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Can Newt Inc. Serve High Tea? Can Newt Inc. Serve High Tea? Can Newt Inc. Serve High Tea? Can Newt Inc. Serve High ...

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Can Newt Inc. Serve High Tea?

December 16, 2011
I've got a piece in this week's National Journal magazine exploring how Gingrich made millions playing a Washington influence game detested by the Tea Party. 

I write for subscribers

Tea party supporters may think that they've found their ideological soul mate in the brash rhetorical stylings of Newt Gingrich, but the former House speaker's consulting empire could give them pause. With its corporate members and pragmatic conservatism, Newt Inc. embodies almost everything they hate about Washington.

First, there is Gingrich's ingenious twist on the traditional influence game, which permitted him to make more money than less creative minds might have done. A large lobbying shop can charge its big corporate clients somewhere in the neighborhood of $20,000 to $30,000 per month. But a firm that's deep in one policy area--health care, for instance--can quickly outgrow the pool of potential clients, because possible conflicts of interest prevent it from serving competitors. A firm generally couldn't represent Aetna, UnitedHealthcare, and WellPoint, because their disparate business interests may put them on opposite sides of a policy fight. (Anyway, market leaders often don't like the same firm representing their competitors.)

Gingrich's innovation was to confine his mandate to policy and political counsel, not shoe-leather lobbying. His clubby Center for Health Transformation, where industry power players and policy wonks meet to brainstorm ideas and strategy, charges annual membership dues between $20,000 and $200,000. The center, insiders say, is a cross between a consultancy and a think tank. "The center was a stroke of genius. He got money from everybody," said a health care industry source familiar with the center. "You could never get that much as a lobbyist." Between 2001 and 2010, the center brought in almost $55 million and counted among its members such major health care players as Blue Cross Blue Shield, AstraZeneca, and the Pharmaceutical Research and Manufacturers of America.

Then there's Gingrich's advocacy for the Medicare prescription-drug benefit, a government program the tea party reviles. ... While he (campaigned to pass the benefit), drug and insurance interests that favored the bill--not necessarily paragons of conservatism--were paying big-money dues to his center. The result would not please tea party members: Last year alone, the Medicare Part D program cost about $62 billion, a figure that will more than double by 2020, according to an estimate by the Medicare Board of Trustees.
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