in New York. I did a lot of work for Cartier. I mean, it was marvelous. I did a diamond and emerald rosary bead for Imelda Marcos that was clearly one of the most awful and vulgar things ever made. And I started to have doubts. May master teacher, Larry Calenberg came to me one morning and said, you are miserable. The jewelry business is very mercenary. Pool sharks. So I went out to Tucson. I rented a room in the old anti-ray months pool hall and I started to make art. So I started to draw. And paint a bit and I fill might studio with these things. I thought, what do I do now? So in a moment of madness, I said, I will make prints of all these images and I will just put them up on the walls in Tucson and then I will see what people think of them. Everyone really liked them. No one knew who the hell I was but they really liked these images. So I thought, oh. That's what I will make art to do. I will keep making prints and keep putting them up so it turned into a dialogue where every week, I would go back to the sites I had chosen which were mostly abandoned buildings on busy intersections. The papers started to report on it. The police started to get nervous about it. The politicians were deeply troubled because I was still anonymous. So it got very interesting very fast. Well, I suddenly had my m.o. I knew why I was making art. I had an audience. But then I realized I wanted bigger and better sites. So through a series of crazy events, I convinced the department of transportation to give me buildings on speedway that they were going to tear down anyway and let me do murals on them and the murals were very much for people driving by. Well, this just went really well. I got some national press on it, had a lot of fun. Got attention and love which is all an artist wants. And this went along pretty well. And then eventually I went too far. Eventually, the police got really mad. And eventually, I said, well, it's time to become an easel painter. I have always found fashion models really unattractive. For the most part I find them rather monstrous. And I find movie stars just about as grotesque. I like the way people really look. And my portraits are largely about looking at how we actually exist. They're wild characters. But at the same time, I am looking at just how mysterious we all are and how, in some weird way, we are all kind of alike. Humans are really peculiar and that means everybody. Nothing makes me happier than big ears. I'll be honest. I started to alternate between very serious formal portraiture and drawings on old and strange and funny pieces of paper as my sketchbook. Because I could draw on an empty piece of paper but it was a lot more fun to draw with a 19th century piece of paper that somebody had already established the conditions and I had to sort of participate with. It's a weird kind of collaboration with unknown ghosts. There's a word, it's written on a warrant for someone's arrest issued by the court, Alice Schwartz was running the ok house. And the ok house was used for purposes of prostitution in Frontier, Montana, 1911. And its just a great, great description of someone's life and it really demanded a portrait. I had to do a portrait of Alice Schwartz, whoever she was. This is a collection of some of my favorite materials that I have found. And this is material from all over the world. Most of it I found in Europe in flea markets but some I found right here in Tucson. On top here we have a map of the United States drawn in about 1830 by a student. This is a piece from a scrapbook. It's also from around 1830. I found it in London. And there's some really sappy romantic poetry here. Which I can barely get through. But considering that this was probably a stay at home woman who may have even been trapped at home and this is what she did to better herself, it's just a marvelous piece of paper. It's very challenging to think what I could add to it but I feel like I probably will.

Producer:
Some woman's face?

Chris Rush:
It will probably get a face. This is almost the impact opposite. This is a German piece of paper. It's a religious edict. I am sure that someone suffered somehow from this piece of paper. My rulings are basically, I want something that's been handwritten or hand-drawn, and I really want part of a story. I want evidence of the margins of life. I mean, I call these orphan papers because no one really wants them. You know? But when I, when I put a portrait, when a face is put on this paper, it really changes everything. Then it goes, it goes from miscellaneous to story. And somehow in bringing these old papers to light, there is this marvelous rescue of these little pieces of humanity that I just enjoy so much.

Michael Grant:
Thanks very much for joining us this Thursday evening. I am Michael grant. Have a great one. Good night.

ASU class of 2006


Guests:
  • Dr. Terri Hedgpeth -
  • Arthur Laffer -
  • Chris Rush - Tucson artist


View Transcript
Michael Grant:
Tonight on "Horizon," it's graduation week at Arizona State. Thousands of students are graduating. We will talk to one of the outstanding graduates. Congress has approved more tax cuts; critics say many of them aimed at the wealthy. Hear from the economist whose theories laid the groundwork for such cuts. And meet the artist who uses a unique medium for his drawings. That's coming up next on "Horizon." Good evening. Welcome to "Horizon." today is the big day for more than 6,000 Arizona State University students as they donned caps and gowns and marched down the aisle to the tune of "Pomp and Circumstance." among the new grads will be 200 nurses, more than 250 teachers, over 600 engineers, and 1400 business grads, almost half of those earning their M.B.A.'s. Tonight we have an opportunity to introduce to you one of outstanding students. Blind from birth Terri Hedgpeth has excelled while winning awards and research grants, serving on boards and conferences and much more. Joining is now is Dr. Terri Hedgpeth. Am I the first to refer to you that way?

Terri Hedgpeth:
Thank you.

Michael Grant:
I am exhausted reading your resume. It is exceptionally impressive.

Terri Hedgpeth:
You are very flattering. Thank you.

Michael Grant:
One of the, in your studies, you researched technology for students with disabilities. And you were telling me about one project that has made easier to scan written product to get it into a more usable formatted for the blind.

