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Newt Gingrich’s Congressional Ethics Scandal Explained

As Newt Gingrich looks to complete his improbable political comeback, his opponents won’t let him (or the electorate) forget about the scandal that ended the first act of his political career—a string of 84 ethics complaints in the House that culminated in a $300,000 sanction. The pro-Romney super PAC Restore Our Future hammered home the message in a recent Iowa television ad, citing the fine as evidence that “Newt has a ton of baggage.”

The former Speaker of the House has a handy response for those taking aim at his past. “All of the substantive issues, we were ultimately told we were right,” Gingrich told the DesMoinesRegister editorial board on Thursday. “It’s truly one of the most frustrating things of my career.” He blamed his congressional downfall on bad lawyering and on the zealotry of the House ethics committee (although half of the members were Republican).

Lost in the campaign trail barbs about Gingrich’s ethical lapses, however, is any sense of what Gingrich actually did, either allegedly or as a matter of record. In short, he used a network of consulting firms, educational institutions, and even a charity for inner-city teens to promote a set of clearly partisan political goals designed to sweep Republicans into power in Washington. Gingrich’s web of interconnected organizations formed the early prototype for the multi-million-dollar public and private network he established after leaving public office, known now as “Newt Inc.”

Here’s how it worked:

Step 1: The Vehicle

Gingrich’s political machine took advantage of a number of institutions that actually predated his congressional tenure, the most significant of which which was GOPAC, a political action committee founded by former Delaware Gov. Pierre S. du Pont. GOPAC had not distinguished itself particularly in its early years, but things began to change in 1986 when Gingrich, an ambitious back-bench congressman from Georgia, took control of the group. He instilled in it a sense of purpose—namely, his vision of a Republican majority in Washington by 1996. GOPAC, in turn, became a fundraising machine, raking in $15 million on Gingrich’s watch. As Connie Bruck later reported in the New Yorker, it also skirted Federal Election Commission disclosure requirements by distributing fundraising dollars without ever actually handling the money itself. In some cases, it effectively served as a matchmaker, pairing candidates with like-minded donors.

The committee’s plan was to change the very language of politics and recast the terms of the debate entirely; Gingrich would, like the professor he once was, educate rising conservative politicians to “speak like Newt.” One way to do that was to issue buzzword-packed cassette tapes to aspiring Republican lawmakers.

The other method Gingrich conceived of was to hold nationally televised seminars. In 1990, he developed a program, the American Opportunities Workshop, in which he offered his—and by extension, GOPAC’s—vision for the future and outlined steps to organize activists on cable television. Gingrich specifically avoided linking the program to the Republican Party by name, lest he scare off political novices. But winning elections was, by all accounts, the intent. As the House ethics committee noted in 1997, “While the program was educational, the citizens’ movement was also considered a tool to recruit non-voters and people who were apolitical to the Republican Party.”

Step 2: The Shell Charity

Running a national political movement without the formal backing of the party was resource intensive. So to save money, Gingrich and his allies tried something new. They replaced the American Opportunities Workshop with an almost identical program with a different name, American Citizens’ Television. And they turned over the operations to the Abraham Lincoln Opportunity Foundation, a tiny Denver-based charity founded and controlled by GOPAC ally Bo Callaway, a former Colorado Congressman and Army Secretary.

According to papers filed with the IRS in 1984, ALOF was designed to instill a sense of civic virtue inner city kids by sponsoring “Land of Opportunity Speaking Competition Contests” in Colorado public schools. The charity’s leadership was nearly identical to the leadership of the Colorado Republican Party (in fact, it was the state GOP that had come up with the idea for the contest in the first place).

If the contest helped nudge teenagers toward the Republican party and further the GOP’s minority outreach efforts, well, that was all well and good; the first winner, a Vietnamese immigrant, earned a $2,500 scholarship and delivered the opening Pledge of Allegiance at the 1984 Republican National Convention.

By 1987, Colorado Republicans had lost interest in speech competitions, the contests had stopped, and ALOF had gone dormant. It had just $486.08 in its bank account—but it did have one thing of much greater value: 501(c)3 status from the IRS, meaning all donations to the group were tax-exempt. Control of the charity remained in the hands of Callaway.

Step 3: Doubling Your Money

Gingrich brought the Abraham Lincoln Opportunity Foundation back to life in 1990—albeit in a dramatically different role. Instead of fostering a love of capitalism and civic virtues in inner-city kids, it was paying for Gingrich to teach conservative activists how to elect Republicans. Internal memos placed a premium on airing the program in specific congressional districts.

