2012 Presidential White Paper #1
Former House Speaker Newt Gingrich
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of this paper, complete with footnotes.
Gingrich is best known for leading the 1994 “Republican Revolution” that swept the GOP into the House majority for the first time in over forty years, and he deserves immense credit for that. His actual voting record in the House, however, was somewhat less stellar.
The Club for Growth did not have its own scorecard for members of Congress during Gingrich’s tenure from 1979-98, but the non-partisan and pro-free market National Taxpayers Union (NTU) has been issuing a congressional scorecard for decades and Gingrich’s record on economic issues, as provided by NTU, is worth analyzing. From 1979-98, Gingrich had an average score of 61% (with 100% being a perfect score on supporting lower taxes and limited government). The average Republican score over this time period was slightly lower at 56%.
The Club for Growth is committed to lower taxes – especially lower tax rates – across the board. Lower taxes on work, savings, and investments lead to greater levels of these activities, thus encouraging greater economic growth.
From an economic growth perspective, Newt Gingrich is excellent on tax issues, except when he’s not. In general, Gingrich does favor lower, flatter tax rates, and has a pro-growth instinct toward reforms that lower rates and broaden the base. But he also has a persistent habit of supporting big-government tinkering that manifests itself in many unhelpful ways.
First, the good stuff. On various high-profile tax votes in Congress, Gingrich amassed the following pro-growth tax record:
His vote and leadership against the 1990 Bush tax increase is especially praiseworthy, as it exhibited political courage to fight against a bad policy that was promoted by the president and congressional leadership of his own party.
- Voted YES on the Reagan tax cut of 1981
- Voted YES on the Reagan tax reform bill of 1986
- Voted NO on the George H.W. Bush “Read My Lips” tax hike in 1990.
- Voted NO on the Clinton tax hike in 1993.
- Voted YES on the capital gains tax cut in 1997.
Further, Gingrich can be one of the most clear-eyed and forceful advocates for supply-side economics and the value of free enterprise. He has most recently favored:
- an immediate and permanent repeal of the Death Tax;
- elimination of all capital gains taxes;
- reduction of the corporate tax rate to 12.5 percent;
- a 50 percent payroll tax cut for both employers and employees;
- a 100 percent tax write off for businesses’ equipment purchases.
In addition, Gingrich has advocated a near flat tax proposal that would lower the current 25 percent income tax rate to 15 percent. This would, in Gingrich’s words, “in effect, establish a flat-rate tax of 15% for close to 90% of American workers.” Both of these options would be enormously good for our economy.
Now the bad stuff. Gingrich has an affinity – all too common even among conservative politicians – for gimmicky, special interest tax incentives that empower politicians to pick winners and losers in the marketplace. His favorite device is the tax credit.
In the wake of the 9/11 terrorist attacks, Gingrich proposed a six month, $1,000-per person tax credit for 50 percent of the cost of personal travel more than 100 miles from one’s home. The idea sounds nice, but just as Cash for Clunkers only expedited the purchase of cars people were going to buy anyway (at non-car buying taxpayers’ expense), Gingrich’s Cash for Getaways would only have subsidized trips people were going to make anyway, enabling a transfer payment to frequent travelers from families without the time or inclination to travel. This proposal would also require more government to administer and oversee compliance. It is not a fiscally conservative policy. While perhaps not a large issue in itself, this is indicative of an approach Gingrich has frequently advocated. At times he has sponsored bills or issued proposals to do the following:
- A tax credit for the purchase of home computers used for educational or professional purposes.
- A $1,000 tax credit for low-income first-time homebuyers.
- Refundable tax credits for auto companies for the cost of flex-fuels cars, hybrids, plug-in hybrids, and the development of hydrogen cars.
- Tax credits to encourage investment in biofuels and “renewable forms of energy.”
- A permanent 50 percent tax credit for research and development, or at least for “companies that are willing to take on government's ‘grand challenges’ (for example, the first inhabitable moon base).”
- A special business tax credit for “corporations that fund basic research in science and technology at our nation's universities.”
The Club for Growth is committed to reducing government spending. Less spending enhances economic growth by enabling lower taxes and diminishing the government’s economically inefficient allocation of resources.
