Gingrich: $700B Bailout 'Essentially Wrong'

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This is a rush transcript from "On the Record ," September 22, 2008. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight -- well, he says they are all wrong, the House, the Senate, the Secretary of the Treasury, Paulson, and the president. Who says that? Former Speaker of the House Newt Gingrich. And that's not all. He says Senator McCain has an important decision to make before the debate this Friday night.

Moments ago, former speaker of the House Newt Gingrich, author of the new book, "Drill Here, Drill Now, Pay Less," went "On the Record."


VAN SUSTEREN: Mr. Speaker, nice to see you, especially on the set.

NEWT GINGRICH (R), FORMER SPEAKER OF THE HOUSE: Glad to be here. It's always fun to be back with you.

VAN SUSTEREN: All right. Just about a block away from here, everyone's scrambling to bail out some banks. Your thought?

GINGRICH: Well, I think it's essentially wrong on two levels. It's wrong, first of all, because the really fundamental problems we have in our economy require a much deeper solution which people on Capitol Hill aren't willing to engage in, and part of the reason I wrote the new book on energy.

And then second, I think the idea of giving the Secretary of the Treasury $700 billion to bail out Wall Street is just so profoundly wrong. I can't quite imagine that they're moving forward with it. I mean, it's wrong in every way. It's wrong to take money and bail out Wall Street. It's wrong to give that kind of power to the secretary of the treasury. Watching this Congress write it makes me worry about what all the hidden details will be.

Watch Greta's interview with Gingrich: Pt. 1 | Pt. 2

They wrote a housing -- remember, just a few months ago, it was going to be a $300 billion housing bill out. They wrote it, and they had all sorts of hidden goodies in there, $500 million a year for a far-left organization, for example, of your tax money. And I'm confident by the time the Congress and their staffs are done writing this bill, it's going to have 10 or 12 grotesque things buried in it. And then Bush is going to sign it because Paulson wants the money.

VAN SUSTEREN: Well, but you talk about Congress hiding it. I mean, what's sort of interesting is that -- at least as I understand it, is that the president -- where the Republicans and Democrats part waters (ph), at least in one part, is the Democrats at least don't want the executives at the top to get paid for failure. They've taken these giant golden parachutes. So that's one thing that sounds like a good idea is quit (INAUDIBLE) failure.

GINGRICH: Look, I don't understand how you can have deals with somebody gets, in one case, I think it was something like $91 million for leaving.

VAN SUSTEREN: How come I get fired for failure and they get $91 million?

GINGRICH: Well, the whole thing is absurd. And yet once they start down this road -- I mean, one of the proposals is to cap how much you can pay the people who take over the company. Well, fine. You're not going to get very good people taking over the company, and it's going to cost you more. But you can understand the populist anger that says, I'm sick and tired of these people.

I'm opposed to the whole concept, you know, capitalism on the way up and socialism on the way down.

VAN SUSTEREN: So what would you recommend? I mean, there's obviously sort of a -- it looks cataclysmic, these failures. What would you recommend?

GINGRICH: Well, I'd recommend four things. I'd recommend first that they dramatically change the accounting procedure called "mark to market" because it has forced companies to bankrupt unnecessarily. I would repeal the Sarbanes-Oxley bill, which has turned out to be a disaster and did not warn us about a single one of these bankruptcies, and...

VAN SUSTEREN: Wait a minute. Why is that bill -- because what that at least did is made some of the things for some of these board members to be more obvious or be -- take more responsibility.

GINGRICH: Well, I mean, first of all, it did not work in a single one of these. It didn't work at AIG. It didn't work at Lehman Brothers. It didn't work in Bear Stearns. It didn't work in Freddie Mac. It didn't work a Fannie Mae.

But what it does do is it adds about $3 million a year in accounting fee and red tape for a small startup company. And the result is -- I just spent three days at Silicon Valley talking to people about this. The result is they're not bringing any companies to market. There's not a single new company coming out. We had zero new starts, what are called IPOs, in the second quarter, and we had one in the third quarter.

And everyone out there tells me that this bill is a monstrosity, and it doesn't work when you want it to work and it costs you an enormous amount of money and raises the risks so dramatically that no serious entrepreneur that I know of is willing to serve on a board anymore.