The strategy was clear—by giving money to a tax-exempt organization, donors could effectively double their buying power because they could write it all off as a tax deduction (meaning it was that much less they had to pay to Uncle Sam). Not that there was much of a difference between ALOF and GOPAC. It was a matter of paperwork and little else; the two organizations shared a DC office, and many of the same employees. They even shared money—while the Abraham Lincoln Opportunity Foundation was nominally operating Gingrich’s television program, GOPAC loaned the group $45,000; the Los Angeles Times reported that in 1990, GOPAC donors gave the former inner-city charity at least $150,000.

In 1997 Gingrich was ultimately slapped with a $300,000 fine by the House ethics committee for his “reckless” or “intentional” use of nonprofits for partisan political ends.

Ultimately, the IRS caught wind of the arrangement and stepped in, ruling that as an educational nonprofit, ALOF couldn’t finance a purely political enterprise. In 1990, the final episode of the program was produced instead by a third conservative group, Citizens Against Government Waste—which, while not technically affiliated with Gingrich, was a major donor to his enterprises.

With the IRS’ ruling, ALOF’s new role was more or less dead. But it continued to beat on, at least for a few years, as a conduit between donors and GOPAC. Because ALOF owed GOPAC money, Callaway offered donors the option of giving to ALOF instead, thereby shoring up the group’s finances and taking advantage of its tax status. Citizens Against Government Waste gave $37,000 to ALOF in 1991, and ALOF cut a check for $37,000 to GOPAC later that day. The Ethics committee report noted that in addition to Callaway, “Two other GOPAC Charter Members made contributions to ALOF which were immediately turned over to GOPAC.”

Step 4: The College Course

With ALOF relegated to the background, Gingrich once again devised an elaborate funding and control mechanism to organize conservatives. This time, GOPAC would craft and develop a message of civilizational drift that would propel his party to victory; the corrupt welfare state was steering the United States away from the values that had made it great. But to cut costs (and skirt tax laws), he’d recruit outside groups to handle the fundraising and operations.

Gingrich unveiled a new television program, “Renewing American Civilization,” and found a willing host in Georgia’s Kennesaw State College, which offered to make it a four-credit course. Publicly, the goals were strictly educational; privately, it was a partisan mobilization drive. As Gingrich wrote in a letter, “Our hope is to have at least 50,000 individuals taking the class this fall and to have trained 200,000 knowledgeable citizen activists by 1996 who will support the principles and goals we have set.”

You didn’t need to work at GOPAC to see the real aims of the course. Gingrich was rebuked by many of the same scholars he claimed had helped devise the course. Boston College professor James Q. Wilson, whom Gingrich touted as an adviser to the course, actually repudiated the program after initially coming on board. According to one letter obtained by the ethics panel, the famed academic scolded the Speaker for the clearly partisan tone of his lesson plan: “If this is not to be a course but instead a sermon, then you should get a preacher to comment on it.”

Larry Sabato, a University of Virginia political scientist whom Gingrich had also touted as a contributor to the course, soured on the experiment as well. In a 1996 book, he called the course “a partisan organizing tool.”

It was an odd public-private partnership. Kennesaw State provided classroom space to Gingrich and gave out course credits to students who participated in the class, but it relied on a third-party called the Washington Policy Group to manage and raise funds. All of that would be pretty innocuous, except GOPAC was the Washington Policy Group’s only client, and its staff consisted of three GOPAC vets. Gingrich promoted the entire operation in floor speeches.

Step 5: Public to Private

When a new Georgia state law explicitly prohibited public universities from sponsoring elected officials as teachers, Gingrich found a new home for Renewing American Civilization, but he kept the operation intact. GOPAC continued to supply the message, and Gingrich continued to deliver it. He simply moved the course from Kennesaw State to tiny Reinhardt College. And in place of the Washington Policy Group, Reinhardt outsourced fundraising for the course to a small group called the Progress & Freedom Foundation.

Like WPG, its staff overlapped GOPAC’S, and its ties to Gingrich ran deep. As the Washington Post reported, much of the $900,000 the group raised came from Gingrich donors.

