OTR Interviews

Gingrich: The fiscal cliff is an 'artificial invention' of Washington, GOP should do what's right for the American people

Former presidential candidate thinks Republicans are giving Pres. Obama, Democrats leverage, that the fiscal cliff is like a 'fantasy'


This is a rush transcript from "On the Record," November 29, 2012. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Former Speaker of the House Newt Gingrich joins us. He is the author of the book "Victory at Your Town." Nice to see you, Mr. Speaker.


VAN SUSTEREN: All right, tell me, why are you telling House Republicans to, quote, "get a grip"?

GINGRICH: Well, I think this whole fiscal cliff language is designed to maximize a sense of fear that's nonsense. The very same people, the Congress and the president, who invented the fiscal cliff -- this is all an invention -- could break it down into 12 foothills, or 15 foothills or 20 foothills. They could tackle one problem at the time.

I agree with what I understand Senator Jeff Sessions has said -- and I think he'll be on your show later -- this ought to be out in the open. We're rushing towards a secret deal made in secret meetings where nobody will know what's going on, and then people will be told, Boy, if you don't vote for this, we'll go over the cliff.

Well, I think there are a lot worse things than going over a man-made cliff that I think is entirely artificial. And I think the reality is, the President of the United States has not come forward with any serious spending cuts. What the Democrats are proposing is to take the tax increase now, and then sometime next year, eventually, possibly, we might have some kind of entitlement reform. That's a really bad deal for the American people.

VAN SUSTEREN: Well, I don't know if it's also a deal that anyone expects could be realistically kept. I mean, any deal that's made today in Washington is amended next week and the week after, or not kept. So I mean, it's, like, you know, you make your deal right now, and you hope that it even can last -- last through the year. Am I right?

GINGRICH: Well, the only way you guarantee deals is you actually pass them into law. Then it's a lot harder to change them.

And my only point is, you know, if we had a game, and every time the term fiscal cliff came up, people had to donate a dollar to something, you'd be amazed in the course of a week or two how often this has been repeated like a mantra. I compared to a great essay by Tom Wolfe called "Mau-Mauing the Flak Catchers" in which people chanted and made noise in order to get their way.

I think we ought to recognize this entire fiscal cliff is an artificial invention of Washington, created by people in the Congress and the presidency. And it can be broken down by them into a series of steps that can be taken without having to be rushed into one gigantic, last- minute, little understood, with no hearings, one vote up or down -- I think it's a terrible way to govern the United States.

VAN SUSTEREN: Well, we're now there. The sequestration deadline is coming up the 1st of January. What people are saying on Capitol Hill, and the president is saying, and some in Congress are saying, and it may all just be scary stuff, but that if we go over this fiscal cliff that all sorts of things will happen, that there'll be another recession or we'll go deeper into our existing one, if we have an existing one, there'll be jobs lost, the markets will crater, I mean, and all these horrible things are going to happen should we go over that fiscal cliff, even though it is created by the face that the president and the House and the Senate failed to do their work a year-and-a-half ago and pushed us up against this deadline. Your thought.

GINGRICH: Right. Right. My thought is, first of all, they could pass a provision to just extend it 90 days. They could break it down into a series of projects.

The Democrats don't seem to want to want to deal with really big entitlements, Medicare, Medicaid. There are 80 different entitlement programs that are income-adjusted, 80 different programs that could be block-granted, sent back to the states, and you could save money.

There's a proposal to allow the federal government to actually develop its own oil and gas reserves that are available on federal land that would yield over a trillion dollars in the next two decades. That's revenue, but it's not a tax increase. Now, apparently, for liberals, if it's not a genuine tax increase, revenue you just get by having more money doesn't count.

There's a proposal to apply the same standard as Visa, Master Card or American Express to paying for Medicaid and Medicare. That would save between $700 billion and a trillion dollars over the next decade.

