AIADA Congress: One on One with Former Speaker of the House Newt Gingrich

By Marty Bernstein

AIADA Contributing Editor

 

Among writers and journalists there’s a syndrome known as “beat envy” … the other person’s beat (the industry or topic they cover) is more fun, interesting, perk laden, serious and/or professional than the one you have. 

 

I’m not complaining. Far from it.

 

The auto beat is great.  I’ve met the heads of almost every car company in the world and have interviewed most of them. Ditto for fast rising and sometimes, fast falling executives.  There’s travel to interesting places and venues around the world.  Lots of great cars to test drive.  Nice people to work with and for.  But I am a news and political junkie. I’d love to cover politics and politicians.

 

But obviously, I don’t. Instead, I subscribe to several newspapers, listen to a little talk radio, but television has a special place.  I watch both red and blue news, C-Span and of course, the Sunday morning talk shows. They are overflowing with personalities, characters and some very knowledgeable folks.

  

You’ve seen ‘em, heard ‘em and know ‘em all. Not personally, of course, but you know them: pundits, politicos, crepe hangers, the right, the left, the middle, top brass, spooks, comb-overs, the wanna be’s and the almost weres and, of course the current and past top guns. 

 

So, even though it was set-up in advance, when my phone rang precisely at 4:30 p.m., just as scheduled, I answered it, and the voice on the other end of the line said “This is Newt Gingrich …” well, it was special.  For a brief moment I was a political writer, but then reality set-in and I began chatting with the former Speaker of the House and a member of Congress for more twenty years.

 

Gingrich is well known for being the architect of “Contract with America,” the plan that lead the Republican Party to capturing the House of Representatives for the first time in 40 years.  Okay, so he’s a good politician, grip and grinner and strategist but there’s more. 

 

With a Ph.D. in Modern European History (Do I call him Dr. or Mr. Speaker I had wondered) and a seemingly unquenchable thirst for knowledge in an amazing array of subjects (I’ve watched him last on Meet The Press) he is able to knowledgeably discuss the complexities, issues, problems and dilemmas facing the automobile industry here in America and internationally.   And just in case you were wondering, some well thought plans, opinions and views on how to fix more than a few of them.

 

Thus Spoke Newt on the Death Tax Excerpts from Newt Gingrich’s keynote address to dealer members Tuesday, May 23, 2006 As the architect of the plan that swept the Republicans to power in the ‘90’s, Newt Gingrich understands politics as well as anyone in or out of control of the legislative process in the nation’s capital. A passionate advocate for change in many Federal areas, Gingrich urged the audience to adopt a confrontational, strident, strictly business orientation and attitude when meeting and dealing 1 on 1 with members of Congress. Gingrich said, “You represent a real world interaction, but you have come to a city, Washington, DC, which has learned not to change, not to modernize and not to confront realities and necessities. Your involvement as a citizen is very important.” Continuing, “I am really concerned about the death tax repeal. If you were to take a poll in the country, the country is overwhelming in favor of repealing the death tax. That is why I’m delighted you are here to talk to people on the Hill, but you have to make it really clear what you want and what you expect.” His vast experience in politics predicted a conversation with a Senator or member of Congress. He said you’re going to hear: “I’m really glad you’re here and I’d really like to help you, but I hope you understand my problem, I just can’t quite help you because …” Then the reason is stated, but to respond to statements like this, Gingrich encouraged members of the AIADA to say: You know, I really sympathize with you, but I hope you’ll understand my problem which is ‘I am going to figure out the total cost of that tax to me personally and I’m going to spend that to beat you! I know there was nothing personal when you voted to raise my taxes and I want you to know there is nothing personal when I spend my money to beat you either. I’m pleased we’re great friends and have this nice relationship’ Gingrich continued… “I mean this to the depths of my heart: I am sick and tired of politicians saying to you, ‘I was glad to take the … check, having our picture taken, but I hope you understand why I’m ripping you off. And I hope you know how much it really pains me, because if I had any other choice I sure wouldn’t do it.’ “Think of dealing with House and Senate,” the former speaker noted, “As a “straight forward supplier problem, just think of them as a supplier of government. If you had a supplier who was ripping you off, would you keep of fire them? It’s not complicated. If you’re nice and pleasant, they’re going to run all over you. So organize enough of your friends, they’ll suddenly decide, ‘Gee, I am so glad something broke loose and I am now able to help you.’ Gingrich concluded his address to the 29th Annual Congress with the statement, “If they don’t help you, fire ‘em! It’s just that simple.” And with these words of admonition ringing in their ears, AIADA members set off in buses to visit members of the House and Senate. Would be nice to know how many followed the advice, wouldn’t it?

