Below is the second half of my two-part interview with former Speaker Newt Gingrich. In this portion we talked more specifically about his book, To Save America: Stopping Obama's Secular-Socialist Machine, and his opinions on a wide range of policy issues:
Fivethirtyeight.com: The subtitle of your book refers to Obama's "secular-socialist machine." Can you explain to our readers what you mean by each of these three components?
Speaker Newt Gingrich: The Obama Administration ignored the public’s opposition to the stimulus package. The Administration ignored the fact that a majority of the American people were opposed to Obamacare. And they ignored the loss of the Teddy Kennedy’s senate seat, and ended up ramming through a bill that the country clearly did not want. That’s the behavior of a machine. So I’m first of all prepared to defend the concept that it’s a machine.
Second, working backwards, by any reasonable standard Obama is committed to socialism. I mean socialism in the broad sense. I’m not talking about a particular platform adopted by the International Socialist Movement in the late 19th century. I’m talking about a government-dominated, bureaucratically-controlled, politician-dicatated way of life. Not only have we taken over GM, Chrysler and AIG, but there’s a czar in the White House who believes he can establish the pay scale for 30 companies he’s never been in, for hundreds of people he’s never met. They just nationalized the student loan program. They designed Obamacare so there’s a backdoor road to socialized medicine because it creates an incentive for companies to drop their employees. There’s evidence that hundreds of companies may drop millions of employees from their health insurance and have them go buy individual insurance. So there’s a lot of different practices that would lead us to believe this is socialist operation.
And socialism is inherently secular because it believes the center of authority is not god, the center of authority is not your rights as an individual—the center of authority is the state, and the state gets to decide what you’re allowed to keep and what you’re allowed to do. And in addition, if you look at some of Obama's appointees, like his nominee for the Equal Employment Opportunity Commission, who has explicitly stated that religious liberty has to be subordinated to identity politics. The Democratic candidate for Senate in Massachusetts said if you’re Catholic maybe you shouldn’t work in emergency rooms. Two Democratic legislators in Connecticut introduced a bill that would have destroyed the Catholic Church. You have a judge in Wisconsin who said a day of prayer is unconstitutional. Everyday you turn around and you see a continuous assault on religion in general, and on Christianity and Judaism in particular.
538: Do you consider Medicare and Social Security socialist, and why or why not?
NG: I think that Medicare is part of the Bismarckian insurance state because it in fact pays all the money to the private sector. But I think we are going to have to dramatically reform Medicare, and increase the individual freedom and increase the individual responsibility in the system.
These models that grew up a 100 years ago, when Bismarck first developed them in 1870s and 1880s, have proved not sustainable in a modern world market. We need a new and better model which has much more individual responsibility.
538: What about the corporate bailouts in October 2008 where people complained that we got privatized profits and socialized risks and that that’s a form of corporate socialism—how do you feel about that?
NG: I feel very strongly about that. I said at that time that I thought Henry Paulson should not have been Treasury Secretary. I thought it was totally wrong for the former chairman of Goldman Sachs to be funneling billions of dollars from the taxpayers to Goldman Sachs. And I have said over and over, you can’t have capitalism on the way up and socialism on the way down because you get socialism both ways.
I think that we should basically start moving away from Fannie Mae and Freddie Mac, which was a government guarantee, and frankly break them up. One of my deepest beliefs is that if you’re too big too fail, you’re too big to manage. And we need to find ways to get to a more risk-accepting system, and not find a way to have more government control of the risk.
538: In your book you call Barack Obama the most radical president that America’s ever elected. I haven’t talked to his spokespeople, but I suspect they'd respond by saying he's cut taxes for 95 percent of Americans, ramped up troop levels in Afghanistan, and goes to church as often if not more often than Ronald Reagan ever did. So I guess I would ask, what’s so radical about him?
NG: First of all, no president in American history has gone around and said as openly and as directly as Obama has that he gets to decide who earned too much and who didn’t earn too much, he gets to decide what to redistribute and how to redistribute it. No Administration had as few people with private sector or corporate experience as this Administration.
No administration has done as much to expand federal spending in peace time. And remember all this expansion in spending is peace time spending; it has nothing to do with Afghanistan and Iraq. It has to do with their desire to prop up big government and prop up state and local governments.
538: A lot of conservatives have dissociated themselves with Obama’s predecessor, George W. Bush, under whom the first $3 trillion budget and first $1 trillion deficit was passed. You make a few passing references to the former president, but you really don’t mention him that much. How would you in retrospect classify the former president and rate his presidential performance?
NG: I think that he was very sincere in his desire to protect America. I think he was very sincere in his basic conservative social values. I think he began his Administration with a real commitment on lower taxes and more economic growth, precisely in the Reagan model. And I think that late in his Administration that he was frankly worn down by the bureaucracies in Washington.
Three things happened. The State Department gradually dominated his national security policy, to the disadvantage of freedom and our security. The victory of [Harry] Reid and [Nancy] Pelosi led him to negotiate in a way where he accepted some really bad ideas because he thought he had to find a way to get along with Democrats in Congress.
And then I think when the crisis hit in the fall of 2008 everybody panicked. Candidly, there was a period there when you had the Federal Reserve chairman and the Secretary of the Treasury saying, “If we don’t do X, Y and Z, the entire world economy is going to collapse.” That’s pretty good grounds for stopping and trying to do something. It’s easy for people to say, "Well, I’d rather have risked a world depression." But most of the people I talked to in the private sector at the time were really worried about the system freezing up totally.