Terri Hedgpeth:
Yes. I have been working for the past and a half years in the center for cognitive ubiquitous computing which is kind of a related center to computer science and engineering. And our director, Dr. Ponchoffen, has? His grand vision, he wants to develop assistive technologies for people who are blind and visually impaired. And so about three years ago we met with two focus groups of consumers who are blind and visually impaired to find out what it is they feel is important, what it is that they need because oftentimes, engineers tend to go off and to never-never land, developing technologies that when they bring them out and they are surprised why consumers reject it. So one of the things that the group mentioned is that even though today or the three years ago they used scanners to scan books, and they could converted it through optical character recognition software and listen to what it says, or what they scanned, it was a monotonous process because with a scanner if you are scanning chapters in textbook you have to manipulate the text book. You have it face up, face down on the scanner, close the door. Hit the button to scan. Ok. You got to scan. Open it. Take the book out. Lay it back down on the terrible. Turn the page. Take the book. Put it back down. If you are scanning 50 pages, 100 pages, an entire textbook, that can get to be a really monotonous process.

Michael Grant:
As I understand it what was developed was a camera you could keep the book laid flat, turn the pages and greatly enhance that process. And then the product then can translate either to larger type, depending upon the visually impaired nature, or it can then translate it to speech.

Terri Hedgpeth:
That's right. It's important that a system should be user configurable and be able to meet the needs of the individual users. And some need large print and some will need speech output and others need both together. And so the system, what it does is it allows you the way it works, is the camera is mounted on a stand about 13 inches above the page. And so you late book out flat on the table like this. And you just snap a picture with the, hit a keyboard on the computer or the laptop, whichever you have it hooked to, and that snaps the picture of that page. The you turn that page and snap another picture. So you are never moving the book. It stays put. And after you are finished with that, then, you send your pages that you have captured over to the optical character recognition software and it's the same scenario there. It will recognize it and send it off to word and it allows you to read it with text to speech output, or enlarged print.

Michael Grant:
So, Terri, what's next for you? I know you have several research grants. Where will you be working?

Terri Hedgpeth:
Well, in our lab, in cubic we have a lot of specializations. In assistive technology, we have area focus that is in visual processing. And we have another area focus that is in haptics which means tactile or things you can touch, hold.

Michael Grant:
Braille, for example?

Terri Hedgpeth:
Braille but more than that. We are looking at, our lab, what we are working on is virtual haptic so you can basically explore the surface of mars with your hand.

Michael Grant:
Ok. Terri, we are out of time. But just an outstanding academic career and I am sure an outstanding professional career to follow. Thanks very much for joining us.

Terri Hedgpeth:
Thank you very much.

Michael Grant:
The United States senate has passed a $70 billion tax cut over five years. The house passed that bill on Wednesday. President bush expected to sign it. Democrats who oppose the bill say those cuts are mostly been fitting the rich. Also today state GOP legislators introducing a plan to cut state income taxes. One man who undoubtedly is cheering these developments has been dubbed the father of supply side economics, Arthur Laffer, was a member of president Reagan's economic policy advisory board. He is credited, of course, with popularized what became known as the Laffer curve, a theory used to justify tax cuts. Laffer in town as part of the Goldwater institute's spring speakers series. Larry Lemmons caught up with Dr. Laffer at the Camelback Inn.

Larry Lemmons:
Just to lay a foundation first, could you talk a little bit about what supply side economics is.

Dr. Arthur Laffer:
I have a very fast primer.

Larry Lemmons:
Is it at all possible?

Dr. Arthur Laffer:
Unfortunately, it's really simple. People like doing things they enjoy and they dislike doing things they don't like. And the role of government in this world is to change incentives to change the attractiveness or the unattractiveness of activities. And what you want to do in this world is you want to make activities as attractive as possible, or little unattractive -- you want to sound, stable money. Low interest rates, no inflation so people can count on markets. You want low regulations. Not so you have no regulation so people do things wrong but you want low regulation that are pro growth, pro people. You want free trade. So if you find high quality products at low cost abroad, who would ever say no to that? It just makes no sense. And low flat rate taxes. You want government to control spending. So that you have what people need, the good schools, the good roads, all of that, good police, good fire, all of that stuff but don't go overboard. Don't throw out favors to your friends and do big welfare payments. That's what supply decide economics. To make good sound business attractive, and to make bad activities unattractive.

Larry Lemmons:
Now, someone said supply side economics is a way to run up the budget deficit. You can have the spending but at the same time you can cut taxes.

Dr. Arthur Laffer:
It's this hatred of deficits that's just silly. When you buy a house, you get a mortgage or not? If you have to buy a house with cash, deficits are good. Running a budget, borrowing money is not bad. If you can borrow money at 5\%, and lend money at 10\%, how much should you borrow? Now, switch those numbers. If you can borrow at 10\% and lend at 5\% how much should you borrow? Zero. It depends upon the circumstances. If you have really fantastic uses of your money, and the costs are relatively small, then, it's ok to borrow but if you don't, if you have poor uses of the money and high costs, then don't worry borrow. That's time you pay the money back. That's all you do. Deficit borrowing by the government should be used judiciously depending upon the returns of the resources versus the cost of taxes. Sorry.

Larry Lemmons:
So what is the Laffer curve? I know that you didn't actually coin that term. It has been attributed to what you had apparently --

Dr. Arthur Laffer:
To moi.