Step 6: Sanctions

In 1997, Gingrich was ultimately slapped with a $300,000 fine by the House ethics committee for his “reckless” or “intentional” use of nonprofits for partisan political ends, and for misleading the House by offering conflicting account about GOPAC’s role in all of it (for which he blamed his lawyer). Although the sanction was tied to the specific violation of providing misleading information, he wasn’t exactly absolved of other wrongdoing. In some cases, the committee decided not to pursue a matter any further simply because he had stopped the unethical activity that had gotten him in trouble in the first place; for other charges (such as the use of official resources for his own non-profits, Gingrich received letters of admonition). That same year, Abraham Lincoln Opportunity was stripped of its nonprofit status by the IRS, only to have it restored again six years later in a decision that raised eyebrows among campaign finance watchdogs.

Whether or not Gingrich technically broke House rules, his makeshift fundraising network was undeniably shady. He gladly appropriated a tax-exempt organization aimed at helping inner-city kids and used it to finance his goal of winning control of the House of Representatives. He likewise took two nonprofit educational institutions and used them to host a college course whose partisan aims he happily gushed about in private correspondence, and whose high-profile advisers actually repudiated it.

At a campaign stop in New Hampshire in November, Gingrich promised that if elected, he would teach an online class to the American people. The course, he said, would be free to the public. If the past is any indication, the real questions is: What’s the real motive—and who’s footing the bill?


By: Tim Murphy, Mother Jones, December 20, 2011

December 20, 2011 Posted by | Republicans | , , , , , , | 1 Comment

Two More Ways Republicans Are Undermining Financial Regulations

After Republicans took over the House of Representatives in November 2010, the incoming House Financial Services Chairman, Rep. Spencer Bachus (R-AL), said he believes Washington’s role is to “serve the banks.” And the GOP has done its best this year to follow that directive, by denying regulators the money they need to implement the Dodd-Frank financial reform law, trying to repeal or water down some of the law’s key provisions, and blocking Obama administration nominations to regulatory posts.

In the budget deal that averted a government shutdown last week, the GOP kept it up. While the Securities and Exchange Commission was granted a desperately needed increase in funding, the Commodity Futures and Trading Commission, which is given the Herculean task of policing the derivatives market by Dodd-Frank, was not so lucky:

Under the new deal, the Commodities Futures Trading Commission will get $10 million more for staffing, thus making layoffs for the agency less likely in 2012. But that money won’t come through a funding increase: In the end, Republicans refused to budge on the overall funding level for the agency, which will stay at $205 million. Instead, $10 million for staffing will be shifted out of the agency’s budget for information technology. The overall level of funding falls significantly short  of President Obama’s own request for the CFTC — $308 million, which would be an increase of almost 50 percent — as well as the Senate Democrats’ request for $240 million.

Senate Republicans have also put a hold on a slew of nominations to fill financial regulatory positions, ostensibly to ensure that President Obama doesn’t make recess appointments:

Several of Obama’s picks are waiting to be confirmed by the Senate, including Martin Gruenberg to be chairman of the Federal Deposit Insurance Corp, Thomas Hoenig to be the FDIC’s vice chair and Thomas Curry to lead the Office of the Comptroller of the Currency.

But Republicans refused to sign off on the list, complaining that the White House did not give them assurances Obama would not use a long congressional recess to make temporary appointments.

These kinds of actions have the effect of undermining Wall Street reform and preventing regulators from ensuring that the 2008n financial crisis doesn’t have a sequel. The end result is that Bachus’ marching order gets fulfilled, as the GOP helps the banks go right back to the same practices that brought down the economy in the first place.


By: Pat Garofalo, Think Progress, December 20, 2011

December 20, 2011 Posted by | Banks, Economy | , , , , , | Leave a comment

PolitiFact’s Pants On Fire For Choosing “Ryan Will End Medicare” As “Lie Of The Year”

This morning, PolitiFact announcedthat the Democrats’ charge that Rep. Paul Ryan (R-WI) budget will end Medicare is the biggest lie of the year — even though it’s 100 percent true!

Here is why: Ryan’s plan ends traditional fee-for-service program and forces all future retirees to ultimately enroll in private coverage.

Under his proposal, beginning in 2022, people turning 65 will receive a pre-determined “premium support” payment to purchase private insurance. Insurers will offer a basic package of benefits, but traditional Medicare — the program that President Lyndon Johnson enacted in 1965 — will literally stop enrolling new beneficiaries. Rather than paying health care providers directly — and using its market clout to secure better bargains and other efficiencies for enrollees —  the government would now pay multiple private health insurers pre-determined amounts per beneficiary to act as middle men between patients and providers.

