Newt Gingrich on Budget & Economy Former Republican Representative (GA-6) and Speaker of the House

We balanced the budget four times in the 1990s

PAUL: Newt's mentioned this quite a few times about balancing the budget four times. I went back and looked at the record. The national

We balanced the budget four times in the 1990s

GINGRICH: Under the system that was used, we were $405 billion [ahead]. I agree with Ron that we take Social Security off budget.

Ron Paul's economic stances compared to Gingrich's

Gingrich vs. Paul on Economic Issues

• Financial Bailout
• Automaker Bailout
• Wall Street Reform
• Economic Stimulus
• Reaganomics
• Federal Reserve secrecy
• Balanced Budget
• Term Limits
• Earmarks
• Unions
• Unemployment Extension
• Social Security Privatization
• Tax-and-Spend policies
• Marriage Penalty

Don't bail out Freddie Mac & Fannie Mae; break them up

GINGRICH: First, the housing bubble came from the Federal Reserve inflating the money supply. Second, I was never a spokesman for any agency, I never did any lobbying for any agency. I offered strategic advice. I was in the private sector. You're allowed to charge money for it. It's called free enterprise. I'm not for bailing them out, in fact, I'm for breaking them up.

Q: Rep. Bachmann, you called Speaker Gingrich a "poster boy of crony capitalism."

BACHMANN: Well, when you're taking over $100 million, and you're taking money to influence the outcome of legislation in Washington, that's the epitome of the consummate insider.

Dodd-Frank kills small business & small banks

GINGRICH: He's certainly right that you want to get to the real value of the houses as fast as you can. But I think there are two specific steps you have got to understand in terms of housing. If the Congress would repeal Dodd/Frank, you would see the housing market start to improve overnight. Dodd/Frank kills small banks, it kills small business. The federal regulators are anti-housing loan, and it has maximized the pain level. You could also change some of the rules so it would be easier to do a short sale where the house is worth less than mortgage than it is to do a foreclosure. Today, the banks are actually profiting more by foreclosing than encouraging short sales. But in the long run, you want the housing market to come back? The economy has to come back.

Only leadership can balance the budget

GINGRICH: If you assume Washington remains the way Washington is right now, it's all hopeless. We might as well buy Greek bonds and go down together.

Q: How do you get us out of that?

GINGRICH: I'm going to outline a 21st century Contract with America. And it's going to be far bolder, far deeper, far more profound than what we did in 1994. It's important to remember that in September 1983, we created 1,100,000 new jobs. Obama's socialist policies, class warfare, and bureaucratic socialism, we created zero in August. I believe with leadership we can balance the budget. I did it for four consecutive years. We went from $2.2 trillion projected deficit over a decade to $2.7 trillion projected surplus when I left. I think it is doable, but it takes real leadership.

Modernizing government would save $500B per year in waste

GINGRICH: That's just a Washington mythology. Anybody who knows anything about the federal government knows that there's such an enormous volume of waste, that if you simply had a serious all-all effort to modernize the federal government, you would have hundreds of billions of dollars of savings falling off. If you modernize the federal government, you save $500 billion a year. One example, the federal government is such a bad manager of money, that somewhere between $70 billion and $120 billion a year in Medicare and Medicaid is paid to crooks. We wrote a book several years ago called "Stop Paying the Crooks." I thought it was pretty obvious even for Washington. So I would start to balance the budget by stop paying the crooks, not by cheating honest Americans.

No sequel to failed stimulus & job-killing policies

The Fed's secrecy & power are antithetical to a free society

GINGRICH: I would fire him tomorrow.

Q: Why?

GINGRICH: I think he's been the most inflationary, dangerous, and power-centered chairman of the Fed in the history of the Fed. I think the Fed should be audited. I think the amount of money that he has shifted around in secret, with no responsibility, no accountability, no transparency, is absolutely antithetical to a free society. And I think his policies have deepened the depression, lengthened the problems, increased the cost of gasoline, and been a disaster.