VAN SUSTEREN: But that's -- isn't that a little bit different? That's sort of almost a stimulus to the economy issue, as opposed to the actual -- what we're talking here...


VAN SUSTEREN: ... Is the failure at the top of the bank...

GINGRICH: If you don't stimulate the economy...

VAN SUSTEREN: I'm not opposed to stimulating the economy.


GINGRICH: My point's more profound. When they...

VAN SUSTEREN: You're always profound!

GINGRICH: Well, but when they get done spending $700 billion, if they don't have the economy back again, I mean, if they don't have people out there making money, they're going to need another $700 billion.

VAN SUSTEREN: So Paulson, the president and the Senate and the House, they're all just plain wrong.

GINGRICH: They're wrong.

VAN SUSTEREN: All of them.

GINGRICH: And what they're in the process of doing -- and I can appreciate Paulson's view. Paulson was the former chairman of Goldman Sachs. It makes perfect sense if you're from Wall Street to want to bail out Wall Street. But if they don't eliminate the capital gains tax, if they don't pass a strong energy bill -- remember, we're sending $700 billion a year, the amount Paulson wants -- we're sending $700 billion a year overseas for energy. So we now have foreign countries bringing our energy money back to buy out banks.

VAN SUSTEREN: And speaking of energy, your new book.

GINGRICH: Well, "Drill Here, Drill Now, Pay Less." And it covers the whole energy gamut, from oil to gas to coal to nuclear power to hydrogen to biofuels to solar power to wind, and makes one key point. The United States has more energy than any other country in the world, and we are being crippled by our own government.

VAN SUSTEREN: Well, but we've been crippled by our own government -- you and I talked about this the other day, about the fact that this is not something that just happened yesterday or last week or last month, this has been going on for decades.


VAN SUSTEREN: And every time the price of oil comes down, everyone forgets that we should be looking at alternative sources.


VAN SUSTEREN: We haven't done anything.

GINGRICH: Right. And so when we call for -- in "Drill Here, Drill Now, Pay Less," is a comprehensive program that tackles every element of energy simultaneously and that says, Will want to get to a point where we get at least $500 billion a year of that money back because if you had over the next 10 years $500 billion being in the U.S. for energy that's currently going overseas, that's $5 trillion in economic activity over the next decade. That would dramatically enhance the value of Wall Street. And that would begin to mop up some of the money that we're currently losing.

VAN SUSTEREN: All right. Let's assume that you're right, and you may very well be. Why isn't this happening?

GINGRICH: Well, I think that people like the president and the Secretary of the Treasury get up in the morning and say, Clearly, we're not going to get the liberal Democrats to do anything that makes sense, so what is it we can do that may not make sense but it's the only thing we can do?

VAN SUSTEREN: So they cave in? Is that your view, they're weak?

GINGRICH: Absolutely -- absolutely...

VAN SUSTEREN: They're weak?

GINGRICH: Absolutely.


GINGRICH: When they signed the housing bill this summer, which was a terrible bill and which literally paid $500 million a year to one left-wing organization which is currently out filing lawsuits to try to beat McCain, so you, as a taxpayer, are subsidizing this organization -- had nothing to do with housing. It was pure politics.

VAN SUSTEREN: So why is President Bush doing that?

GINGRICH: I think they've lost their nerve. I think they're panic- stricken. I think that they are desperate. And here's what people need to worry about. These guys have been wrong for months now. You know, Paulson didn't show up Tuesday. Paulson was the secretary of the treasury for two years, and they've been consistently wrong. And you can look at his quotes and you can see that he's been wrong.

Well, after we throw away $300 billion on housing this summer, we're now going to throw away $700 billion on Wall Street. If this fails after a trillion dollars, what's the next request?

VAN SUSTEREN: All right, explain something to me. We hear all these giant numbers. We hear about Wall Street failing. We hear the sort of the platitudes about Wall Street and Main Street. As a practical matter, for the person who makes about $50,000 or $75,000 a year and is raising a family, what is this going to mean?