It will no longer guarantee seniors a defined package of benefits, but will instead only offer a defined contribution towards their health care costs. As the Congressional Budget Office (CBO) analysis of Ryan’s proposal explains, “the payment for 65-year-olds in 2022 is specified to be $8,000, on average, which is approximately the same dollar amount as projected net federal spending per capita for 65-year-olds in traditional Medicare.” However every subsequent year, as health care costs increase, the government’s contribution “would grow at a slower rate,” inflation, and the age of the enrollee. By 2030, under the proposal, the premium support would “only cover 32 percent of a typical 65-year-old’s total health care spending” and would decrease every subsequent year.

PolitiFact concedes that this is, in fact, “a huge change to the current program.” But it’s more than that. Capping costs to beneficiaries, closing the traditional fee-for-service program, and forcing seniors to enroll in new private coverage, ends Medicare by eliminating everything that has defined the program for the last 46 years.


By: Igor Volsky, Think Progress, December 20, 2011

December 20, 2011 Posted by | Health Care, Seniors | , , , , , | Leave a comment

“Ring, Ring”: Which Candidate Should Answer That 3 A.M. Phone Call?

It’s late at night when the phone rings at the White House:

Kim Jong Il, the ruthless oddball dictator of nuclear-armed North Korea, is dead. His apparent successor is his 20-something son, about whom practically nothing is known. South Korean officials have rushed to put the nation’s military forces on high alert.

Do we want Mitt Romney answering that phone call?

Newt Gingrich?

We learned Sunday night what happens when Barack Obama is on the receiving end of unsettling news from one of the world’s most dangerous flashpoints. There’s a round of consultation with allies, a carefully worded official statement, an assessment of the status of diplomatic efforts to defuse North Korea’s nuclear program — in other words, a cautious and measured response.

Implicit in Obama’s actions is the recognition that nothing a U.S. president says or does at this moment is likely to influence North Korean events in a positive way. Intemperate words or deeds, however, could be destabilizing at a moment of sudden transition. This is no moment to apply sharp pressure to a hermetically sealed, supremely paranoid regime that considers itself perpetually besieged and happens to possess nuclear weapons.

The White House was particularly concerned about how Kim’s son — Kim Jong Eun, the “Great Successor” who may have already assumed power — would react to anything seen as a provocation. The young, inexperienced leader might believe he had to make a show of belligerence to prove himself. Aggressive action could prompt a sharp South Korean reaction, and suddenly a situation could become a crisis.

All this is lost on Romney, who came out guns blazing with what sounded like a call for regime change.

“Kim Jong Il was a ruthless tyrant who lived a life of luxury while the North Korean people starved,” Romney said in a statement. “He recklessly pursued nuclear weapons, sold nuclear and missile technology to other rogue regimes, and committed acts of military aggression against our ally South Korea. He will not be missed.”

The statement continued, “His death represents an opportunity for America to work with our friends to turn North Korea off the treacherous course it is on and ensure security in the region. America must show leadership at this time. The North Korean people are suffering through a long and brutal national nightmare. I hope the death of Kim Jong Il hastens its end.”

Well, that’s what we all hope. But dancing on the dictator’s grave is hardly presidential. How can anyone be certain what approach is most likely to lead to reform in North Korea until we know more about the Great Successor? Or until we can ascertain who now controls the nuclear weapons?

Romney is eager to show that he would somehow be tougher than Obama in foreign policy — a high bar, given Obama’s record of killing Osama bin Laden and helping orchestrate the demise of Moammar Gaddafi. It’s possible that Romney understands what his responsibility would be if he faced a similar circumstance as president. But if you take his words seriously, the former Massachusetts governor sounds like a dangerous hothead.

That’s nothing compared to Gingrich, whose past statements about North Korea have been shot from the hip.

In 2009, Gingrich said the United States should have used force to prevent North Korea from testing a new long-range missile. “There are three or four techniques that could have been used, from unconventional forces to standoff capabilities, to say, ‘We’re not going to tolerate a North Korean missile launch, period,’” he said.

No, there are not any “standoff capabilities” that could have been used, at least not without starting a nuclear war. Gingrich has expressed his enthusiasm for a laser-beam weapon that the Pentagon tried to develop, but that program was radically scaled back. We could have just destroyed the missile on its launch pad, perhaps with a cruise missile strike, but the North Koreans might well have responded by destroying Seoul.

One of Gingrich’s worries is that North Korean scientists will be the first in the world to work out how a nuclear device can be used to create a massive electromagnetic pulse — and fry electronic circuits from Malibu to Maine. Would somebody please cancel the man’s subscription to Popular Science?