I mean, these are real changes, but they're not changes you're going to get by rushing up to a final last-minute deadline and passing some kind of politically hammered-out bargain.

And frankly, given what I've seen of the Democrats in the Senate, they're not going to give anything. I mean, what they want is a paper spending side that has no meaning while they get real tax money on the other side that has permanent meaning. I think everything I've seen so far, this is a very bad deal if you're a tax-paying conservative American.

VAN SUSTEREN: Well, I was looking at the White House proposal, the official one, tonight, or at least the one that was a proposal and -- from one of my colleagues. And what the White House has proposed, among other things, is an extension of unemployment insurance, White House proposal for refinancing underwater mortgages, a multi-year stimulus package starting with at least $50 billion.

Their package has more -- I mean -- I mean, I thought the whole point was for the White House to come up with expenses when -- I mean, these may be things that we might need or that people might need, but it's certainly not cutting when they -- their own -- their own suggestion has added on more expenses!

GINGRICH: My advice to House Republicans would be to take a page from Tip O'Neill in 1981, go back to regular legislation, start passing bills that actually have a positive effect, send them to the Senate. If the Senate Democrats want to block them, then let the Senate Democrats block them.

But this idea that some kind of phony negotiation at the White House - - it's clear the president has a sense of hubris from his victory. It's clear they don't want to do anything that's serious. How can you have a serious discussion about the, quote, "fiscal cliff," when the president is proposing to make the long-term deficit bigger and is saying, Why don't you give me an extra $50 billion in stimulus, particularly when, if you look at the information that's coming out on how they spent the solar power money, it is a scandal how many billions of dollars they misapplied to lost causes, and how many people got rich out of government guarantees, promptly cashing out as soon as they got the money.

I think Congress ought to slow down, have a lot more hearings and a lot more markups, and produce a number of separate small bills, and then let the Senate Democrats decide, do they really want to go into 2014 as the obstructionist Senate, or do they want to take up positive legislation and actually try to get something done?

VAN SUSTEREN: All right, so let me ask you -- you've also been quoted as saying that, quote, "We don't need a, quote, `surrender caucus.'" I guess that was sort of a shot across the bow at the House Republicans, that they are surrendering to the president or giving in.

But you know, if they take your advice, they've got about three or four weeks left before we hit the so-called sequestration or fiscal cliff. Are you suggesting that we go over it, or what are you suggesting?

GINGRICH: No. First of all, there's no sign that Speaker Boehner is backing down at all and every sign that he's indicated, a very principled position. So what I said referred in general to both House and Senate Republicans, and to some of the members who've had this attitude of, Oh, my gosh, we've got to accept something, we've got to accept something.

And my question is, why? The next election is two years from now. It's not next week. It's not the week after. You have time. Take advantage of the time. Do the right things for America. Don't worry about the politics of it. I mean, don't worry about the Grover Norquist politics and don't worry about the Barack Obama politics. Just do what you honestly believe in.

And the House ought to pass what it can. The House actually can function, so it can sends lots of stuff to the Senate and begin to build up a wave of energy at the Senate that says, Are the Democrats in the Senate going to be so obstructionist that none of these good ideas, none of these reforms, none of these efforts to save money, are going to get through? I think after a couple weeks, that begins to build pressure on the Senate.

But what's happened right now is, the Republicans are surrounded by the news media and the Democrats, who are creating an artificial standard, and basically saying, If you don't sell out on taxes, you're bad people.

Well, I don't think they should accept that standard as set by liberals who are proving, as you just pointed out, in the president's thing tonight, they want to spend more money. They're not about to do anything that helps with the deficit. They want higher taxes to spend even more money to put even more power in Washington, D.C., to have an even bigger bureaucracy.

VAN SUSTEREN: All right, well, let me tell you one other thing that I thought was rather surprising today. Secretary of Treasury Tim Geithner proposed permanently ending congressional purview over the federal borrowing limit, which I suppose is another way of saying, give the president, and any future president, a credit card without a limit, without -- without any congressional oversight.