Gingrich’s record is mostly supportive of smaller government, but he likes to tinker with the economy using more federal government involvement in areas that he is most passionate about. This is most pronounced on spending issues, and has led him to some very bad positions.
During his time in Congress, he had an exemplary voting record on a lot of the top spending proposals:
- Voted NO on the Chrysler bailout in 1979
- Voted YES on the Gramm-Rudman balanced budget bill in 1985
- Voted YES on a balanced budget amendment (as part of the “Contract for America” effort that he led) in 1995
- Led the effort and voted YES to cut $16.4 billion from the budget in 1995.
- Voted YES on welfare reform in 1996
But Gingrich also has a recurring impulse to insert the government into the private economy. A particularly bad mark on his record came in 2003, when he urged “every conservative member of Congress” to support the Medicare drug benefit bill. He called it the “most important reorganization of our nation's healthcare system since the original Medicare Bill of 1965.” The drug benefit now costs taxpayers over $60 billion a year and has almost $16 trillion in unfunded liabilities.
This flaw appeared again in late 2008, when he backed the $700 billion Wall Street bailout. While he was initially opposed to it, he “reluctantly” endorsed it when successful passage was uncertain in Congress.
Prior to those big errors, and somewhat since then, Gingrich has shown an odd condescension toward fiscal conservatives who do not share his views. In 1998, he derided a group of House conservatives by calling them the “the perfectionist caucus” for opposing a 4,000-page omnibus spending bill, adding that “those of us who have grown up and matured in this process understand after the last four years that we have to work together on big issues.”
Free trade is a vital policy necessary for maximizing economic growth. In recent decades, America’s commitment to expanding trade has resulted in lower costs for consumers, job growth, and higher levels of productivity and innovation.
In 1994, William F. Buckley, Jr. called Gingrich a “profoundly committed free trader,” and his record and rhetoric over the years bears out that characterization. Gingrich has been a reliable advocate for free international trade, and a critic of both the politics and economics of protectionism.
In 1993, Gingrich supported the North American Free Trade Agreement, and later argued for including Chile into the deal, with the eventual goal of having the entire Western Hemisphere as a free trade zone.
In 1994, Gingrich supported passage of the General Agreements on Tariffs and Trade, which established fast track authority for the president and the World Trade Organization.
In 1998, Gingrich supported Most Favored Nation (now Permanent Normal Trade Relations) status with China. And he supported free trade legislation between the United States and sub-Saharan African nations.
In 2010, Gingrich called for the creation of “Free Cities,” Hong Kong-style free trade zones, developed from scratch according to agreements reached between the United States and the “receptive governments” controlling the agreed-upon spots.
Evidence of any pro-protectionism support is scant. However, Gingrich did vote YES to keep trade-distorting peanut subsidies in 1985, although he later redeemed himself by voting against them in 1990.
Excessive government regulation stymies individual and business innovation necessary for strong economic expansion. The Club for Growth supports less and more sensible government regulation as a critical step toward increasing freedom and growth in the marketplace.
There’s a long list of big government regulations that Gingrich has opposed. Commendably, he advocates full repeal of Sarbanes-Oxley. He vocally opposed ObamaCare and favors repeal. He supports lifting restrictions on energy production like offshore drilling, drilling in the Arctic National Wildlife Refuge, and nuclear plant construction.
Gingrich opposes the “Employee Free Choice Act,” or “card check,” especially its binding arbitration provision. And he opposed the Dodd-Frank financial regulatory reform bill in 2010, calling it “another big government power grab.”
Once again, however, Gingrich’s penchant for tinkering undermines his otherwise very strong record of pro-growth deregulation.
He fought President Obama’s cap-and-trade scheme and wants to abolish the Environmental Protection Agency. He also opposes the Obama EPA’s controversial plan to regulate carbon emissions via the Clean Air Act, and has urged Congress to prevent its implementation. But previously, in 2008, he starred in a television ad with Nancy Pelosi urging a bipartisan solution to climate change. In a debate with Senator John Kerry in 2007, Gingrich said, “the evidence is sufficient that we should move towards the most effective possible steps to reduce carbon loading in the atmosphere." While he insisted that government regulation wasn’t the answer, he said, “I would agree you would get more change more rapidly with an incentivized market rather than a laissez-faire approach.” That’s Gingrich-speak for government involvement.
