Schwarzenegger taps conservative think tank

? Arnold Schwarzenegger has been vague about his economic plans for California, but clues may come from his advisers, many of whom hail from a conservative think tank whose members helped develop President Bush’s economic plan.

Hoover Institution economists are advising the Republican actor on taxes, unemployment and the economy in his race to replace Gov. Gray Davis on Oct. 7. They also helped Bush develop his economic plans, including two major income tax cuts.

Founded in 1919 by Republican Herbert Hoover, Stanford University’s Hoover Institution on War, Revolution and Peace espouses a free-market approach in which private enterprise trumps government intervention.

Nobel Prize-winning economist Milton Friedman and other Hoover researchers helped popularize the “supply side” economic theories that dominated President Reagan’s economic policies.

The cornerstone of the philosophy is that tax cuts — regardless of whether they accompany spending cuts — let executives and entrepreneurs spend their capital on new jobs, research and other investments that bolster the economy.

Hoover scholars advising Schwarzenegger include former Republican Gov. Pete Wilson; Michael Boskin, the elder President Bush’s economic adviser; George Shultz, a former secretary of the treasury and state; and John Cogan, a former assistant secretary at the U.S. Department of Labor.

Democratic Lt. Gov. Cruz Bustamante, who favors a tobacco tax hike, a crackdown on small business tax shelters and higher taxes on the rich, leads most polls of those planning to vote in the special recall election. Schwarzenegger, 56, runs second and is the top Republican candidate.