MB: Given the growth of international automotive brands in America, do you think Congress will impose tariffs and other restrictive barriers to protect U.S. vehicle and component manufacturers? If this is done, do you think it’s wise?

NG: No.  I believe that American manufacturers should compete on quality and innovation.  I think there are things we should to make it easy for any American manufacturer whether its General Motors or Ford or Toyota, Honda, BMW, Mercedes-Benz or Nissan. There are a lot of auto manufacturers in the U.S. – some foreign owned some domestically owned. 

 

MB: How can this be done effectively?

NG: We ought to have tax laws that accelerate buying new equipment so that it depreciates on a 100% basis every year.  We ought to reform litigation … so we don’t have the lawyer tax we pay in this country.  It’s about three times as much in our gross domestic product as it is in Great Britain.   I don’t think we should hide from foreign competition. I think we should keep modernizing our system till we meet foreign competitors.  And, frankly, some of that is a management problem in terms of the Big 3.

 

MB: The Chinese Yuan just went above the 8 to 1 ratio for the first time and there’s been rumblings about updating the Smoot-Hawley Law -- what will the impact be?

NG: The ratio, I believe, will start changing towards to 6 or 5 to 1 before this is over.  There was a time when Japanese workers were paid a lot less than American workers.  Japanese workers today are making as much or more as American workers. Regarding the Smoot-Hawley Law, I’m for making America competitive.  I am not in favor of trying to cripple other people.

 

MB: Recently, a group was organized by former Big 3 employees to promote Made In America vehicles as a cause celeb … Your thoughts about this … ?

NG: I recommend you interview Andy Stern, president of the SEIU  … he is the one union leader I know who has been to China five times. If the Big 3 were to send all their UAW members to China for a week they’d have a better sense of what we are up against.  As long as the UAW persists in believing that we are somehow in 1955 and there are no competitors, it’s going to be very hard for the traditional American manufactures to compete. 

 

MB: Some members of the media – both mainstream and trade -- have become almost xenophobic vis a vis buying from China.  Is this realistic?

NG: I think the first thing has to be to come to grips with the reality of modern competition.  The people most likely to favor being anti-import are people who either represent trial lawyers or unions – both of which are groups which make it harder for us to compete. 

 

MB: How is American industry going to compete efficiently and effectively in a world driven by price? 

NG: I think it would be nice to get beyond political demagoguery to what is it going to take for American workers and American factories to compete head to head with China, India, Korea, Thailand, etc., And recognize by the way, that this is going to be a big challenge.  Every audience I talk to has a key message -- that we are faced with more challenges than any point since April of 1861.  And I take that very seriously.  It is a total range of challenges we have to resolve  in our generation so that our children and grandchildren can have a decent future is very formidable. 

 

MB: How can we compete when many are not facing reality and are ignoring the situation by keeping their heads in the sand?

NG:  I think that’s right.  There are people around us who really don’t know because they have not looked at China and India.  They haven’t looked at the scale of scientific change so they really aren’t focused yet because they haven’t seen it yet.  Second, there are people who can’t afford to know because their interest groups – whether it’s the teachers union defending a really bad school or it is trial lawyers defending a really bad litigation system. You name it. Thirdly, people who know we should do serious things, but for political or news media reasons are too timid to do them. 

 

MB: President Bush’s scheduled meeting with the Big 3 presidents has been postponed till sometime in June.  If you were President, what would you tell the CEO’s of DaimlerChrysler, Ford and General Motors?

NG: First of all they have to be honest about the scale of the competition … and recognize that what we want to do is change taxation, regulation, education and healthcare so they can meet the competition.  But we don’t want to shield them from competition.  Second, we need their help in leading the way in building flex-fuel cars, accelerating the development of hydrogen fuel cell cars, and, thirdly I’d ask them, “what kind of tax incentives and other kinds of things we could do?” that would accelerate the development of a more independent energy strategy which has to have automobiles as integral part.

 

MB: That’s a lot to ask, isn’t it?

NG: That’s where I’d start.  Down the road my whole goal would be to say to them, you must lean forward to be on the offense.  They’ve got to figure out how to solve these things, not how to hide from them.  That means inevitably they’ve got to educate the work force.  They’ve got to get people to understand this is going to be a huge challenge. 

 

MB: Do you think the Detroit Three are up this challenge

NG: We don’t have any evidence of it yet!