More recently, Gingrich defended federal ethanol policies. Even Al Gore now admits ethanol subsidies hurt the environment and that he only supported them because of Iowa’s influential presidential caucuses. Gingrich singled out a Wall Street Journal editorial critical of ethanol policies, and suggested ethanol’s “big city” critics get their facts straight. Responding to the fact that, without subsidies, tariffs, and federal mandates, there would be no ethanol market, Gingrich said, “If they’re prepared to insist on a flex-fuel vehicle and every car in America capable of buying ethanol, I think the industry can stand on its own.” Thus, Gingrich would favor eliminating ethanol subsidies only after Congress mandates that everyone buy ethanol cars.
Gingrich has also long endorsed a federal role in supporting renewable energy projects and the development of clean energy technologies.
These inconsistencies are notable because they are inconsistencies. Gingrich’s default approach to regulatory issues is usually to favor the free market and empower entrepreneurs and consumers. Despite that good record, too often Gingrich seems overly compelled to find government answers to complex issues when the hurdles to free market solutions appear too high.
America’s major entitlement programs are already insolvent. The Club for Growth supports entitlement reforms that enable personal ownership of retirement and health care programs, benefit from market returns, and diminish dependency on government.
Gingrich has long advocated reforms, of one sort or another, of the federal government’s three major entitlement programs – Medicare, Medicaid, and Social Security. But he has three glaring mistakes in his record that can’t be overlooked.
On Social Security, Gingrich has been consistently pro-growth and pro-reform and for all the right reasons. He favors personal Social Security savings accounts owned by individual taxpayers and off limits to congressional spendthrifts. He has written:
“With large personal social security savings accounts, even low- and moderate-income workers will accumulate hundreds of thousands of dollars by retirement and will be able to leave a financial legacy to their children or other heirs. Personal social security savings accounts offer workers far greater personal choice, ownership and control than the current system.”In addition to his own plans, Gingrich supported President Bush’s effort in 2005 to reform Social Security with personal accounts, and a 2004 plan offered by Congressman Paul Ryan and then- Senator John Sununu that would have done much the same.
Gingrich also favors comprehensive reform of the notoriously inefficient Medicaid program. He originally proposed the idea of block-granting the program back to the states in 1995, giving them more flexibility to administer it.
He has long advocated expanded health savings accounts, tax free accounts coupled with high-deductible catastrophic coverage to allow people to build a medical nest egg, like a health care 401(k) plan.
As noted above, however, Gingrich has a few doozies in his record. First, in his 2008 book Real Change, Gingrich advocated an individual mandate for health insurance – a similar mandate is central to ObamaCare and is being challenged by 26 states in court as being unconstitutional. Gingrich wrote:
“[I]ndividuals are expected to help pay for their care. Everyone should be required to have coverage. Those with very low incomes should receive vouchers or tax credits to help them buy insurance. Those who oppose the concept of insurance should be required to post a bond to cover costs.”The second large error in Gingrich’s entitlement record was equally troubling: the former Speaker played a high profile advocacy role on behalf of President George W. Bush’s Medicare prescription drug benefit bill in 2003. Gingrich penned several op-eds supporting the general thrust and specific provisions of the bill, urging House Republicans to pass what was billed at the time to be a $400 billion expansion of the federal government.
Among the lowlights of his advocacy:
“Every conservative member of Congress should vote for this Medicare bill. It is the most important reorganization of our nation’s healthcare system since the original Medicare Bill of 1965 and the largest and most positive change in direction for the health system in 60 years for people over 65.”Gingrich still maintains his support for Medicare Part D, and in a 2006 op-ed lauded the virtues of the first year of its implementation.
“Congress should allow seniors to get the drugs they need by adding a prescription drug benefit to Medicare.”
Finally, Gingrich supported the creation and eventual expansion of SCHIP, the government-run health care program for children of low-income families.
The Club for Growth supports broad school choice, including charter schools and voucher programs that create a competitive education market including public, private, religious, and non-religious schools. More competition in education will lead to higher quality and lower costs.
