Government: Fund-Raising

Keeping Newt Flush and Center

So far, the only thing his PACs support is Gingrich

It has been nine months since former House Speaker Newt Gingrich resigned his leadership post after a weak GOP showing in the 1998 midterm elections. The Republican Party is still working to right itself, but for Gingrich, not much has really changed. The charismatic ex-Speaker is doing what he always did best: raising large sums and preaching the Gingrich gospel.

Newt Inc. is a one-man conglomerate that pulls in money from an Atlanta consulting firm, paid positions at think tanks, memberships on corporate boards, and fat speaking fees. But at its core are two political action committees that drum up cash from Gingrich loyalists to keep his conservative ideas alive. "We are the platform for the next generation of ideas," boasts Michael Shields, a spokesman for both Gingrich PACs.NEW TWIST. Some of what Newt is doing is fairly common among out-of-office, name-brand politicians such as Bill Bradley and Dan Quayle. For years, both have used their PACs to support staff, consultants, and travel. But in 1998, Bradley spent more than 25% of his receipts on campaign donations; Quayle spent about 4%.

Gingrich, however, is being extraordinarily aggressive in using his two PACs--one in Washington and one in Georgia. Both are called Friends of Newt Gingrich, or FONG, and together they have raised more than $1.2 million in six months. Neither PAC has given to a political campaign yet, though Gingrich, who declined to comment for this story, may eventually support candidates who espouse his ideas. That's if there is any money left. So far, FONG has spent nearly every penny it has taken in on salaries, direct mail, and other expenses that help Newt advance his political agenda.

Georgetown University law professor Roy A. Schotland, a campaign-finance expert, calls the PACs part of a "personal perpetual motion machine." They exist to maintain the high profile of the public Gingrich while the private Gingrich rakes in five-figure speaking fees, Schotland says.

Not fair, says spokesman Shields. "For someone to assume the PAC is supporting a `life style' is a shrill attack." He notes that Gingrich gave up a taxpayer-funded staff, security detail, and an office on Capitol Hill--perks he is entitled to as ex-Speaker.

Gingrich certainly does not miss such trappings. He commands $50,000 a speech to groups such as the National Wholesale Druggists' Assn. and the Cadillac Dealers Assn. He's on track to take in some $3 million in speaking fees this year.

American Enterprise Institute, a conservative Washington think tank, provides Gingrich with an office, a paycheck, a budget, and a research assistant as he mulls policy issues--something he also does for the Hoover Institution in Palo Alto, Calif.

Then there is his 90-second radio show, Age of Possibilities, whose terse commentaries reach 100,000 people daily on Premiere Radio, home of conservative talk-show host Rush Limbaugh. A cable-TV show and syndicated newspaper column also are in the works. And this past spring, Gingrich hung out his shingle in Atlanta, where the Gingrich Group, in partnership with PricewaterhouseCoopers and other corporate consulting firms, is advising companies on health care and technology. The group won't reveal its client list.

In his spare time, Gingrich is an adviser to Hollinger International Inc., a Chicago-based conglomerate run by conservative Canadian media magnate Conrad Black, whose holdings include the Chicago Sun-Times. Hollinger wouldn't divulge Gingrich's salary.

Forstmann Little & Co., a New York leveraged-buyout firm, keeps Gingrich on board as an unpaid adviser. And home-lending agency Federal Home Loan Mortgage Corp., or Freddie Mac, employs him as a legislative consultant.

But most impressive are the PACs. The larger federal PAC provides Gingrich with a full-time staff of three and occasional temporary workers. The labor cost: over $105,000 in the first half of '99. The federal PAC also pays for offices in Atlanta and Washington. It even ponied up Gingrich's $300-a-year dues to the Capitol Hill Club, a GOP watering hole next to party headquarters.

In the first half of '99, the federal PAC raised nearly $1.1 million from hundreds of donors. The state affiliate took in about $119,000. Nearly all of the state money came from "Newt Salute," an Apr. 14 fund-raiser. Who gave? Forstmann Little, for one. The company that Gingrich advises gratis wrote a $10,000 check. Other $10,000 donors were Anheuser-Busch, Philip Morris, and U.S. Tobacco.

Federal election law forbids corporate donations to federal PACs and limits individual donations to $5,000 in a calendar year. But state PACs, such as the Georgia FONG, have much greater flexibility to accept large sums of corporate money. To comply with the law, corporate gifts to Newt Salute were funneled to the Georgia PAC, where they are legal. The same was done with personal checks that exceeded $5,000.

But the line between the two PACs is blurry at best. The federal PAC pays the state PAC's salaries, rent, and overhead. And the federal PAC laid out $134,000 to stage Newt Salute at the Willard Inter-Continental Hotel, one block from the White House.

The fund-raiser was viewed by many as Gingrich's last hurrah in Washington, and lots of Hill luminaries showed up. But it also aroused concerns among many Republicans that money raised at the $1,000-a-plate affair would never see its way back into the GOP. They were right. With the capital from Newt Salute, Gingrich now hopes to drum up more money through an ambitious direct-mail operation.

Some in the GOP think Gingrich should be paying more attention to his party, which is at risk of losing its slim House majority. "Republicans are fighting for their lives to keep control of the House, and Newt is siphoning off valuable resources for his ego," complains a former GOP lawmaker.

Others expect Gingrich to step up to the plate eventually. "At the right time, we'll call on Newt to help," says Thomas M. Davis III, chairman of the National Republican Campaign Committee. Gingrich has indicated that he may eventually give money to candidates who pass a litmus test. They must agree to a 25% cap on all taxes, support free trade, back a missile defense system, and endorse private Social Security accounts.

Meanwhile, Newt is keeping his loyalists employed. In the first six months of this year, Joe Gaylord, Gingrich's consummate adviser, fund-raiser, and sidekick, billed the federal PAC $39,000 through his consulting firm, Chesapeake Associates. During the same period, Rachel Pearson, a former staffer in the Speaker's office, was paid more than $27,000 as a fund-raising consultant.

Campaign-finance experts who have reviewed Gingrich's operation say that the PACs exist entirely within the law, and unless donors grow weary of supporting him, the money is likely to keep flowing in. Once it does, Gingrich can basically do whatever he wants with it. "PACs have flexibility in how they spend their money," says Federal Election Commission spokesman Ian Stirton. "There's nothing in the law that says they're required to support federal candidates."

Gingrich's staff makes no apologies. The PAC "provides a platform for him should he choose to get on it," says Shields. A PAC "doesn't necessarily mean just giving checks [to candidates].... We're operating as a strong entrepreneurial operation.""EXTREME." Campaign-finance watchdogs call FONG a typical example of a PAC following the letter, if not the spirit, of the law. "It's an extreme case of a more general phenomenon," says Donald J. Simon, executive vice-president for Common Cause. "These PACs operate as kind of an extra pocket...into which wealthy individuals can stuff money." Simon says Gingrich's PACs and others like them could be misleading donors, who assume their money is being funneled to political candidates.

John R. Rickard, a retired parole officer from Oxnard, Calif., and longtime Newt fan, isn't one of them. Rickard, who gave $375 to FONG, is disappointed that the donation hasn't helped "defeat the Clinton-Gore cabal" but says "it's entirely up to Newt" to decide how to spend his money. Still, no more checks will be coming from Rickard, who says he's disillusioned by Gingrich's pending divorce from his wife of 18 years. "If he cheated on his wife, he cheated on me," Rickard says. If more Newtniks start thinking like Rickard, the Gingrich money machine could start to sputter.By Lorraine Woellert in WashingtonReturn to top