 

MB: Similarly what would you tell the CEO’s of the international brands?

NG: There are a couple different challenges here.  The Europeans, if anything, are more challenged than we are.  Their labor force structure is more rigid, their likelihood of solving things is lower, so I don’t think I would necessarily – automatically – give them a pass on this.  This is a hard problem.  If you’re an auto company outside of China, you have to begin to seriously think how you’re going to compete with China.  As they get into production they are going to be very, very competitive. That’s part of what people are doing to have to deal with.

 

MB: During the recent SAE convention in Detroit, a Big 3 purchasing executive told major suppliers they must go to China for manufacturing if they want to continue selling them. Your reaction to this?  

NG: (laughs – does not respond)

 

MB: Why should the government create CAFE standards – shouldn’t manufacturers strive to improve MPG standards as a marketing tool?

NG: There are two parts to that.  The first part is that every effort to establish stricter CAFE standards has led to the American public efforts to get around them.  Liberals for 40 years have been trying to get Americans into small vehicles as an act of theological commitment. They drove us out of cars by making cars so small that people then bought trucks.  Look at the explosion in the whole light truck business over the past 30 years.   Liberal intellectuals are saying … we have to coerce the American people for their own good. 

 

MB: So, how would you decrease America’s dependence on oil?

NG: My argument is simple.  First of all we should “incentivize” – if we want a strategy for getting people off petroleum, then what you want to do is incentivize buying vehicles that don’t use petroleum.  Then you’d have to figure out how to incentivize gas stations to go to an E85 ethanol blend … or hydrogen fuel cells.

 

MB: Do you think hydrogen powered cars will ever come to fruition?

NG: How do I incentivize people to buy the first generation of hydrogen fuel cell cars?  You could have very dramatic impact.  And you might say to companies, we’ll give you a 3 to 1 ratio –every hydrogen car you produce, will count as three in terms of meeting your other standards.  What would the impact of a hydrogen fuel economy be on virtually everything we worry about from the economy to national security the environment? It – it is a substantial breakthrough.

 

MB: American refined E85/ethonol has limited production capacity now and not many service stations are equipped to offer it for sale.  What about E85 from Brazil … even with the high tariff? 

NG: The question there is, do you really want to shift from Saudi Arabia to Brazil as the source of dependency.  I would like to see us build the largest possible renewable fuel system inside the U.S.  That’s why I helped launch the 25% renewables by 2025 initiative. 

 

MB: It seems the rising cost of gasoline per gallon is not a big deal to high income groups.  It’s the lower to average income demographic groups that are feeling a terrible, budget-busting impact. What can be done?

NG: I’d like to see an incentive plan to help them get new and better vehicles.  Because if you help those folks make the transition to a system that uses less fuel and is less expensive, then you’ve really improved the economic situation for many. 

 

MB: The .50 per gallon gas tax discussion came up again … do you think it will ever come to this?

NG: Certainly, it’s a liberal favored approach.  But the folks you described (lower incomes) are the ones who get hammered by it.

 

MB: On to another subject of importance to independent business owners -- the estate tax. What is your opinion on this? 

NG: I think we should permanently abolish it. If you’ve already paid taxes on it once, why should you have to pay taxes twice?  I can’t imagine any grounds for making the case that we should go the IRS and the undertaker the same week. 

 

MB: The current estate tax law does restrict family entrepreneurial enterprise and endeavors, doesn’t it?

NG:  In a lot of cases you make it very, very hard to transfer it inside your own family because of the tax burden.

 

MB: In addition to the estate tax situation, what can be done about the health care cost crisis that impacts all businesses?  

NG: I founded The Center for Health Transformation … we have a program we think will ultimately take between 20 and 40% out of the cost of health care.

 

MB: How?

NG: There’s a lot to do. We start with health saving accounts, but we are also looking at a whole range of other things we really think will improve healthcare and lower costs. We already have an extensive list of proven real-life ‘transformations’ that are saving lives and saving money.   

 

MB: (Time was running out) Is the program on the web?

NG: Yes, at www.healthtransformation.net or www.newt.org. 

 

MB: And one last question, what was your first car? 

NG: My first car was a Plymouth … ah, eh, Valiant … a long time ago.  Actually it was a Barracuda. We used it while I was in grad school in New Orleans.

 

I’m an automotive beat writer/journalist, but for one brief shining moment (apologies for the plagiarism to Lerner and Lowe), I was a political writer. Thanks Mr. Speaker.

May 24, 13:08 PM 2006