Gingrich ‘Loophole’ Offers Lobbyist Access for Consultant Cash

Testifying before Senate committees in 2003 and 2006, Newt Gingrich commanded attention as a former House speaker. He used the opportunities to share his vision of the future of health care -- and to mention a few clients.

Both times he singled out HealthTrio LLC, an electronic health-care record company and an early member of Gingrich’s Center for Health Transformation. As a member, the Denver-based company would have paid as much as $200,000 a year to the for- profit center.

HealthTrio was one of dozens of companies that benefited from its relationship with Gingrich, who had access to lawmakers and opportunities to advance their interests that go well beyond those of a standard Washington lobbyist. Gingrich insists he never lobbied, and he never registered as a lobbyist.

“I call it the Gingrich loophole,” said Howard Marlowe, president of the American League of Lobbyists in Alexandria, Virginia. “It’s not lobbying under the law, he’s right about that. It is lobbying in reality.”

Lobbyists must register their work with Congress if they have a paying client, make at least two contacts on behalf of the client and spend at least 20 percent of their time working for that client during a three-month period. Gingrich’s work often dovetailed with the work lobbyists do, even though he probably didn’t hit the 20 percent threshold, Marlowe said.

Providing Information

While lobbyists sometimes work behind closed doors to make deals and help draft legislation, much of their time is spent simply providing information to lawmakers and clients or trying to raise a client’s profile before agencies and congressional offices that can affect their interests. Often that means getting a meeting with a legislative director or chief of staff for a senator or representative.

Top lobbyists can more easily access lawmakers themselves, and Gingrich had a natural open door. The expectation that Republicans would respond to his support helped spur the government-backed home mortgage company Freddie Mac to hire Gingrich for a second contract in 2006, according to people familiar with the discussions. All told, McLean, Virginia-based Freddie Mac paid the Gingrich Group at least $1.6 million for “strategic advice.”

“You don’t need to be within the technical definition of being a lobbyist to still be influence-peddling with senior Republicans in Washington,” Minnesota Representative Michele Bachmann said during a debate with Gingrich and other presidential hopefuls on Dec. 15.

Affecting Legislation

In 2003, Gingrich gathered about two dozen Republican House members who opposed a $395 billion Medicare prescription drug benefit to pitch them on why they should support it, former Representative C.L. “Butch” Otter, who said he was in the room, said in an e-mail.

Otter, who supports Mitt Romney in the Republican presidential primaries and is now governor of Idaho, said it was “obvious” to him and others in the room that they were being lobbied. The meeting occured as Gingrich was building the Center for Health Transformation, which was seeking financing from drugmakers.

Gingrich has also bragged of killing legislation, often a goal of lobbyists. During a Dec. 10 Republican presidential debate, he said he “helped defeat” a proposal to lower carbon emissions known as “cap and trade” through a nonprofit advocacy group he founded called American Solutions.

’Influence Peddling’

“Gingrich’s boasting reveals, truly, what he was doing: He was working for and against specific legislation. That’s lobbying,” said Craig Holman, who pushes for tougher lobbying and campaign finance laws as a lobbyist for Washington-based Public Citizen. “When it comes to promoting or attacking or defeating legislation, that is influence peddling.”

Energy companies are among the top donors to American Solutions. The group took in more than $1.3 million from two of them, Peabody Energy Corp. (BTU) and Devon Energy Corp. (DVN), during the last two election cycles, according to the Center for Responsive Politics, which tracks political money in Washington.

Devon Energy’s spending on lobbying jumped to $2.5 million in 2009 as the House took up the cap-and-trade legislation; the Oklahoma City-based company spent another $1.4 million in 2010, according to the Center for Responsive Politics.

The majority of the company’s lobbying was done by in-house company lobbyists; it also paid Research-able Inc. and Jackson Lewis LLP in 2009. Patton Boggs LLP registered Devon as a client, saying it earned less than $5,000 a quarter.

Energy Tax’ Opposed

Gingrich called the legislation “a giant energy tax” during an April 12, 2010 Fox News appearance, delivering the same argument made on the network by Devon Energy President John Richels a month later.

Peabody Energy, based in St. Louis, spent almost $2 million on lobbying in 2009 with 12 firms registering as lobbyists, according to center data. They included former Representative Dick Gephardt’s Gephardt Group and Dickstein Shapiro LLP. The company spent a similar $1.9 million in 2010.