GINGRICH: Well, you know, in the short run, it means tightening your belt and realizing we may end up in a recession and realizing that there was an awful lot of fluff that people thought was real and all of that's going to disappear. The only thing that the government can do is slow down the rate at which it disappears, and therefore make it even worse because the fact is, until we find, for example, what the real value of houses are, we can't rebuild the housing market. Until we find out what the real value of this paper is, we can't rebuild the entire financial system.

And so the longer and slower this is, the more politics, the more bureaucrats, the more lobbyists that are involved, the more expensive this'll be over time and the longer it'll take us to recover. The Japanese got stuck in 1989 and they stayed in a stagnant economy for 14 years because they couldn't bring themselves to confront how bad it was and get it over with.

VAN SUSTEREN: Now in light of the fact that it's the president who's responsible, he's the captain of the ship -- you're a professor. You've taught -- what -- how would you grade President Bush, and taking in the economy, I mean, all the elements of his responsibility? How do you grade him?

GINGRICH: Well, this is -- this is virtually the opposite of everything he campaigned on.

VAN SUSTEREN: Which means what grade?

GINGRICH: It means that he's -- I'm not going to give hi a grade because then that becomes the headline. But I am prepared to say that I think that what the administration's doing right now is about a un- Republican as anything I've seen and is about as far away from the principles of Ronald Reagan and Margaret Thatcher as you could get. And I think it's a fundamental mistake, and I think -- I don't think any Republican should have a false sense of automatically saluting because the secretary of the treasury, who's been consistently wrong, tells them he wants money.

VAN SUSTEREN: All right. Now let's turn to the other situation, the race for the White House. In light of the description you've given of the current president in the White House, does this somehow have an impact on your thoughts about the Republican candidate, Senator John McCain? Or how does this reflect on him or tarnish him or hurt him?

GINGRICH: Well, I think Senator McCain faces a huge decision. If he's a genuine reformer and a genuine change agent, then I don't see how he can possibly be for the bill that they're writing because it's the opposite of everything he says he favors. If, on the other hand, he's prepared to actually stand up and say no, there's going to be a considerable rupture between the McCain campaign and the Bush White House.

And you could end up by Friday night having a debate in which Obama is defending the Bush plan and is defending the taxpayer. Now, that would be a reversal of historic proportions, and I don't know what'll happen yet. My hope as a reformer and as a conservative and as a follower of Ronald Reagan -- my hope is that Senator McCain is going to decide that this is not something he can vote for, that it is, in fact -- defrauds the taxpayer, does not have adequate protection, and that no single person, like the secretary of the treasury, should have the level of power over $700 billion that this secretary wants.


VAN SUSTEREN: We have more with the Speaker coming up. But first, here is your "On the Record" live vote. Go to, answer this simple question. Do you think our government has any clue how to fix the economy? Yes or no. We'll read your results at the end of the hour.

And coming up, more of your interview with Speaker Gingrich. Governor Palin is meeting with leaders from around the world this week, and has the Speaker -- does the Speaker have some specific advice for her? Governor Palin should listen closely to this.

And later: Jokes are one thing, but did "Saturday Night Live" actually suggest that "First Dude" Todd Palin" has committed incest? Yes, you heard me right. Now, we're going to play it for you. You can decide for yourself.


VAN SUSTEREN: We are 43 days away from the election, and it could not be much closer. The latest FOX News Rasmussen polls conducted yesterday show just how tight the race is. Here's the latest in the five key battleground states. In Florida, Senator McCain leads Senator Obama 51 to 46 percent. In Ohio, Senator McCain also leads, 50 to 46 percent. In Virginia, Senator McCain holds a razor-thin lead, 50 to 48 percent. And in Michigan, Senator Obama leads, 51 to 44 percent. And in Pennsylvania, Senator Obama's holding onto a narrow lead, 48 to 45 percent. Now, keep in mind the margin of error on those polls is plus or minus 4.5 percent. Bottom line, no one knows who is going to win.

Now more of your interview with former Speaker of the House Newt Gingrich.


VAN SUSTEREN: Why do you think everyone seems to be for it? Is it because it's an election year and many of the members of Congress have to go back to the district and they don't want to look like the -- they're against hurting the economy or -- why are so many people supporting this?