Education reform is another area that perfectly illustrates Gingrich’s dual (and occasionally contradictory) tendencies toward both pro-growth conservatism and big-government meddler.
For decades, Gingrich has been an unequivocal advocate for school choice, writing in a 2006 op-ed:
“The status quo is failing our students, and to truly see real change, we need to enact real change. The simplest and surest way to transform education is to give students and parents the freedom to choose where they will go to school. This means eliminating restrictive zoning laws that force kids into schools simply because they live nearby. This means introducing free-market forces into education, encouraging schools to compete for students, much like businesses compete for customers. This means that schools that do not perform will either improve or close their doors — which is as it should be. There is no middle ground.”Gingrich admirably advocates charter schools, vouchers for families with children trapped in failing schools, and greater flexibility in rewarding good teachers and dismissing bad ones.
But Gingrich’s tinkering side reveals itself when he suggests that the federal government “save the children.” In 2006, he wrote:
“Finally, Congress should tie education funding to school accountability. The No Child Left Behind law is making it blaringly obvious just how many schools are crippling and destroying children. We should save the children. Congress should require school systems to institute metrics-based performance standards in order to receive federal funding to ensure that every child is getting the education that they deserve.”
Demanding that the federal government get involved in what most conservatives believe is a state or local issue is something that Gingrich doesn’t seem to appreciate.
The American economy suffers from excessive litigation which increases the cost of doing business and slows economic growth. The Club for Growth supports major reforms to our tort system to restore a more just and less costly balance in tort litigation.
Gingrich has been a clear and consistent advocate for lawsuit abuse reform for years. The “Common Sense Legal Reform Act” was part of the Contract with America in 1994, and was passed by both the House and Senate, but vetoed by President Bill Clinton. The bill would have reformed the tort system by penalizing frivolous and predatory lawsuits by imposing “loser pays” rules and capping punitive damages.
More recently, Gingrich has supported tort reform in the context of health care reform and cost-containment. In 2009, Gingrich criticized President Obama’s health care overhaul for skirting the issue of lawsuit abuse reform: “The “plain and simple truth” is that leaving the tort system ‘as is’ ignores more than $200 billion in potential savings annually in health care.” Specifically, Gingrich cited statistics pertaining to the expensive and wasteful practice of “defensive medicine,” in which doctors perform unnecessary tests solely to protect themselves from predatory lawsuits.
In 2002, Gingrich called for a cap on “pain and suffering” awards in medical malpractice suits, and cited the dangerous shortage of doctors in many states that had not – to date – reformed their liability laws. In 2006, Gingrich noted the quick reversal of Texas’ trend of losing doctors after the state passed medical malpractice reform.
Gingrich has also called for the establishment of special “health courts” to manage the glut and exploding costs of medical malpractice litigation.
POLITICAL FREE SPEECH
Maximizing prosperity requires sound government policies. When government strays from these policies, citizens must be free to exercise their constitutional rights to petition and criticize those policies and the politicians responsible for them.
Except for one large blemish, Gingrich has what seems to be a clear, strong, and positive stand on behalf of political free speech.
In 1995, he countered calls for spending restrictions in campaigns by noting the 1992 presidential campaigns combined spent half of the major television networks’ news budgets. He said giving journalists free, unlimited access to the public while restricting campaign contributions represented “a nonsensical socialist analysis based on hatred of the free enterprise system.”
Gingrich has rightly been a harsh critic of the McCain-Feingold Bipartisan Campaign Finance Reform Act, saying in 2006 that it ought to have been named the “McCain-Feingold censorship law” and compared it to the Sedition Act of 1798.
According to Gingrich,
“A truly functioning campaign system would take power out of Washington and return it to its owners—the American people. Such a system would allow individuals to make unlimited contributions to candidates for Congress in their district, so long as it is reported immediately on the Internet and is transparent and accessible.”Gingrich strongly supported Citizens United in their challenge against the constitutionality of the McCain Feingold bill, and recently appeared in a video produced by Citizen United commemorating the anniversary of the successful ruling.