Larry Lemmons:
Could you describe then that curve and.

Dr. Arthur Laffer:
Sure. It's simple. There are two effects taxes have. You know, if you raise taxes, it's true; you do collect more money per dollar of tax base. That's true. But if you raise taxes, it reduces the incentives to do an activity and if you get a smaller tax base. It's like any other price. If you raise the price of candy, the companies will make more profit per candy bar but there will be less candy bars sold. Sometimes had you raise tax rates, the output effect is larger than the tax rate effect on the income. And you will actually collect less revenues. Sometimes you will collect more revenues. If you are at zero taxes, the government's going to collect zero revenue. If you raise tax rates even though you cost a little bit in output you will still collect more revenue. But let's say you are 105 tax rates so every time come in the office instead of getting a check you get a bill. How much are you going to work, Larry?

Larry Lemmons:
Even if you had 100\% --

Dr. Arthur Laffer:
I used 105 just to go overboard. I want to make it cost them so they can see the point. If you cut tax rates at those very high rates, obviously, you are going to increase output and increase revenues. And that's all it is. You do that relationship; you have you have this relationship between tax rates and totals revenues. Obviously, that's really simple and simplistic. It depends on how long it is. Which tax you raise. All those other things. But it just shows the principle that raising tax rates does not always raise revenues, and it never, ever, ever raises as much revenues as the percentage increase in taxes. If you raise tax rates by 5\%, you will never get 5\% more revenue. You may get 4\%. But you won't get five. There will always be that output effect and that output effect is serious.

Larry Lemmons:
Isn't there a question about where, at what point, do you get a maximized revenue?

Dr. Arthur Laffer:
Of course. Of course.

Larry Lemmons:
How do you find out where we are at any --

Dr. Arthur Laffer:
You have to do the best you can with the estimates but you never want to be where you maximize revenues. You never want to be there. That's not the goal of government is to maximize revenues. The only thing is that if you are in that prohibitive range, there is no argument against cutting tax rates. None. Now, in capital gains, for example, we know a cult in capital gains rate has in every single instance raised revenues. Why on earth would you tax the higher rate if it's costing the government revenues and hurting people? It makes no sense. And there are a number of other taxes where we also know the more broad-based the tax, the less leakages there are. The better the tax system. That's why you come out to the conclusion that the best taxes is a low flat rate tax that encompasses all taxes.

Larry Lemmons:
I know you voted for Bill Clinton twice. Didn't you?

Dr. Arthur Laffer:
I thought he was a great president. Not a good man. But I did think he was a great president.

Larry Lemmons:
Would you describe the fruits from the Clinton years, the late 1990's, we had a huge budget surplus and then, of course, when George W. Bush came into office he started cutting taxes and it's really a long side more of the supply side economics theory. So can you talk about that transition and how you saw, how the economy has changed?

Dr. Arthur Laffer:
We had a horrible situation at the end of 1999, while Clinton was still president. Had nothing to do with Clinton's policies but we had the Y2K project and we had a 1970's redux. There was that huge run up on the NASDAQ if you remember, interest rates rose. The price of gold rose. The dollar fell on the foreign exchanges, we had that wild flurry and then the fed in early 2000 did what they should have done, they contracted that monetary base back. There was no Y2K problem. It was all a phony. And then you got the market collapsing back down. It came back down to where it should have been and then we had September 11. Now, here is president George W. Bush sitting here with a collapsed economy, huge drop in revenues, and a huge increase in need for defense expenditures. Now, the question I would ask is, do you think he should raise taxes on the last three people working? Is that the smart thing to do in a down turn? No, it's not. Thank goodness Bill Clinton had provided Bush with the wherewithal to be able to borrow. It's a classic time of where you should borrow. Bill Clinton had had surpluses and cut government spending so much and done such a good job that bush had the fiscal freedom to be able to run a deficit and do what was right. And that's exactly what bush did and has done. He's done a great job on that. And this economy is the best performing economy ever. And he owes a lot of that to Bill Clinton's great economics, but he did the right thing with those options at hand. He had to do the defense spending. He had to. We had a real problem. And he couldn't raise taxes during a down turn. That's just silly. That makes no sense. So he did the right, two right things. He cut the tax rates; increased defense spending and he ran a deficit. But that's the type of circumstance that I mentioned earlier that you really think a deficit is appropriate.

Larry Lemmons:
What about the overall economy now? Where should we be going from here?

Dr. Arthur Laffer:
What has happened here, and my view is this economy is the best performing economy that has ever been on planet earth. There's nothing been even close to us today. You know, the first thing is, do you remember the old Latin phrase, the doctor is always use --

Larry Lemmons:
No, I don't.

Dr. Arthur Laffer:
It means first of all do no harm.

Larry Lemmons:
I have heard that.

Dr. Arthur Laffer:
Just don't do damage. This thing is doing so well, shhh. Do nothing dramatic, nothing drastic. You have got a great fed chairman in there, Ben Bernanke. You have got nice tax rates. Make them permanent. Make bush's tax cuts permanent. Don't do anything radical in this society today. Period. Don't do any restrictions on immigration. Don't do any restrictions on trade. All of those things can hurt the economy. Don't do wage and price controls. Don't do an excess profits tax, don't do gas lines -- all of these bone head ideas these people come up with can only knock you off this wonderful platform. And then what we want to do from here on out is very marginally change policies. It's not like when I came in with Reagan. You know, those days we had an economy that was in the garbage.