538: You mentioned Nancy Pelosi. She certainly comes in for her share of criticism in the book. How would you have responded legislatively and political to the Obama agenda?
NG: It depends on what your majority is. Look, I was very fortunate. I led a national movement which won an election on a specific contract. That election attracted a whole new generation of freshmen members who were very militant. So we had a very cohesive group taking on Bill Clinton and the Left. So, you know, that’s a different environment than if I inherited her majority—I couldn’t do anything because there’s not much I could do because it’s a left-wing majority.
I think the Democrats completely misunderstood the elections of 2006 and 2008. Those were performance elections. They were not values elections. And you can tell that by the fact that Obama campaigned with a very explicit, constantly repeated promise that he would not raise taxes on anybody earning less than $250,000. And they are clearly and decisively going to break that promise. And I think they’re going to break that promise at enormous expense to their re-election opportunities.
538: You discuss at length the wealth the country has created since Reagan came into office. But when you adjust for inflation the people in the bottom three quintiles haven’t seen their incomes go up, and adjusted for inflation incomes went down during the Bush era. It’s one thing to create wealth and another to create income that goes into people’s pockets. Where’s all the wealth gone?
NG: That was true from Reagan through the end of the 1990s. From Reagan through the end of the nineties, you saw a continuous improvement in economic opportunity for all Americans. You saw a substantial decline in the number of people living in poverty. You in fact saw real opportunity across the system. Now, I think starting with the shock of 9/11, frankly the last decade has been disappointing.
But I would also suggest to you that when talk about the poorest Americans, until you talk about the crisis of the American education bureaucracy and the failure of large public school systems to deliver education for the poor, and until you talk about the degree to which bad government, high taxes, big bureaucracy and corrupt politicians make it very hard in the inner cities to create jobs, I think you can’t understand what’s happening. I think we’ve had a political-cultural failure in the poorest neighborhoods of America that has economic consequences.
But the answer—and I’m actually giving a speech in June to the Detroit Chamber of Commerce on the topic of what you would do if you wanted Michigan and Detroit to be prosperous again—and one of my key points is going to be that if you create an unsafe community with very high regulations, very high taxes, a political class that is totally unreliable, a union movement that is anti-work and anti-business, don’t be surprised if business leaves.
538: We recently saw a failed terrorism bombing in New York. How would rate Obama’s performance on terrorism?
NG: Well, first of all, if we’re going to go back, in Detroit we did not know about the Christmas Day Bomber until his pants caught on fire. In New York, we did not know about the car bomb until a vendor noticed the car was smoking. In both cases, the national security apparatus of the United States failed—period, end of story, non-negotiable.
Second, recognize that this is an Administration trying to write a national security document in which they avoid using the word "Islam," although there’s no other plausible connectivity. You start with the killings in Arkansas a year and a half ago, the killing in Fort Hood, you go to the five Americans picked up in Afghanistan going to a terrorist training camp, you go to the Detroit bomber on Christmas Day, you go to the New York Times Square bomber, and the one connectivity that all of them have is radical Islam. Now, if you have an administration which won’t confront that reality, won’t even use the word “Islam,” and won’t think about the implications, how are you going to win this war?
538: Last question. In your book you talk about and defend the small regulatory state. And yet Americans across the ideological spectrum, including yourself earlier in this interview, are furious about the bailouts caused at least in part by unregulated or at least under-regulated markets. Meanwhile, we just saw Congress, which rarely votes unanimously on anything of substance, voting unanimously to keep a closer eye on the Federal Reserve. Aren’t taxpayers entitled—whether they’re bailing out AIG, an insurance company, or GM, an automobile maker—aren’t they entitled to a government that supervises markets a little bit better in order to avoid bailouts in the first place, and how do you get there?
NG: I’m not at all sure that government regulations are the right answer. I have said publicly and have been saying for almost a decade that I thought Sarbanes-Oxley was a disaster. I didn’t think it accomplished anything. I thought it crippled American business. It slowed down venture capital. It stopped new start ups. It added enormous additional costs to smaller and mid-sized businesses. People like Bernie Marcus of Home Depot—and he created 325,000 new jobs—he said he really could not have created those kinds of jobs at Home Depot under Sarbanes-Oxley rule. Sarbanes-Oxley failed. It doesn’t teach us anything about Lehman Brothers. It doesn’t teach us anything about Bear Stearns. Doesn’t warn us about anything. So now we add another layer of bureaucracy.
The fact is that in 1991 we created a regulatory agency to look at Fannie Mae and Freddie Mac with a $62 million budget and 200 full-time bureaucrats, and they knew nothing. Warren Buffett said that he looks at more than two companies a day and he can’t imagine what the bureaucrats were doing. So I would be very cautious in believing that more bureaucracy is necessarily the answer.
538: You don’t think we need a systemic-risk regulator looking at the whole system?
NG: I believe if you give enough power to systemic-risk regulators you’re going to incur corrupt, and you’re going to dramatically cripple the system. I think you’re far better to say, “How do we redesign the system so that it has dramatically less systemic risk?”
For example, you could build in a system of countervailing bond issuance that simply says that the bigger you are the more bonds you have to buy, so that you’re paying for your own collapse. That would be a reasonable and prudential policy. And you also have to accept that some companies are going to fail.
538: Well, I hope if you do make that announcement next February you will come back and join us again at 538. Thank you.
NG: You’re welcome.