Nevertheless, Gingrich supported the “Fairness Doctrine” in 1987, a proposal that would force broadcasters to air all sides of a controversial issue. It obviously infringes 1st Amendment rights and it can only lead to bigger government as bureaucrats haggle over what’s controversial, what’s “fair”, and other details.
POLITICAL ACTIVITY & ENDORSEMENTS
Robust political activity is essential to producing a federal government that is more respectful of free markets and produces more pro-economic growth policies. The Club for Growth’s PAC has been active in some of the more central battles within the Republican Party nominating process in recent years, supporting pro-growth candidates over pro-government ones.
Whereas in most policy areas Gingrich’s record has been consistently or largely good, his record of involvement in political activity in which a clear pro-growth and anti-growth choice was available has been frequently poor.
In the 2009 special election for Congress in New York’s 23rd district, Gingrich was outspoken in his support of liberal Republican nominee Dede Scozzafava, up to the moment she finally quit the race after center-right voters rallied behind Conservative Party nominee Doug Hoffman. Long after most prominent conservatives had endorsed Hoffman, Gingrich held firm in his advocacy for a liberal candidate who supported Obama’s stimulus plan and the pro-union “card check” proposal, among other bad positions.
In 2010, Gingrich openly campaigned for embattled U.S. Senator Robert Bennett in Utah, whom Gingrich’s wrongly called “a true-blue conservative.” In 2008, Gingrich aggressively supported and campaigned for liberal Congressman Wayne Gilchrist (R-MD) when he faced a conservative challenge from now-Congressman Andy Harris. In 2006, same thing, when Gingrich backed liberal Congressman Joe Schwarz (R-MI) when he was challenged by conservative now-Congressman Tim Walberg.
It is of course common for leading Republicans to support incumbent Republicans who face primary opposition. However, Gingrich has taken this to another level, supporting incumbents even when he had long been out of office himself, and doing so with a vigor and passion that is entirely inconsistent with the level of conservatism that the candidates themselves espouse.
In Gingrich’s worldview, he appears to elevate partisanship to principle. His conflation of party expansion with genuine political or policy success is a common mistake, especially among establishment leaders and Washington insiders. This mistake can easily morph into a strange contempt for serious conservative reformers within the GOP. After all, from a pro-growth perspective, it is clear that the candidates Gingrich strongly opposed, Senator Mike Lee and Congressmen Andy Harris and Tim Walberg are far superior to the RINO incumbents they defeated.
Here again, Gingrich’s penchant for condescension appears. In that NY-23 race, for instance, Gingrich went so far as to attack conservatives who supported Hoffman (whom Gingrich belatedly endorsed himself), saying: “So I say to my conservative friends who suddenly decided that whether they’re from Minnesota or Alaska or Texas, they know more than the upstate New York Republicans? I don’t think so.”
As a historical figure, it is undeniable that Newt Gingrich has played leading roles in some of the most important battles on behalf of economic growth and limited government in the last quarter century.
His opposition and momentary defeat of the 1990 Bush tax increase, his leadership of the 1994 Republican Revolution, and his spearheading of the provisions of the Contract With America are major league achievements. His consistent support for pro-growth tax reform, free trade, Social Security reform, tort reform, and political free speech also evidence a clear and impressive understanding of the fundamentals that underlie the free enterprise system that has made America prosperous.
Unfortunately, the problems in Speaker Gingrich’s record are frequent enough and serious enough to give pause. On two of the most important recent issues that confronted limited government conservatives (creating the new budget busting Medicare drug entitlement, and the Wall Street bailout), Gingrich was on the wrong side. His advocacy of an individual health care mandate is problematic. His penchant for tinkering with rewards for favored industries and outcomes shows a troubling willingness to use federal power to coerce taxpayers into his preferred direction. And his occasional hostility toward conservatives who do not share his desire to support liberal Republicans or to compromise on matters of principle is worrisome.
The totality leads one to be rather unsure what kind of president Newt Gingrich would be. Past is often prologue, and in Gingrich’s case there is an enormous volume of past on which to base a judgment. One could reasonably expect a President Gingrich to lead America in a pro-growth and limited government direction generally, possibly with flashes of real brilliance and accomplishment, but also likely with some serious disappointments and unevenness.