Larry Lemmons:
Yes, the Carter years.

Dr. Arthur Laffer:
Carter years were terrible. When we came into office, the prime interest rate was 21.5\%, Larry. We had the highest marginal tax rate with 70\%. I mean, it was a disaster. Capital gains tax rates on real capital wanes were way over 100\% because 17-18\% inflation, we taxed nominal capital gains at 50\%. It was crazy. We had wage and price controls. All of that stuff. We needed something radical then. Reagan and Clinton and W. Have done a great job of bringing the economy to its proper place.

Larry Lemmons:
You left out --

Dr. Arthur Laffer:
I did leave out someone and I meant to leave him out. I meant to leave him out. He took us back a little bit but he was in office very short period. Thank goodness. But you know, brought us to -- now you just don't want to do something drastic. Enjoy this while it lasts. It's great. 4.7\% unemployment. When I am in France I am on a board of one of the largest companies. I am the only American. The unions are striking all the time. We don't have a union problem. We don't have strikes anymore. We don't have race riots. When you go to Germany the unemployment rate is well over 10\%. Enjoy. Keep this going as long as possible.

Larry Lemmons:
I just wanted to interrupt you because I know you don't have a whole lot of time here. Can you talk about, then, Arizona? You know we have a huge budget surplus right now.

Dr. Arthur Laffer:
You have a great surplus. Because of the nation.

Larry Lemmons:
Could you talk about, what do you think would be the wise --

Dr. Arthur Laffer:
Let me tell you when I came in and worked with you people, and I worked with you people very closely as you may know when Fife Symington was elected governor. We were going to get rid of the income tax in Arizona over the full eight years. His term in office was interrupted, in fact, disrupted in his fifth year. We were two-thirds of the way there. Getting rid of the state income tax with no offset. We were running surpluses. The economy was booming. It was working beautifully. You should go back and continue those policies. Whether our democrat or republican, it doesn't really matter. Kennedy did it. And Reagan did it. Those are good democrat and good republican. Clinton did it and w. Is doing I good democrat and a good republican. This is just common sense economics. I think that Arizona should get rid of its income tax. With their surpluses cutting the rates. None of these rebate stuff. Just cutting the tax rates down and bringing business into Arizona and keeping your prosperity going. You have been very blessed to be neighborly with California, where economic policies are stupid. Can you not see from what we do, the mistakes you should not follow? If you don't -- see, those mistakes go back to your own history. Look at what happened under Babbitt, and follow forward. Did you see what your tax rates were when fife took office? It was incredible. The prosperity you have had since then has been amazing.

Larry Lemmons:
Thank you, Dr. Laffer, for speaking with us today.

Dr. Arthur Laffer:
Thank you. My pleasure.

Michael Grant:
Tucson artist has found an unusual medium for his drawings. Artist Chris Rush searches for old do you means to use as his canvas. Our producer gives us a profile of the artist.

Chris Rush:
There is nothing more beautiful Atlantic an object that has been affected by time and many hands. There's something about that is a beauty you cannot reproduce. So for me to be part of that and add some layer to it is really very rewarding. My name is Chris Rush. I was born at Jersey shore. Lived there most of my childhood. I spent one year out here in Tucson when I was a teenager. I went to Morano High, future farmers of America and their scary blue and gold jackets. And I ended up a jewelry designer for the big houses in New York. I did a lot of work for Cartier. I mean, it was marvelous. I did a diamond and emerald rosary bead for Imelda Marcos that was clearly one of the most awful and vulgar things ever made. And I started to have doubts. May master teacher, Larry Calenberg came to me one morning and said, you are miserable. The jewelry business is very mercenary. Pool sharks. So I went out to Tucson. I rented a room in the old anti-ray months pool hall and I started to make art. So I started to draw. And paint a bit and I fill might studio with these things. I thought, what do I do now? So in a moment of madness, I said, I will make prints of all these images and I will just put them up on the walls in Tucson and then I will see what people think of them. Everyone really liked them. No one knew who the hell I was but they really liked these images. So I thought, oh. That's what I will make art to do. I will keep making prints and keep putting them up so it turned into a dialogue where every week, I would go back to the sites I had chosen which were mostly abandoned buildings on busy intersections. The papers started to report on it. The police started to get nervous about it. The politicians were deeply troubled because I was still anonymous. So it got very interesting very fast. Well, I suddenly had my m.o. I knew why I was making art. I had an audience. But then I realized I wanted bigger and better sites. So through a series of crazy events, I convinced the department of transportation to give me buildings on speedway that they were going to tear down anyway and let me do murals on them and the murals were very much for people driving by. Well, this just went really well. I got some national press on it, had a lot of fun. Got attention and love which is all an artist wants. And this went along pretty well. And then eventually I went too far. Eventually, the police got really mad. And eventually, I said, well, it's time to become an easel painter. I have always found fashion models really unattractive. For the most part I find them rather monstrous. And I find movie stars just about as grotesque. I like the way people really look. And my portraits are largely about looking at how we actually exist. They're wild characters. But at the same time, I am looking at just how mysterious we all are and how, in some weird way, we are all kind of alike. Humans are really peculiar and that means everybody. Nothing makes me happier than big ears. I'll be honest. I started to alternate between very serious formal portraiture and drawings on old and strange and funny pieces of paper as my sketchbook. Because I could draw on an empty piece of paper but it was a lot more fun to draw with a 19th century piece of paper that somebody had already established the conditions and I had to sort of participate with. It's a weird kind of collaboration with unknown ghosts. There's a word, it's written on a warrant for someone's arrest issued by the court, Alice Schwartz was running the ok house. And the ok house was used for purposes of prostitution in Frontier, Montana, 1911. And its just a great, great description of someone's life and it really demanded a portrait. I had to do a portrait of Alice Schwartz, whoever she was. This is a collection of some of my favorite materials that I have found. And this is material from all over the world. Most of it I found in Europe in flea markets but some I found right here in Tucson. On top here we have a map of the United States drawn in about 1830 by a student. This is a piece from a scrapbook. It's also from around 1830. I found it in London. And there's some really sappy romantic poetry here. Which I can barely get through. But considering that this was probably a stay at home woman who may have even been trapped at home and this is what she did to better herself, it's just a marvelous piece of paper. It's very challenging to think what I could add to it but I feel like I probably will.