GINGRICH: Oh, I think the fix is in in Washington. First of all, you to everybody on Wall Street calling all of their friends and saying, I want the money. It's not noble. It's not -- it's not patriotism. It is -- you know, (INAUDIBLE) $700 billion.

VAN SUSTEREN: It's a lot of money.

GINGRICH: So everybody in Washington -- everybody on Wall Street who wants to get their hand into your wallet for $700 billion is calling all their friends in Washington, saying, Please be for this, please be for this.

VAN SUSTEREN: Well, and -- but I mean, I guess we should reflect on (INAUDIBLE) it's -- $700 billion is what would be authorized. It doesn't necessarily mean that it would be used, although, frankly, I've never seen any money in Washington be authorized and not be used, right?

GINGRICH: Well, that would...


GINGRICH: That would mean that the emergency bills they've passed so far this year will have exceeded a trillion dollars on top of the $2.8 trillion federal government.

VAN SUSTEREN: And which is a whole 'nother sort of anti-Republican...

GINGRICH: Yes. I mean...

VAN SUSTEREN: ... Small government -- what happened there?

GINGRICH: Look, for somebody who cut his teeth on Goldwater and then campaigned for Reagan, this is -- I mean, if a liberal Democrat were proposing this, every Republican in the House and Senate would know what to say and it'd be no. The fact that you have a Republican proposing it I think has them totally confused, and that's part of why you see them -- you know, they're almost sleepwalking into accepting something which none of them would if it had been offered by liberal Democrat.

VAN SUSTEREN: Are you confident that both President Bush and Secretary Paulson understand this?

GINGRICH: No. I don't -- first of all, Paulson's been consistently wrong, and...


GINGRICH: ... And he's the president's primary adviser.

VAN SUSTEREN: And does the president understand the economic issue of what's going on on Wall Street?

GINGRICH: I mean, look, he has been getting briefed by Bernanke, who is the chairman of the Federal Reserve, and by Paulson, who is the secretary of the treasury, and they've both given him their version of reality. Whether or not he has then talked to a wide range of other people, I don't know.

VAN SUSTEREN: If you gave a 30-second private sound bite with President Bush, what would you say to him?

GINGRICH: Get a second plan.

VAN SUSTEREN: Just that.

GINGRICH: Yes, just -- you need a better plan. This is not a good plan.

VAN SUSTEREN: Is this catastrophic, this plan?

GINGRICH: Yes, I think it -- I think it's a disaster. I think it's going to lead to 20 years of political corruption, lobbying influence and bureaucratic micromanagement of the finance sector. I mean, my advice to the president would be bring in the people who advised Ronald Reagan, put them around a table and ask them how to fix this. But do not go with this Wall Street-based monstrosity.

VAN SUSTEREN: All right. Governor Palin is meeting this week with a number of foreign leaders, including the new president of Pakistan. Your thought on Governor Palin sort of making the rounds? Going to meet with everybody who's anybody up in New York this week.

GINGRICH: Well, I mean, my advice to her is to listen carefully. Don't make any commitments and ask good questions and just keep learning. I think she's not in office right now. She doesn't have any obligations to go out and say or do anything. And this is a great chance for her to let people from a wide variety of backgrounds tell her what they wish Americans knew. And I think -- we have a model that we use of listen, learn, help and lead. And I think it's important for leaders to listen and learn, and I think that she ought to be pleasant, cheerful and not make any particular positive commitments at all for Senator McCain but just ask lots of questions.

VAN SUSTEREN: President of Pakistan, new president of Pakistan, here in the United States -- how important is the Pakistani issue right now, what's going on in Pakistan, for us?

GINGRICH: Well, I think Pakistan is extraordinarily important because they have nuclear weapons. They are geographically in a vital position. They are currently in their northwest territory housing al Qaeda and the Taliban. They do not have control over their northwest.

On the other hand, their own nationalism makes them very sensitive when we go in and go after the Taliban or al Qaeda. And I think it's a mess, but I think it's -- when you have a country with a relatively weak government, with a large fanatic fringe element dominating part of the country and with lots of nuclear weapons, you have potentially a very volatile, very dangerous environment.

VAN SUSTEREN: Thank you, Mr. Speaker. Always nice to talk to you.

GINGRICH: Thank you.


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