Did Drug Firms Hire Gingrich To Back Medicare Drug Benefit?

National Memo Mon, 11/28/2011 - 10:33pm —

by Joe Conason

To look closely at Newt Gingrich is to see a failed statesman who pocketed tens of millions of dollars by exploiting his political celebrity and government connections over the past decade or so. Although the former Speaker never registered as a lobbyist, the corporations that financed his “for-profit” think-tank and his consulting firm weren’t simply charmed into writing those enormous checks.

But for Republican primary voters, Gingrich’s blatant buckraking may not be nearly as troubling as what he helped his corporate masters to achieve on Capitol Hill. Having accepted large sums from major drug companies as well as PhRMA, the industry lobbying group, he reportedly helped to push through the Bush administration’s Medicare drug benefit – which is anathema to the right-wing Tea Party voters whose support he is now courting.

As the Washington Post and other outlets have reported in recent days, the estimated take from Gingrich Inc., the conglomerate of Newt-centered consulting, publishing, and propaganda activities that he founded after leaving Congress in 1999, ranges upward of $110 million. He points out that he has written (or had ghost-written) about a dozen best-selling books and a number of television documentaries, and that he has also earned top dollar by delivering speeches – much like his old nemesis Bill Clinton (who has devoted a large proportion of his similarly huge earnings to charity and foundation work).

The largest proportion of the Gingrich bonanza, however, evidently derives from the Center for Health Transformation, an unusual profit-making “think-tank” in Washington, where most such organizations are not-for-profit; and the Gingrich Group, his consulting company which gave corporations “advice” while it supposedly refrained from traditional lobbying for legislation. He also operated a tax-exempt non-profit called American Solutions, which he seems to have used largely to finance millions of dollars worth of travel by private jet and limousine for himself and third wife Callista.

The “group” took in lucrative fees from the corporate likes of mortgage giant Freddie Mac, which paid Gingrich around $1.8 million over several years to help with troublesome Republicans seeking to shut down the government-backed firm. The “center” dispensed advice, videos, and conferences on health care to a huge variety of companies in the health field, which paid annual “dues” ranging from $5000 to $200,000 depending on their size after its doors opened in 2003. Familiar pharma names such as Astra Zeneca and Novo Nordisk were major customers, along with the official PhRMA lobby.

Precisely what the center did for these exorbitant sums is not clear, but some commentators suspect that its activities skirted lobbying even if it avoided the narrowest definition of that business. In his defense, both Gingrich and his friends have insisted he did nothing that could be construed as supporting legislation on behalf of a client.

Yet xonservative journalist Tim Carney, writing for the Washington Examiner, reports that the former Speaker used his connections on the Hill to promote passage of the Medicare drug bill, also known as Medicare Part D, in 2003 – which was designed to protect drug company profits no matter how high the cost to consumers and taxpayers. According to Carney, Gingrich was hired “by someone in the industry” during the contentious debate over the bill, when his successors in the House Republican leadership notorious twisted many arms in their own caucus to achieve passage.”

“Three former Republican congressional staffers told me that Gingrich was calling around Capitol Hill and visiting Republican congressmen in 2003 in an effort to convince conservatives to support a bill expanding Medicare to include prescription-drug subsidies,” Carney writes.
“Conservatives were understandably wary about expanding a Lyndon Johnson-created entitlement that had historically blown way past official budget estimates. Drug makers, on the other hand, were positively giddy about securing a new pipeline of government cash to pad their already breathtaking profit margins.”

There is much more to be found in the archives and bank accounts of Newt, Inc., from his relationship with the Chamber of Commerce to his advocacy of policies that benefited his corporate clients, whether or not he actually lobbied directly for them. But his promotion of the Medicare expansion may be his greatest vulnerability for the moment, as he assumes the front-runner position.

On Monday, the chair of Gingrich’s Center for Health Transformation estimated its revenues over the past decade at $55 million. Fees are flexible, she said, with “charter memberships” going for an annual fee of $200,000.