Producer:
Some woman's face?

Chris Rush:
It will probably get a face. This is almost the impact opposite. This is a German piece of paper. It's a religious edict. I am sure that someone suffered somehow from this piece of paper. My rulings are basically, I want something that's been handwritten or hand-drawn, and I really want part of a story. I want evidence of the margins of life. I mean, I call these orphan papers because no one really wants them. You know? But when I, when I put a portrait, when a face is put on this paper, it really changes everything. Then it goes, it goes from miscellaneous to story. And somehow in bringing these old papers to light, there is this marvelous rescue of these little pieces of humanity that I just enjoy so much.

Michael Grant:
Thanks very much for joining us this Thursday evening. I am Michael grant. Have a great one. Good night.

Tucson artist Chris Rush


Guests:
  • Dr. Terri Hedgpeth -
  • Arthur Laffer -
  • Chris Rush - Tucson artist


View Transcript
Michael Grant:
Tonight on "Horizon," it's graduation week at Arizona State. Thousands of students are graduating. We will talk to one of the outstanding graduates. Congress has approved more tax cuts; critics say many of them aimed at the wealthy. Hear from the economist whose theories laid the groundwork for such cuts. And meet the artist who uses a unique medium for his drawings. That's coming up next on "Horizon." Good evening. Welcome to "Horizon." today is the big day for more than 6,000 Arizona State University students as they donned caps and gowns and marched down the aisle to the tune of "Pomp and Circumstance." among the new grads will be 200 nurses, more than 250 teachers, over 600 engineers, and 1400 business grads, almost half of those earning their M.B.A.'s. Tonight we have an opportunity to introduce to you one of outstanding students. Blind from birth Terri Hedgpeth has excelled while winning awards and research grants, serving on boards and conferences and much more. Joining is now is Dr. Terri Hedgpeth. Am I the first to refer to you that way?

Terri Hedgpeth:
Thank you.

Michael Grant:
I am exhausted reading your resume. It is exceptionally impressive.

Terri Hedgpeth:
You are very flattering. Thank you.

Michael Grant:
One of the, in your studies, you researched technology for students with disabilities. And you were telling me about one project that has made easier to scan written product to get it into a more usable formatted for the blind.

Terri Hedgpeth:
Yes. I have been working for the past and a half years in the center for cognitive ubiquitous computing which is kind of a related center to computer science and engineering. And our director, Dr. Ponchoffen, has? His grand vision, he wants to develop assistive technologies for people who are blind and visually impaired. And so about three years ago we met with two focus groups of consumers who are blind and visually impaired to find out what it is they feel is important, what it is that they need because oftentimes, engineers tend to go off and to never-never land, developing technologies that when they bring them out and they are surprised why consumers reject it. So one of the things that the group mentioned is that even though today or the three years ago they used scanners to scan books, and they could converted it through optical character recognition software and listen to what it says, or what they scanned, it was a monotonous process because with a scanner if you are scanning chapters in textbook you have to manipulate the text book. You have it face up, face down on the scanner, close the door. Hit the button to scan. Ok. You got to scan. Open it. Take the book out. Lay it back down on the terrible. Turn the page. Take the book. Put it back down. If you are scanning 50 pages, 100 pages, an entire textbook, that can get to be a really monotonous process.

Michael Grant:
As I understand it what was developed was a camera you could keep the book laid flat, turn the pages and greatly enhance that process. And then the product then can translate either to larger type, depending upon the visually impaired nature, or it can then translate it to speech.

Terri Hedgpeth:
That's right. It's important that a system should be user configurable and be able to meet the needs of the individual users. And some need large print and some will need speech output and others need both together. And so the system, what it does is it allows you the way it works, is the camera is mounted on a stand about 13 inches above the page. And so you late book out flat on the table like this. And you just snap a picture with the, hit a keyboard on the computer or the laptop, whichever you have it hooked to, and that snaps the picture of that page. The you turn that page and snap another picture. So you are never moving the book. It stays put. And after you are finished with that, then, you send your pages that you have captured over to the optical character recognition software and it's the same scenario there. It will recognize it and send it off to word and it allows you to read it with text to speech output, or enlarged print.

