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

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NEED TO KNOW: LOBBYING

Can Newt Inc. Serve High Tea?

Newt Gingrich’s way of doing business—and the business he did—could sour the supporters he’s trying to reach. A look inside the influence machine.

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Friend to health care: Newt Gingrich(AP Photo/Nati Harnik)

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. In the early 2000s, consumer fury at the high cost of medicines was on the rise, and PhRMA hired Gingrich to rehab its public image. But soon the Medicare Part D debate took off in Congress, and PhRMA focused its attention on lobbying to help pass it. Nevertheless, Gingrich personally supported the drug legislation, becoming one of the bill’s most outspoken conservative champions.

The former House speaker, who shut down the government twice when President Clinton refused to cut Medicare and other programs, was now endorsing a multibillion-dollar expansion of the program. Days before Congress passed Medicare Part D, he extolled the bill’s market reforms as a reason to vote for it. “If you are a fiscal conservative who cares about balancing the federal budget, there may be no more important vote in your career than one in support of this bill,” he wrote in The Wall Street Journal.

 

Gingrich even addressed rank-and-file lawmakers, focusing on how they could inject competition and choice into Medicare, said Jack Howard, a former Gingrich congressional staffer turned lobbyist. “It was kind of like one of those speeches from Braveheart. He would give this very powerful speech and get people all pumped up and come bursting out of the meeting ready to do battle.”

While he did all this, 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.

Supporters of the former speaker say he wasn’t merely a shill; his big-tent approach to the center also meant he was willing to rub some members the wrong way. For instance, Gingrich wanted to create a system where consumers could compare prices and buy medicines directly from drug companies, creating a kind of Orbitz for prescription drugs. But, according to center spokeswoman Susan Meyers, the idea polarized drug companies because it envisioned the government paying only for basic drugs. (For pricier ones, consumers would have to pay the difference themselves.) By giving people the cheapest drugs and thus keeping them out of the hospital, she said, it would have saved money over the long run. “He would take positions that some of the membership in CHT hated and some liked, and it usually boiled down to what he thought was the right thing to do,” said a Gingrich supporter who worked for an organization that used to belong to the center. “He is not a man, in my opinion, motivated by money.”

On the campaign trail, Gingrich is trying to sell himself as an ideas guy, parrying charges that he cashed in on his Washington connections to get rich. So far, it seems to be working: In a recent Gallup Poll, almost half of tea party supporters prefer the former speaker, while only 20 percent support Mitt Romney. How, given these heresies, is that possible? Partly because Gingrich’s influence work is not well-known. For the rest, Rep. Jack Kingston of Georgia, a Gingrich supporter, has a theory: “There’s a lot of tea party conservatives who say that was a bad deal, but you don’t see them not taking Part D as a benefit.”

 

This article appears in the December 17, 2011 edition of National Journal Magazine.

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