The man Newt Gingrich once derided as the “tax collector for the welfare state” has become the House speaker’s personal banker.
In a bizarre twist to a capital soap opera, Gingrich announced Thursday that defeated Republican presidential candidate Bob Dole has given him an unsecured $300,000 loan to pay the speaker’s ethics fine.
It was not a case of one dear friend helping another. Dole conceded that the two one-time adversaries had not spoken since the night of Dole’s crushing loss to President Clinton last November. Then, on Tuesday, the former Senate majority leader made his offer to help get Gingrich out of a jam.
“He’s a great patriot … and a close personal friend,” Gingrich said of Dole. “He’s going to get a good commercial rate (10 percent over eight years), and he’s going to make money.”
But in lending Gingrich the money in a deal that most banks would not give ordinary borrowers, Dole did more than help the Georgia Republican out of a financial fix.
He also helped burnish his legacy among Republicans, who were deeply disappointed with the Kansan’s lackluster presidential campaign.
“If I were Bob Dole, I would not want to go out as the guy who lost to Bill Clinton. I would much rather go out as the guy who got the House Republicans out of a jam,” said John Pitney, a professor of political science at Claremont-McKenna College in California and a former Republican National Committee official.
Gingrich has been agonizing over how to pay the penalty since the House in January voted to reprimand him for failing to seek legal advice against using tax-exempt organizations to fund his political empire.
As part of the settlement, Gingrich agreed to pay $300,000 to the committee to reimburse it for extra work caused by incorrect information his lawyer submitted over his name.
The loan arrangement announced Thursday seemed to satisfy Gingrich’s Republican troops, who have been urging the speaker to pay the fine with personal funds rather than campaign cash or through other contributions. Many in the GOP believe Gingrich would be finished politically if he were to be seen as suffering little from the penalty.
“There was not one dissenting voice” in a meeting of House Republicans Thursday morning at which Gingrich explained his decision, said Rep. Ray LaHood, R-Ill. “I think this (loan from Dole) is very explainable. The debt is being paid back, and it’s being paid out of his hide … It puts him back on track,” LaHood said.
“He’s trying to do what’s right. I give him credit,” said Rep. John Shimkus, R-Ill., who said Gingrich is not a wealthy man. “In my (Springfield-based) district, $300,000 is a lot of money to anybody.”
While Republicans said the loan puts the matter behind Gingrich and the party, Democrats were not ready to let the issue lie. The House Ethics Committee must approve the arrangement, and Democrats are questioning whether Gingrich got a “sweetheart deal.”
Gingrich will have eight years to repay the loan at an interest rate of 10 percent, compounded annually. He doesn’t have to make payments on the loan until 2005, though interest charges would still accumulate.
Because House rules require the Georgia Republican to step down as speaker no later than 2002, the repayment schedule means the loan will come due presumably after Gingrich has joined the private sector, where he will be in a position to earn a larger income and collect speaking fees, which are now prohibited.
“Could any ordinary American get such a deal for themselves?” Minority Whip David Bonior, D-Mich., Gingrich’s chief antagonist in the House, asked Thursday. “Is this just another example of business as usual, where politicians and lobbyists work out a deal which no one else in America could get?”
Bonior and other Democrats suggested the loan could violate a House ban on gifts to lawmakers because the terms appeared more lax than what commercial banks would require. Gingrich, for example, is not being asked to put up any collateral. “I have grave doubts whether it meets ethical standards,” Bonior said.
The loan was purely Dole’s idea, said Gingrich spokeswoman Christina Martin. “It was his initiative,” she said. “The speaker did not reach out to him.”
A couple of weeks ago, Dole sent “quiet word” through intermediaries that he might be willing to help Gingrich, Martin said. On Tuesday evening, Dole met Gingrich on the speaker’s Capitol balcony overlooking the Washington Mall to seal the deal.
In a statement Thursday, Dole said, “I consider this not only an opportunity to support a friend, but a long-term investment in the future of our party. Today we bring this story to a close, and a united Republican party moves forward with its positive vision for the next millennium.”
In a speech on the House floor, Gingrich said he agreed that he must personally bear the cost. “My campaign could have paid the entire amount, and it would have been legal and within past precedents of the House. Yet on reflection it was clear that many Americans would have regarded this as another example of politics as usual and of avoiding responsibility,” Gingrich said.
As speaker, Gingrich earns $171,500 a year. On his 1995 financial disclosure forms, Gingrich reported net royalties from his book, “To Renew America,” of $471,000. According to the form, Gingrich’s total net worth is no more than $857,000.
Dole and his wife, Elizabeth, are much more wealthy; they are worth somewhere between $2.3 million and $7.7 million, according to disclosure forms.
Much of their income is from Elizabeth Dole’s salary as head of the American Red Cross and her fees as a speaker.
A potential problem for Gingrich is that Dole recently joined a prominent Washington law and lobbying firm, Verner, Liipfert, Bernhard, McPherson and Hand. Democrats have suggested that Dole’s loan is tainted because he is being paid by a firm whose clients have myriad interests before Congress.
MEMO: Cut in Spokane edition