Is that how -- is that how you see that?

GINGRICH: Sure. Look, if you were a liberal and you wanted to run up the biggest possible deficit, you'd sure like to quit having to fight regularly over the debt ceiling.

Frankly, the Congress ought to move in the opposite direction and start hearings on oversight on the Federal Reserve, which has put far more money into the economy than the treasury has, and which has wielded far more economic power than the treasury. And I think the amount of power that Ben Bernanke's had as chairman of the Federal Reserve is totally inappropriate in a free society and deserves -- and deserves hearings.

But again, I would have the House Republicans organize virtually every committee and every subcommittee to have the largest wave of hearings in 2013 so the country begins to learn how inefficient, how wasteful, in some cases, how corrupt the entire system has become, and we get this information out in the open. That will increase the public desire to cut spending, rather than raise taxes.

VAN SUSTEREN: I don't think the American people even realize how -- what kind of accounting Washington does. Like, if they want to make something seem big, they span it out 10 times, and so they say -- you know, so they multiply it 10 times so it seems like a lot, and that they consider a cut -- let's say, for instance, in the sixth year of that 10-year program, that they reduce the amount of the increase that they originally planned, that's considered a cut.

I mean, the way that they do the number crunching on Capitol Hill, or in Washington, absolutely makes your skin crawl!

GINGRICH: Sure. I mean, one of the things that ought to be attached to any kind of debt ceiling is to end baseline budgeting, which is what you're describing, and go back to a world the rest of us live in, where a $1 increase is called an increase, a $1 cut is called a cut.

And as you just pointed out, the current model at the Congressional Budget Office is an engine of liberalism and an engine of big government. And the congressional Republicans ought to demand, as part of their price for having -- passing any future debt ceiling, that we eliminate baseline budgeting and go to an accurate accounting.

VAN SUSTEREN: All right, tell me, if we're having this conversation January 2, what will we be discussing? Will we have gone off the fiscal cliff, or will there have been a last-minute deal behind closed doors here in Washington? What's going to happen?

GINGRICH: Well, I mean, the pattern has been for a really disgusting deal that accomplishes almost nothing, that increases the size of government at the cost of the American people.

What I've been watching is a model that somebody described as socialist austerity. That's where you keep raising taxes and keep raising regulations on the private sector while you keep growing government. And so the result is the economy gets sicker and weaker.

Greece, for example, has seen its economy shrink by 7 percent in the last year. All of Europe is in recession now. The last official number was the economy actually shrank last month for all of Europe as a unit. Japan has been stuck for 23 years in a decaying economy -- 23 years.

And I think we're seeing pressure in Washington for exactly the same pattern. That's what's happening in California, in Sacramento. It's what's happening in Illinois, in Springfield. It's what's happening in New York, in Albany. It's big government getting bigger and bigger while the private sector gets smaller and smaller. And that actually makes the debt problems even harder to deal with.

VAN SUSTEREN: All right, just so I understand, so do you think the wiser thing for the House Republicans, and Republicans in the Senate, is to get some sort of 90-day deal, to push things down the road for 90 days, and hold hearings in the meantime and do it, like, piecemeal, or do you think it's better to...


VAN SUSTEREN: ... push it off the fiscal cliff and take sort of the draconian impact...


VAN SUSTEREN: ... of whatever we're going to happen?

GINGRICH: I think they should -- they should offer to break down the cliff into a series of foothills. They should offer to postpone any immediate crisis. But they should be adamant they're not going to accept a one-size package that increases government spending and requires tax increases while achieving nothing on entitlement reform, which is exactly what the Democrats are going to try to push them into.

VAN SUSTEREN: How can we fix Washington? I mean, besides the baseline accounting -- that's terrible. I think actually it's horrible that the Congress and president has known for a year-and-a-half this was going to happen, and all they did was -- they didn't do anything. They let the super-committee not -- it didn't work out, so then they didn't do anything until now. They take a three-month vacation, so -- on our -- and we pay them to campaign for their own jobs.