Michael Grant:
So, Terri, what's next for you? I know you have several research grants. Where will you be working?

Terri Hedgpeth:
Well, in our lab, in cubic we have a lot of specializations. In assistive technology, we have area focus that is in visual processing. And we have another area focus that is in haptics which means tactile or things you can touch, hold.

Michael Grant:
Braille, for example?

Terri Hedgpeth:
Braille but more than that. We are looking at, our lab, what we are working on is virtual haptic so you can basically explore the surface of mars with your hand.

Michael Grant:
Ok. Terri, we are out of time. But just an outstanding academic career and I am sure an outstanding professional career to follow. Thanks very much for joining us.

Terri Hedgpeth:
Thank you very much.

Michael Grant:
The United States senate has passed a $70 billion tax cut over five years. The house passed that bill on Wednesday. President bush expected to sign it. Democrats who oppose the bill say those cuts are mostly been fitting the rich. Also today state GOP legislators introducing a plan to cut state income taxes. One man who undoubtedly is cheering these developments has been dubbed the father of supply side economics, Arthur Laffer, was a member of president Reagan's economic policy advisory board. He is credited, of course, with popularized what became known as the Laffer curve, a theory used to justify tax cuts. Laffer in town as part of the Goldwater institute's spring speakers series. Larry Lemmons caught up with Dr. Laffer at the Camelback Inn.

Larry Lemmons:
Just to lay a foundation first, could you talk a little bit about what supply side economics is.

Dr. Arthur Laffer:
I have a very fast primer.

Larry Lemmons:
Is it at all possible?

Dr. Arthur Laffer:
Unfortunately, it's really simple. People like doing things they enjoy and they dislike doing things they don't like. And the role of government in this world is to change incentives to change the attractiveness or the unattractiveness of activities. And what you want to do in this world is you want to make activities as attractive as possible, or little unattractive -- you want to sound, stable money. Low interest rates, no inflation so people can count on markets. You want low regulations. Not so you have no regulation so people do things wrong but you want low regulation that are pro growth, pro people. You want free trade. So if you find high quality products at low cost abroad, who would ever say no to that? It just makes no sense. And low flat rate taxes. You want government to control spending. So that you have what people need, the good schools, the good roads, all of that, good police, good fire, all of that stuff but don't go overboard. Don't throw out favors to your friends and do big welfare payments. That's what supply decide economics. To make good sound business attractive, and to make bad activities unattractive.

Larry Lemmons:
Now, someone said supply side economics is a way to run up the budget deficit. You can have the spending but at the same time you can cut taxes.

Dr. Arthur Laffer:
It's this hatred of deficits that's just silly. When you buy a house, you get a mortgage or not? If you have to buy a house with cash, deficits are good. Running a budget, borrowing money is not bad. If you can borrow money at 5\%, and lend money at 10\%, how much should you borrow? Now, switch those numbers. If you can borrow at 10\% and lend at 5\% how much should you borrow? Zero. It depends upon the circumstances. If you have really fantastic uses of your money, and the costs are relatively small, then, it's ok to borrow but if you don't, if you have poor uses of the money and high costs, then don't worry borrow. That's time you pay the money back. That's all you do. Deficit borrowing by the government should be used judiciously depending upon the returns of the resources versus the cost of taxes. Sorry.

Larry Lemmons:
So what is the Laffer curve? I know that you didn't actually coin that term. It has been attributed to what you had apparently --

Dr. Arthur Laffer:
To moi.

Larry Lemmons:
Could you describe then that curve and.

Dr. Arthur Laffer:
Sure. It's simple. There are two effects taxes have. You know, if you raise taxes, it's true; you do collect more money per dollar of tax base. That's true. But if you raise taxes, it reduces the incentives to do an activity and if you get a smaller tax base. It's like any other price. If you raise the price of candy, the companies will make more profit per candy bar but there will be less candy bars sold. Sometimes had you raise tax rates, the output effect is larger than the tax rate effect on the income. And you will actually collect less revenues. Sometimes you will collect more revenues. If you are at zero taxes, the government's going to collect zero revenue. If you raise tax rates even though you cost a little bit in output you will still collect more revenue. But let's say you are 105 tax rates so every time come in the office instead of getting a check you get a bill. How much are you going to work, Larry?

Larry Lemmons:
Even if you had 100\% --

Dr. Arthur Laffer:
I used 105 just to go overboard. I want to make it cost them so they can see the point. If you cut tax rates at those very high rates, obviously, you are going to increase output and increase revenues. And that's all it is. You do that relationship; you have you have this relationship between tax rates and totals revenues. Obviously, that's really simple and simplistic. It depends on how long it is. Which tax you raise. All those other things. But it just shows the principle that raising tax rates does not always raise revenues, and it never, ever, ever raises as much revenues as the percentage increase in taxes. If you raise tax rates by 5\%, you will never get 5\% more revenue. You may get 4\%. But you won't get five. There will always be that output effect and that output effect is serious.

Larry Lemmons:
Isn't there a question about where, at what point, do you get a maximized revenue?

Dr. Arthur Laffer:
Of course. Of course.