Put people back to work to raise revenues without taxes

There are three good ways. The Ronald Reagan technique put 3,700,000 more people back to work. You reduce government spending. You raise government revenues enormously. The "committee of 12" ought to be looking at, how do you create more revenue, not how do you raise taxes.

Second, you go to energy: You open up American energy, $500 billion a year here at home, enormous increase in federal revenue.

Third, we own 69% of Alaska. Let's set aside [some] for national parks. We could liberate an area the size of Texas for minerals and other development. That would raise even more revenue, not the normal Washington viewpoint.

The Super-committee is as dumb an idea as I've ever heard

[All 8 participants raised their hands] Q: Mr. Speaker, why are you shaking your head?

A: Look, I think this super committee is about as dumb an idea as Washington has come up with in my lifetime. The idea that 523 senators and congressmen are going to sit around for four months while 12 brilliant people, mostly picked for political reasons, are going to sit in some room and brilliantly come up with a trillion dollars or force us to choose between gutting our military and accepting a tax increase is irrational. They're going to walk in just before Thanksgiving and say, all right, we can shoot you in the head or cut off your right leg, which do you prefer? What they ought to do is scrap the committee right now, go back to regular legislative business, and get rid of this secret phony business.

It's a scandal that the Federal Reserve is secret

A: Well, I think that having some kind of central bank is an important part of how you deal with monetary policy in the modern world. But having Chairman Bernanke deal with hundreds of billions of dollars, some estimates as much as $16 trillion in secret is profoundly against a free society. The feds should be totally audited. It should be out in public. Their decision documents from 2007, 2008, & 2009 should be public. We should know who they bailed out and why they bailed them out. And who they didn't bail out. And I think that it is a scandal that the Federal Reserve is secret. And I think, frankly, their monetary policy since the late 90s has been a major factor in the economic pain we're now going through.

Federal government pays at least $150B a year to crooks

A: Control spending. Put Americans back to work. Get back to a balanced budget as we did when I was Speaker. America believes their program will save $500 billion a year in federal spending. The federal government pays at least $150 billion a year to crooks. Any sound modern system would save at least $130 billion a year.

Putting people in houses they can't afford invites disaster

• If you do not have any credit, government will find a way.
• If you cannot save for a down payment, government will waive the requirement.
• If you cannot afford to pay the principal, government will give you an interest-only loan for the first three years.
• If you cannot even afford full interest payment, government will give you a below market rate.

Microlending efficiently gets money to local entrepreneurs

Megabanks, which got into so much trouble during the Wall Street meltdown, could never successfully microlend. They're too big and too bureaucratic to understand and analyze millions of small entrepreneurs, and they could never afford the cost of analyzing so many loan applications and processing checks.

Now consider this: if big banks are too isolated and too bureaucratic to operate successfully in small, local settings, why would we think big, centralized government bureaucracies could do better?

Insure banks rather than pass out checks

The Path to Socialist Banking
1. In Sep. 2008, the major brokerage houses teeter on the brink of bankruptcy.
2. Pres. Bush and his Treasury secretary propose a huge bailout to inject $700 billion of capital into falling financial institutions to stabilize them and stop a run on their assets. The plan is called Troubled Assets Relief Program (TARP).
3. Republicans in the House try to stop the bill (they had the majority then) and substitute an approach masterminded by former House speaker Newt Gingrich to insure banks rather than pass out checks to them. The House defeats the Bush bailout proposal.
4. John McCain "suspends" his campaign; the Republicans in the House cave in at the behest of their nominee and agree to TARP.
5. Democrats ask, what will the taxpayer get out of the TARP bailouts? Had the Republicans listened to Gingrich, the question would have had no force, since no money would have changed hands. But in the context of the Bush TARP bill, the question demands an answer.

1995-97: Pushed for (and got) capital gains tax cut

The results of the 2001 Bush tax cut were similar. Bush sliced the top rate from Clinton's 39.6% to 35% and cut the capital gains rate from 20% to 15%. The result? The rich paid more in taxes! MORE?

