Laffer, a founding father of supply-side economics, offered a ringing endorsement of Gingrich last month, saying his policies would “create a boom of new investment and economic growth.”
But many conservative economists argue Gingrich’s proposals ignore current realities. An analysis by the independent Tax Policy Center found Gingrich’s plan would overwhelmingly favor rich Americans and increase the deficit by $850 billion in one year. “That’s just an astounding amount of money,” said Donald Marron, the Tax Policy Center’s director, who was an economist under Bush.
Alan Viard, a scholar at the conservative American Enterprise Institute, added: “The dramatic difference [between the proposals] is simply the staggering, staggering revenue loss under the Gingrich plan . . . The practical effect is there is no way to bring the deficit under control with that large of a tax cut.”
Gingrich advisers disagreed, arguing it would jump-start enough growth to shrink the deficit.
“It’s all about economic growth,” said Gingrich adviser Louis Woodhill, a Houston investor and member of the leadership council of the Club for Growth. “If you get the growth rate high enough, the federal deficit will melt away like an ice cream cone on a Houston sidewalk in July.”
Lanhee Chen, Romney’s policy director, said Gingrich has offered no credible explanation of how to pay for his huge proposed tax cuts. “His economic policies are kind of a hodgepodge of different ideas that lack a coherence and really demonstrate a lack of capacity to lead on day one,” Chen said.
Romney advisers said his plans are more realistic. He would maintain the 15 percent capital gains tax rate for households earning more than $200,000 and reduce corporate taxes to 25 percent, twice the rate proposed by Gingrich. He would grow the deficit and require big spending cuts, but nowhere near that of Gingrich’s plan, according to the Tax Policy Center analysis. Among his economic advisers are Columbia University business school dean Glenn Hubbard and Harvard professor Greg Mankiw, as well as former Missouri senator Jim Talent and former Minnesota representative Vin Weber.
Gingrich advisers dismiss Romney’s plans as weak.
“Romney is timid,” Ferrara, the chief Gingrich adviser said. “He’s nibbling around the edges rather than changing course.”
Staff writer Philip Rucker contributed to this report.