In an April 14, 2010 appearance at a House energy committee hearing, Gregory Boyce, Peabody’s chief executive officer, said the cap-and-trade program “will result in punishing cost to economies and family budgets.”

Gingrich also said he “fought against Obamacare every step of the way” as his health center “actively campaigned against it.” The center’s members included insurers, who campaigned against the legislation, and drugmakers, who supported it.

Center’s Efforts

The center dispatched a dozen press releases critical of President Barack Obama’s health-care plan in 2009 and 2010, according to an archive on its website. In a March 5, 2010, release, Gingrich lauded a congressman for staying in office “to help defeat a proposal that would ruin the American health care system and increase the national debt.”

While Gingrich was critical of Obama’s $787 billion economic stimulus package in 2009, he supported the inclusion of money for health information technology. And Gingrich and his team over the years took every opportunity to push for more investments, often bringing up HealthTrio.

In 2004, Gingrich and one of the center’s executives, Laura Linn, wrote a paper calling for the creation of electronic health records that extolled HealthTrio’s model. Center executives met with a former top U.K. health official along with HealthTrio and International Business Machines Corp. (IBM) executives, according to the report.

Gingrich Writings

Gingrich wrote of HealthTrio’s work in 2007 in the Journal of the American Enterprise Institute. And in 2010, Gingrich co- wrote a commentary in the American Journal of Managed Care with Malik Hasan, chairman and chief executive officer of HealthTrio, saying the stimulus package provided a road map to greater use of electronic records.

Dave Syposs, a HealthTrio spokesman, didn’t return calls or e-mails seeking comment. HealthTrio in the last two years has also hired the Ross Group LLC and the Federal Group Inc. to lobby on a pilot program for personal health records.

Edward Barbini, an IBM spokesman, declined to comment. The Armonk, New York-based computer services provider was also a member of the center.

The center signs nondisclosure agreements and can’t talk about “the things we provide our members,” said Susan Meyers, a spokeswoman for the center.

Marlowe estimates that a few thousand people in Washington are billing themselves as consultants and really should be registered as lobbyists. And Gingrich is far from alone among former elected officials walking that fine line.

Image Problem

“Lobbying has an image of wining and dining and back-room deal-making,” Holman said. “It’s not a very positive image, and it’s one that those who have their sights on public office try to avoid.”

Former Senate Democratic Leader Tom Daschle drew fire in 2009 when Obama nominated him as his Health and Human Services secretary after Daschle served as an adviser to health-care companies. Daschle isn’t registered as a lobbyist.

Other ex-lawmakers have embraced the lobbying designation, including former Louisiana Representative Robert Livingston, a Republican who supports Gingrich’s presidential bid. The principle of “freedom of speech” in the First Amendment applies to former politicians, too, Livingston said.

“If I want to make a living advocating, I shouldn’t not be able to do it just because of my background,” Livingston said in an interview. “And to say that Newt can’t advise? That’s totally contrary to our Constitution.”

Attack Fodder

Gingrich’s work after leaving office in 1999 has been the focus of attacks ads that may be taking a toll on his standing in the polls. He’s slipped from the top spot in CNN’s Iowa poll to fourth place in the latest survey, as former Massachusetts GovernorRomney and others have run ads against Gingrich.

Texas Governor Rick Perry posted a spot last week that says Gingrich hails from “K Street, the lobbyist hangout in Washington.” The ad continues, “Newt got rich, made millions off of Freddie Mac. (FMCC)” Texas Representative Ron Paul targeted Gingrich with a video called “Selling Access.”

Presidential candidate Jon Huntsman earlier this month said Gingrich would be the nation’s “lobbyist-in-chief” if elected. And Romney has called on Gingrich to return the money he received from Freddie Mac.

Gingrich on Dec. 19 said he received only about $35,000 a year from the Freddie contracts, “less than I was making per speech.” According to three people familiar with Gingrich’s contract with Freddie Mac, the former speaker’s consulting firm was paid between $25,000 and $30,000 a month for his services.

In an interview with Bloomberg News last month, Gingrich said that he wasn’t selling access. “We didn’t use the connections,” he said. “I explicitly do no lobbying.”

Romney ridiculed that, when asked about Gingrich’s work.

“I’m going to let the lawyers decide what is and what isn’t lobbying,” Romney said in South Carolina. “But when it walks like a duck, and it quacks like a duck, typically it’s a duck.”

To contact the reporters on this story: Julie Bykowicz in Washington at jbykowicz@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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