The Washington PostDemocracy Dies in Darkness

One part of the Republican establishment actually loves Donald Trump and Ted Cruz

Donald Trump reacts as Sen. Ted Cruz (Tex.) rebukes Trump's comment during a Republican presidential debate at the University of Miami in Coral Gables, Fla., on March 10. (Pedro Portal/Miami Herald via AP)

An anti-establishment rage has upended the Republican presidential primaries, vaulting two outsider candidates to striking distance of the party nomination and worrying all manner of Republican elites. All that is, except one: the elites most devoted to cutting income and corporate tax rates at the top of the scale.

Those so-called supply-side Republicans have spoken fondly of both Ted Cruz, who has rankled many GOP insiders in Washington, and Donald Trump, whose bombast has so alarmed insiders that they have begun to rally reluctantly around Cruz in order to stop him.

Some supply-side adherents have downplayed concerns about Trump’s vilification of international trade deals and his promises to deport millions of immigrants here illegally, even though they have long pushed to expand both trade and immigration. They have showered praised on Trump and Cruz’s promises of massive tax cuts, which the supply-side wing believes will unleash rapid economic growth for years to come.

“How could you have two better candidates than Cruz and Trump?” said Arthur Laffer, the godfather of supply-side economics, who last year co-founded an advocacy group to push presidential candidates to adopt his preferred tax policies. “You can’t get a better primary than this, from my perspective.”

The praise has alarmed some other conservatives, who say the supply-side crowd is showing itself to be chiefly concerned with cutting taxes for companies and high earners, at the expense of its other principles.

“Trump is the caricature of supply-side economics that supply-side enthusiasts have fought against for decades,” said James Pethokoukis, a columnist for National Review who has criticized Trump and who has pushed GOP candidates to focus their economic policies on helping the middle class. “And now they’re embracing him.”

Laffer said in an interview that he does not believe Trump will follow through with his plan to deport all immigrants here illegally. He also said Trump, who has threatened tariffs on China and Mexico in order to leverage more favorable terms of trade for the United States, is no more protectionist on trade than Cruz — or almost any other American politician - and that he will eventually favor freer trade than America has now.

He said business leaders who have dealt with Trump in the past speak glowingly of the real estate mogul, and he suggested that Trump’s most controversial campaign statements are simply plays for the cameras.

“He’s not going to deport every person in America who’s illegal, really,” Laffer said. “Don’t you see him as a showman?” He added: “I don’t think the policies he will do will be extreme, in terms of being really bad. I do see him being extremely pro-growth. I see him bringing lots of jobs back by cutting the corporate tax.”

Laffer’s group, the Committee to Unleash Prosperity, is officially neutral in the GOP race. Still, its co-founders, including financial commentator Larry Kudlow, former presidential candidate Steve Forbes and economist Stephen Moore, have spoken or written favorably in recent months about Trump and Cruz.

Some of the group’s members warned Republicans against Trump’s immigration and trade positions last year. Kudlow and Moore, in particular, have continued to denounce Trump’s threat of tariffs. Kudlow has written that the war against the Islamic State has changed his thinking on immigrants from the Middle East; Laffer said he differentiates between Middle Eastern refugees, who worry him on security grounds, and Latin American ones, whom he welcomes.

But the group is delighted with Trump’s tax plan, which reduces the top income tax rate from nearly 40 percent to 25 percent and the top corporate rate from 35 percent to 15 percent.

Members have also roundly praised Cruz for a tax plan that closely tracks Laffer’s vision for a growth-injecting tax code. It would institute a single income tax rate of 10 percent for all income and add a “business transfer tax” — essentially, a consumption tax — of 16 percent.

Independent analyses — including some that assume large accelerations in growth as a result of tax cuts — have concluded both plans would add trillions to the national debt in the coming decade if they are not offset by spending cuts. Neither candidate has come close to offering cuts of that magnitude.

The third remaining GOP candidate, John Kasich, has criticized his rivals for what he calls “fantasy” tax plans, while proposing a tax-cut package similar to that of 2012 nominee Mitt Romney. In an interview that lasted more than 20 minutes, Laffer did not mention Kasich once.

Laffer said he believes Trump and Cruz are underselling the benefits of their tax plans, which he said could bring in “massive revenue increases” to the federal Treasury by speeding up growth and boosting incomes across the board. “We’ll have growth rates faster than we had in the '60s or the '80s,” he said — potentially as high as 5 percent per year for at least four years.

Many economists reject the idea that tax cuts could spur growth rates anywhere close to that.

Laffer has long predicted that the economy is primed for rapid growth after years of a historically sluggish expansion, which followed the worst recession in more than a half-century. He also predicts that a pro-growth message will sweep Republicans to historic victories this fall.

He stuck to that prediction in the interview, guessing that Cruz or Trump could win “45 states” in the general election, because Democrats Bernie Sanders and Hillary Clinton are both pushing economic plans that include tax increases.

Asked about polls showing Trump and Cruz trailing Democrats in a hypothetical matchup, he said he was not concerned: In 1980, he noted, Ronald Reagan trailed badly in polls, too.