I mean -- and they've done absolutely nothing. And Americans are jobless. Americans want jobs, and they just do nothing. And now they bring us to this crisis.

GINGRICH: Well, I think it may take several more waves of tough elections. I think, in the long run, the only way you change this is for a free people to demand that they get better leadership or they fire the current team.

President Obama just won reelection, so he can claim he has a mandate. I don't think it's a mandate to raise taxes, increase the size of government and put us even further in debt. But that's going to be his argument. That's the process of self-government. And the American people are going to have to take a grip, not just in Washington, but you look at how bad things are in Illinois and California and New York. Several of our states are in very, very bad shape.

VAN SUSTEREN: Well, California's going to be interesting to watch because they have a Democratic governor, a Democratic legislature now, and they've got big problems. So California is -- you know, the Democrats in California have a chance to either, you know, make things look really good or they're going to let things look very bad. I think it's -- at least I'm keeping my eye on that state.

GINGRICH: That's a key indicator of the future. And I can tell you, if you go to a place like Texas, they're thrilled with the number of Californians who are leaving and moving to Texas. That's happening all across the West. And California is literally exporting some of its hardest-working, best entrepreneurs because they've just given up.

I was with a man just yesterday here in Los Angeles who said that he is moving out of state, taking all of his business with him, because he just can't stand the pain level anymore.

VAN SUSTEREN: Any thought on Benghazi and that investigation?

GINGRICH: Sure. They're going to -- the president has every right to nominate who he wants to have as his secretary of state. The Senate has every right to demand that the president tell them who changed the instructions for Ambassador Rice.

If it's not her fault, it's somebody's. And I think the Senate should make quite clear they will never have a vote on Ambassador Rice until they know -- if she's his choice, until they know what happened about the information, why she was misinformed, and who in the White House changed the instructions, or who somewhere changed the instructions. That's a legitimate demand by the senators, and they should hold very firm on it.

VAN SUSTEREN: And should it be open? I mean, there's an awful lot of stuff that goes on in this town, a lot of secrets, and every time people -- you know, a lot of things -- a lot of things are legitimately classified, but -- you're laughing.

GINGRICH: This is not. I'm laughing because this is a question of who in the American government changed the information going to the ambassador of the United Nations that was not classified information. She got a set of information that was false. She claims she did what was she was given and it's not her fault.

I'm willing to accept her as telling the truth. Fine. Then who did it? And it's fair for the Senate to say, We're not going to approve a new secretary of state until we find out who in the White House or in the intelligence community fundamentally set out a dishonest misinformation for the American people, which was repeated on five different national television shows by the ambassador to the United Nations.

So I don't blame Ambassador Rice. I accept her version of what she did. But then she has then kicked the ball back into the White House, and they had better tell us. And I don't think the Senate has any obligation to approve her until the White House has told them that.

VAN SUSTEREN: Well, I don't like all the discussion behind closed doors because I do not believe that everything that's asked of her or of anyone else in connection with this investigation is classified. I think there's a horrible -- horrible disease in this city. If you don't want to tell something, overclassify it, so the rest of us can't find out. We have to do it through leaks.

GINGRICH: But I think -- I think, in this case, if she is nominated, you'll see open hearings and you'll see a great deal of material put on the record because it's too sensitive a case for them to try to hide it.

VAN SUSTEREN: Mr. Speaker...

GINGRICH: And by the way, Congressman Frank did tell me he's introducing a proposal for a Watergate-type committee to actually look into this in much more detail.

VAN SUSTEREN: Well, all -- I just -- you know, I just want the -- just want the facts, and then we can all move on. But it's been hard getting the facts.

Mr. Speaker, thank you, sir.

GINGRICH: Thank you.