During the 2008 campaign, Hillary Clinton famously asked whether Obama was ready for the 3 a.m. phone call about a foreign crisis. Kim’s death reminds us that it’s always 3 a.m. somewhere in the world.

December 20, 2011 Posted by | Election 2012 | , , , , , , | Leave a comment

On Tap: “Boehner The Barkeep” And The Radical Republican Winterfest

House Speaker John Boehner gave a spirited reply when asked recently about whether his party’s resistance to middle-class tax cuts risked making Republicans appear to be lackeys of the rich.

“I’ve got 11 brothers and sisters on every rung of the economic ladder, all right?” Boehner said. “My dad owned a bar. I know what’s going on out in America.”

So Boehner has his finger on the American pulse because his deceased father owned a saloon? What strange brew have they been pouring in the speaker’s office?

Whatever advice Earl Boehner has been giving his son from the grave, it doesn’t appear to be working. On Monday, the bar owner’s son aligned himself with House conservatives in opposition to a broadly bipartisan plan to extend a payroll tax cut for 160 million Americans.

This new position, essentially reversing the one Boehner voiced a mere three days earlier, proves anew that the old-school speaker is less a leader of his caucus than a servant of his radical backbenchers. Perhaps it would be more accurate to say he’s their barkeep.

Three times at a news conference on Friday, Boehner was asked whether he could support a two-month extension of the payroll tax cut, as Senate Democrats and Republicans were planning. Three times, Boehner declined to state an objection to the two-month extension (he objected to a different part of the agreement, about an oil pipeline, which the senators subsequently changed to his liking).

“I just gave you an answer. How much clearer can I be?” Boehner said, refusing to take issue with the two-month extension.

And so senators passed the extension, 89 to 10. Tea Party heroes Pat Toomey and Marco Rubio voted for the compromise. The fiercest budget cutter of them all, Sen. Tom Coburn, voted for it. Republican lions such as John Cornyn, Jon Kyl and Mitch McConnell voted for it. Only seven Republicans voted “no.”

McConnell, the Senate Republican leader who negotiated the compromise, kept Boehner informed at every step — and was confident enough in Boehner’s acquiescence that his office sent out a notice saying there would be no more legislative business in the Senate until 2 p.m. on Jan. 23. But Boehner’s backbenchers — particularly the Tea Party freshmen — had other ideas, and, in a Saturday teleconference, made clear to Boehner that he would have to abandon the compromise.

The House Republican freshmen have become a bit tipsy with power, and freshman Rep. Steve Womack (R-Ark.) on Tuesday boasted at a news conference that his class is “performing more like sophomores now than freshmen.” Actually, their performance is more sophomoric than anything, but they’ve been able to deliver a string of insults to Boehner, most notably the July revolt that forced the speaker to pull his debt-limit plan from the floor. If Boehner needs any more evidence he’s out of style in his party, he can ponder the rise in the presidential race of Newt Gingrich, the man Boehner tried to depose from the speakership 15 years ago, losing his leadership position in the process.

On Tuesday, Boehner had the unpleasant task of going before the cameras to explain why his House Republicans, after championing tax cuts for millionaires, would be voting against a tax cut for ordinary Americans.

“You know, Americans are tired of, uh, Washington’s short-term fixes and gimmicks,” Boehner began. Behind him in the hallway outside his office, four American flags provided patriotic cover for the reversal. He complained that “the Senate Democratic leaders passed a two-month extension” — omitting mention that Senate Republicans, with Boehner’s knowledge and tacit support, had agreed.

So rather than pass a two-month extension, he’s willing to have the tax cuts lapse entirely when they expire at year end?

“I don’t believe the differences between the House and Senate are that great,” Boehner said, by way of reassurance. But this only confirmed that his side was making a big stink over nothing.

Why didn’t he raise warnings earlier about the two-month extension? “Uh, we expressed our reservations about what the Senate was doing,” he said.

What did he make of the fact that 90 percent of the Senate supported the compromise? Boehner, in reply, demanded to know why “we always have to go to the lowest common denominator” — which is exactly what he had done in letting his backbenchers lead him.

The speaker denied the obvious truth that he had encouraged the compromise before opposing it. He licked his lips, gave a “thanks, everybody” and disappeared.

The sophomoric freshmen must have needed their barkeep to serve them another round.


By: Dana Milbank, Opinion Writer, The Washington Post, December 19, 2011

December 20, 2011 Posted by | Class Warfare, Middle Class, Teaparty | , , , , , | Leave a comment

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