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A Supply-Sider in the California Governor’s Race

Friday, 25 Sep 2009 | 11:12 AM ET
Meg Whitman, former eBay CEO
Source: AP
Meg Whitman, former eBay CEO

There’s a lot of interest in the California midterm elections because of two well-known business ladies, Meg Whitman (former-CEO of eBay ) and Carly Fiorina (former-CEO of Hewlett-Packard ).

Of course, California’s economy and fiscal position are in a death march. All kinds of capitalists and entrepreneurs are running away from the state’s high taxes and over-regulations. (Among other palaces, they’re headed to Texas.) But Whitman and Fiorina - because they are women and former big-business honchos - lend some glamour and renewed interest to California Republicans.

I have not interviewed Carly Fiorina recently - that’s on the schedule. (Fiorina hopes to beat Barbara Boxer in the U.S. Senate race.) But I did interview Meg Whitman, along with her Republican gubernatorial primary opponent, Steve Poizner, a statewide-elected GOP official who is himself a very wealthy and successful high-tech entrepreneur.

Being of relatively sound mind and chock full of sense and sensibility, I am not taking a position on the Whitman-Poizner primary. But I will say this: Mr. Poizner has a very strong, across-the-board, 10 percent tax-rate-reduction plan for personal income, sales taxes, and business taxes, and a 50 percent reduction plan for the state’s capital-gains tax. He cited Arthur Laffer in my interview with him, and essentially declared himself a pro-growth supply-sider.

Ms. Whitman was vague on tax policy. When asked if she would support a 5 to 6 percent flat-tax rate, she said she’d look at it. But her top priority is to cut state spending - a very important mission. She wants to lower taxes down the road, but nothing specific yet.

Both Whitman and Poizner favor heavy use of the governor’s line-item veto, and both want tort reform to reduce business costs. Ms. Whitman would somewhat roll back California’s onerous cap-and-trade policy, while Poizner would freeze the whole plan.

Most observers believe Meg Whitman has the greater star power in the race. However, both candidates are going to spend a lot of money. As I said, I’m not choosing sides right now. But it was interesting to hear Mr. Poizner’s almost pure, supply-side, Laffer Curve-driven, tax-cut rhetoric. I can’t help but wonder if Meg Whitman won’t jump on this bandwagon before it’s all said and done.

It will be a Republican year in 2010, and the GOP could pick off the California statehouse and use it as a tax-cutting, limited-government model with national impact - in ways that Gov. Arnold Schwarzenegger never did.

Questions? Comments, send your emails to: lkudlow@kudlow.com

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  • Lawrence Kudlow is a CNBC senior contributor. Previously, Kudlow was anchor of CNBC's prime-time program "The Kudlow Report"