Larry Lemmons:
How do you find out where we are at any --

Dr. Arthur Laffer:
You have to do the best you can with the estimates but you never want to be where you maximize revenues. You never want to be there. That's not the goal of government is to maximize revenues. The only thing is that if you are in that prohibitive range, there is no argument against cutting tax rates. None. Now, in capital gains, for example, we know a cult in capital gains rate has in every single instance raised revenues. Why on earth would you tax the higher rate if it's costing the government revenues and hurting people? It makes no sense. And there are a number of other taxes where we also know the more broad-based the tax, the less leakages there are. The better the tax system. That's why you come out to the conclusion that the best taxes is a low flat rate tax that encompasses all taxes.

Larry Lemmons:
I know you voted for Bill Clinton twice. Didn't you?

Dr. Arthur Laffer:
I thought he was a great president. Not a good man. But I did think he was a great president.

Larry Lemmons:
Would you describe the fruits from the Clinton years, the late 1990's, we had a huge budget surplus and then, of course, when George W. Bush came into office he started cutting taxes and it's really a long side more of the supply side economics theory. So can you talk about that transition and how you saw, how the economy has changed?

Dr. Arthur Laffer:
We had a horrible situation at the end of 1999, while Clinton was still president. Had nothing to do with Clinton's policies but we had the Y2K project and we had a 1970's redux. There was that huge run up on the NASDAQ if you remember, interest rates rose. The price of gold rose. The dollar fell on the foreign exchanges, we had that wild flurry and then the fed in early 2000 did what they should have done, they contracted that monetary base back. There was no Y2K problem. It was all a phony. And then you got the market collapsing back down. It came back down to where it should have been and then we had September 11. Now, here is president George W. Bush sitting here with a collapsed economy, huge drop in revenues, and a huge increase in need for defense expenditures. Now, the question I would ask is, do you think he should raise taxes on the last three people working? Is that the smart thing to do in a down turn? No, it's not. Thank goodness Bill Clinton had provided Bush with the wherewithal to be able to borrow. It's a classic time of where you should borrow. Bill Clinton had had surpluses and cut government spending so much and done such a good job that bush had the fiscal freedom to be able to run a deficit and do what was right. And that's exactly what bush did and has done. He's done a great job on that. And this economy is the best performing economy ever. And he owes a lot of that to Bill Clinton's great economics, but he did the right thing with those options at hand. He had to do the defense spending. He had to. We had a real problem. And he couldn't raise taxes during a down turn. That's just silly. That makes no sense. So he did the right, two right things. He cut the tax rates; increased defense spending and he ran a deficit. But that's the type of circumstance that I mentioned earlier that you really think a deficit is appropriate.

Larry Lemmons:
What about the overall economy now? Where should we be going from here?

Dr. Arthur Laffer:
What has happened here, and my view is this economy is the best performing economy that has ever been on planet earth. There's nothing been even close to us today. You know, the first thing is, do you remember the old Latin phrase, the doctor is always use --

Larry Lemmons:
No, I don't.

Dr. Arthur Laffer:
It means first of all do no harm.

Larry Lemmons:
I have heard that.

Dr. Arthur Laffer:
Just don't do damage. This thing is doing so well, shhh. Do nothing dramatic, nothing drastic. You have got a great fed chairman in there, Ben Bernanke. You have got nice tax rates. Make them permanent. Make bush's tax cuts permanent. Don't do anything radical in this society today. Period. Don't do any restrictions on immigration. Don't do any restrictions on trade. All of those things can hurt the economy. Don't do wage and price controls. Don't do an excess profits tax, don't do gas lines -- all of these bone head ideas these people come up with can only knock you off this wonderful platform. And then what we want to do from here on out is very marginally change policies. It's not like when I came in with Reagan. You know, those days we had an economy that was in the garbage.

Larry Lemmons:
Yes, the Carter years.

Dr. Arthur Laffer:
Carter years were terrible. When we came into office, the prime interest rate was 21.5\%, Larry. We had the highest marginal tax rate with 70\%. I mean, it was a disaster. Capital gains tax rates on real capital wanes were way over 100\% because 17-18\% inflation, we taxed nominal capital gains at 50\%. It was crazy. We had wage and price controls. All of that stuff. We needed something radical then. Reagan and Clinton and W. Have done a great job of bringing the economy to its proper place.

Larry Lemmons:
You left out --

Dr. Arthur Laffer:
I did leave out someone and I meant to leave him out. I meant to leave him out. He took us back a little bit but he was in office very short period. Thank goodness. But you know, brought us to -- now you just don't want to do something drastic. Enjoy this while it lasts. It's great. 4.7\% unemployment. When I am in France I am on a board of one of the largest companies. I am the only American. The unions are striking all the time. We don't have a union problem. We don't have strikes anymore. We don't have race riots. When you go to Germany the unemployment rate is well over 10\%. Enjoy. Keep this going as long as possible.

Larry Lemmons:
I just wanted to interrupt you because I know you don't have a whole lot of time here. Can you talk about, then, Arizona? You know we have a huge budget surplus right now.

Dr. Arthur Laffer:
You have a great surplus. Because of the nation.