Bailout combines bad policy with worst of Detroit's decay

1995 budget: cut taxes, regulations, & spending

The guts of that Trojan horse were taken nearly verbatim from Reagan's 1985 State of the Union speech. The core of that speech, the heart of Reaganism, venerated the new Republican mantra of cutting taxes on wealth and slashing government spending on entitlement programs. "Entitlement" became identified with a newly-revised, all-purpose political scapegoat: the undeserving poor.

The massive budget cuts in the Gingrich Congress in 1995 were the cutting edge of Reagan's 1985 vision of boosting growth and balancing the budget by cutting regulation on corporations, taxes on the wealthy, and spending on the poor.

1995: Eliminate the annual federal deficit in 7 years

Deficit politics, a central issue from both Ross Perot's and Clinton's campaigns in 1992, crucial to the Republican takeover of Congress in 1994 and now in the fore with Gingrich's latest goal of eliminating the annual federal deficit in 7 years.

The deficit was basic to the overriding political questions of the day--the role of government and the well-being of future generations. The deficit had become an issue of values, even morals.

Clinton argued that he didn't like the deficit. But he had not received sufficient credit for what he had already done on the deficit and the economy. Clinton wanted to run on what he had done. "What we started in '93 was the right thing to do."

Negotiated 1998 budget: first one balanced since 1969

I met the Republicans halfway on the amount of Medicare savings. The Republicans accepted a smaller tax cut, the child health insurance program, and the big education increase. We had produced the first balanced budget since 1969, and a good one to boot. Senator Lott and Speaker Gingrich had worked with us in good faith, and Erskine Bowles, with his negotiating skills and common sense, had kept things going at critical moments.

Balancing budget is morally AND financially right

Let me start with the morality of balancing the budget. Historically, it has always been self-evident in America that each generation had the obligation to live within its means. A major war was a legitimate excuse for massive borrowing. But in peacetime, there has been a general rule that each generation would live within its means. As a result, our children would not be stuck with the task of paying off someone else's debt.

The principle was that we would pay off the mortgage and leave the farm to our children. Only in the last generation has this bias toward the future been reversed. Now we are borrowing against the farm to pay today's living expenses and leaving our children to pay off that debt.

Focus on customers; use employee knowledge

Deming’s name is not familiar to most Americans. But he embodies so many of the traits of the American character that he deserves a place in the nation’s mythology. He is already honored in Japan, where the highest annual award bestowed upon a Japanese company each year if the Deming Award for Quality. Although Deming’s work defies any easy summary, his teachings generally focus around four basic points:
1. The customer should be the focus of any business.
2. Systems, rather than individuals, should be the focus of improving production.
3. There has to be a theory or hypothesis before each change or action. Prediction is the key to management.
4. Every employee can be a key player in improving a process or product. Employees should be treated as knowledgeable contributors to their activities.

Achieve balanced budget by 2002

I think the baby boomers are now old enough that we can have an honest dialogue about priorities, about resources, about what works, about what doesn't.

I think on a bipartisan basis, we owe it to our children and our grandchildren to get this government in order to be able to actually pay our way. I think 2002 is a reasonable time frame and I would hope we can open a dialogue with the American people.

Demand a Balanced Budget amendment.

The Contract from America, clause 3. Demand a Balanced Budget:

Begin the Constitutional amendment process to require a balanced budget with a two-thirds majority needed for any tax hike.

Limit federal spending growth to per-capita inflation rate.

The Contract from America, clause 6. End Runaway Government Spending:

Impose a statutory cap limiting the annual growth in total federal spending to the sum of the inflation rate plus the percentage of population growth.

Supports balanced budget amendment & line item veto.

[As part of the Contract with America, within 100 days we pledge to bring to the House Floor the following bill]:

The Fiscal Responsibility Act:
A balanced budget/tax limitation amendment and a legislative line-item veto to restore fiscal responsibility to an out-of-control Congress, requiring them to live under the same budget constraints as families and businesses.