Larry Lemmons:
Could you talk about, what do you think would be the wise --

Dr. Arthur Laffer:
Let me tell you when I came in and worked with you people, and I worked with you people very closely as you may know when Fife Symington was elected governor. We were going to get rid of the income tax in Arizona over the full eight years. His term in office was interrupted, in fact, disrupted in his fifth year. We were two-thirds of the way there. Getting rid of the state income tax with no offset. We were running surpluses. The economy was booming. It was working beautifully. You should go back and continue those policies. Whether our democrat or republican, it doesn't really matter. Kennedy did it. And Reagan did it. Those are good democrat and good republican. Clinton did it and w. Is doing I good democrat and a good republican. This is just common sense economics. I think that Arizona should get rid of its income tax. With their surpluses cutting the rates. None of these rebate stuff. Just cutting the tax rates down and bringing business into Arizona and keeping your prosperity going. You have been very blessed to be neighborly with California, where economic policies are stupid. Can you not see from what we do, the mistakes you should not follow? If you don't -- see, those mistakes go back to your own history. Look at what happened under Babbitt, and follow forward. Did you see what your tax rates were when fife took office? It was incredible. The prosperity you have had since then has been amazing.

Larry Lemmons:
Thank you, Dr. Laffer, for speaking with us today.

Dr. Arthur Laffer:
Thank you. My pleasure.

Michael Grant:
Tucson artist has found an unusual medium for his drawings. Artist Chris Rush searches for old do you means to use as his canvas. Our producer gives us a profile of the artist.

Chris Rush:
There is nothing more beautiful Atlantic an object that has been affected by time and many hands. There's something about that is a beauty you cannot reproduce. So for me to be part of that and add some layer to it is really very rewarding. My name is Chris Rush. I was born at Jersey shore. Lived there most of my childhood. I spent one year out here in Tucson when I was a teenager. I went to Morano High, future farmers of America and their scary blue and gold jackets. And I ended up a jewelry designer for the big houses in New York. I did a lot of work for Cartier. I mean, it was marvelous. I did a diamond and emerald rosary bead for Imelda Marcos that was clearly one of the most awful and vulgar things ever made. And I started to have doubts. May master teacher, Larry Calenberg came to me one morning and said, you are miserable. The jewelry business is very mercenary. Pool sharks. So I went out to Tucson. I rented a room in the old anti-ray months pool hall and I started to make art. So I started to draw. And paint a bit and I fill might studio with these things. I thought, what do I do now? So in a moment of madness, I said, I will make prints of all these images and I will just put them up on the walls in Tucson and then I will see what people think of them. Everyone really liked them. No one knew who the hell I was but they really liked these images. So I thought, oh. That's what I will make art to do. I will keep making prints and keep putting them up so it turned into a dialogue where every week, I would go back to the sites I had chosen which were mostly abandoned buildings on busy intersections. The papers started to report on it. The police started to get nervous about it. The politicians were deeply troubled because I was still anonymous. So it got very interesting very fast. Well, I suddenly had my m.o. I knew why I was making art. I had an audience. But then I realized I wanted bigger and better sites. So through a series of crazy events, I convinced the department of transportation to give me buildings on speedway that they were going to tear down anyway and let me do murals on them and the murals were very much for people driving by. Well, this just went really well. I got some national press on it, had a lot of fun. Got attention and love which is all an artist wants. And this went along pretty well. And then eventually I went too far. Eventually, the police got really mad. And eventually, I said, well, it's time to become an easel painter. I have always found fashion models really unattractive. For the most part I find them rather monstrous. And I find movie stars just about as grotesque. I like the way people really look. And my portraits are largely about looking at how we actually exist. They're wild characters. But at the same time, I am looking at just how mysterious we all are and how, in some weird way, we are all kind of alike. Humans are really peculiar and that means everybody. Nothing makes me happier than big ears. I'll be honest. I started to alternate between very serious formal portraiture and drawings on old and strange and funny pieces of paper as my sketchbook. Because I could draw on an empty piece of paper but it was a lot more fun to draw with a 19th century piece of paper that somebody had already established the conditions and I had to sort of participate with. It's a weird kind of collaboration with unknown ghosts. There's a word, it's written on a warrant for someone's arrest issued by the court, Alice Schwartz was running the ok house. And the ok house was used for purposes of prostitution in Frontier, Montana, 1911. And its just a great, great description of someone's life and it really demanded a portrait. I had to do a portrait of Alice Schwartz, whoever she was. This is a collection of some of my favorite materials that I have found. And this is material from all over the world. Most of it I found in Europe in flea markets but some I found right here in Tucson. On top here we have a map of the United States drawn in about 1830 by a student. This is a piece from a scrapbook. It's also from around 1830. I found it in London. And there's some really sappy romantic poetry here. Which I can barely get through. But considering that this was probably a stay at home woman who may have even been trapped at home and this is what she did to better herself, it's just a marvelous piece of paper. It's very challenging to think what I could add to it but I feel like I probably will.

Producer:
Some woman's face?

Chris Rush:
It will probably get a face. This is almost the impact opposite. This is a German piece of paper. It's a religious edict. I am sure that someone suffered somehow from this piece of paper. My rulings are basically, I want something that's been handwritten or hand-drawn, and I really want part of a story. I want evidence of the margins of life. I mean, I call these orphan papers because no one really wants them. You know? But when I, when I put a portrait, when a face is put on this paper, it really changes everything. Then it goes, it goes from miscellaneous to story. And somehow in bringing these old papers to light, there is this marvelous rescue of these little pieces of humanity that I just enjoy so much.

Michael Grant:
Thanks very much for joining us this Thursday evening. I am Michael grant. Have a great one. Good night.

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