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April 16, 2014

Newt Gingrich Faces Questions About Consulting Job and Support for Biofuels

Newt Gingrich has been paid hundreds of thousands of dollars to consult for the ethanol industry. 

I am not a lobbyist for ethanol,” Newt Gingrich declared in a mid-winter spat with the editors of The Wall Street Journal over his support for government subsidies for alternative fuel.

But Gingrich was a hired consultant to a major ethanol lobbying group—at more than $300,000 a year.

According to IRS records, the ethanol group Growth Energy paid Gingrich’s consulting firm $312,500 in 2009. The former House Speaker was the organization’s top-paid consultant, according to the records. His pay was one of the group’s largest single expenditures, as it took in and spent about $11 million to promote ethanol and to lobby for federal incentives for its use.

In a Growth Energy publication, Gingrich was listed as a consultant who offered advice on “strategy and communication issues” and who “will speak positively on ethanol related topics to media.”

Chris Thorne, a Growth Energy spokesman, said Gingrich was not hired again in 2010. The group was organized by ethanol producers from the Midwest in late 2008, Thorne said. Its members sought Gingrich’s counsel when it started because “they were people who were never involved in DC politics before, and they were looking for someone who knew how to get things done.” The organization’s IRS report for 2010 is not yet available.

Gingrich’s support of ethanol subsidies does not fit well with conservative, free-market theory, said Thomas Schatz, the president of the public interest group Citizens Against Government Waste. And as voters express concerns over the soaring national debt, many in Congress, from both parties, are questioning the value of the $6 billion tax credit.

“At $6 billion, that is real money, even here in Washington,” Schatz told iWatch News.

“Not only is this tax credit expensive and unnecessary, it has produced many unfavorable consequences including higher food prices, lower fuel efficiency and increased incidences of engine damage in motor vehicles,” CAGW says in a report on its website.

Gingrich’s spokesman, Rick Tyler, did not reply to an email or to two voice messages left on his telephone. The former House Speaker, a leading conservative theorist, writer and speechmaker, is currently pondering a run for president.

Gingrich has worked as a booster of alternative fuels, and warned about the dangers of climate change, even as his political committee has continued taking large donations from the fossil fuel industry.

In 2008, Gingrich appeared with then-Speaker Nancy Pelosi in a public service advertisement about the dangers of global warming.

“Our country must take action to address climate change,” Gingrich said, sitting by Pelosi’s side, in an ad produced by former Vice President Al Gore’s organization, the Alliance for Climate Protection.

Ethanol is “very, very important from an environmental standpoint…if you’re concerned about global warming, not supporting ethanol makes absolutely no sense, and if you’re concerned about carbon loading of the atmosphere, supporting ethanol is a major step in the right direction,” Gingrich told a Growth Energy event in January 2009.

When conservative critics objected to Gingrich’s alliance with Pelosi and Gore, the former Speaker defended his stand, saying it was sound strategy.

“There is a big difference between left-wing environmentalism that wants higher taxes, bigger government, more bureaucracy, more regulation, more red tape, and more litigation and a Green Conservatism that wants to use science, technology, innovation, entrepreneurs, and prizes to find a way to creatively invent the kind of environmental future we all want to live in,” Gingrich wrote on his blog. “Unless we start making the case for the latter, we're going to get the former. That's why I took part in the ad.”

At the same time, Gingrich’s committee, American Solutions for Winning the Future, raised hundreds of thousands of dollars from fossil fuel interests.

Donors connected to Peabody Energy, the world’s largest private coal company, gave $550,000 to the Gingrich committee in the 2010 election cycle, according to the Center for Responsive Politics. Donors from Arch Coal, the nation’s second-largest coal producer, gave $100,000. The Center includes donations from organizations, subsidiaries and individual employees and their family members in its tallies.

Gingrich’s committee also took in six-figure donations from two interests engaged in oil and gas production, collecting $250,000 from donors connected to Devon Energy and $200,000 from those with ties to Plains Exploration & Production, according to the Center. During the 2008 election cycle, Gingrich and the committee promoted offshore drilling with a campaign entitled, “Drill Here. Drill Now. Pay Less.” In that cycle, Peabody interests donated $275,000 and Devon donors gave $250,000.

Growth Energy was founded in late 2008 by the world’s top ethanol producer—the South Dakota based POET group—and other fuel companies to promote the use of the alternative fuel. Growth Energy’s membership has grown to include 67 plants, owned by 46 companies, in 22 states.

Former Iowa Rep. Jim Nussle and retired Army Gen. Wesley Clark serve on the Growth Energy Board with POET CEO Jeff Broin, Bruce Rastetter of Hawkeye Energy Holdings, and other prominent figures from the alternative fuels industry.

According to the IRS records, Clark was paid $201,623 in 2009, and Nussle $50,000, in consulting fees. Tom Buis, the group’s CEO, earned $399,615.

Growth Energy raised and spent some $11 million in 2009 on public relations, lobbying and promotion, according to its IRS report. It has hired several Washington insiders, including former aides to Senate Majority Whip Dick Durbin, D-Ill., and House Speaker John Boehner, R-Ohio, to lobby on Capitol Hill.

Gingrich supported ethanol as Speaker. In March 2009, at a POET event in South Dakota, he boasted that he and Nussle had “helped save ethanol” from those in Congress who wanted to end the federal subsidy for the fuel. In addition to providing advice, and speaking positively to the media, Gingrich has appeared at POET and Growth Energy events in Iowa and the Midwest, promoting the ethanol industry.

It was at another ethanol event, a Renewable Fuels Association summit in Des Moines last January, that Gingrich clashed with the conservative editorial page editors at The Wall Street Journal.

Gingrich deplored America’s reliance on oil imports, and especially oil from the Persian Gulf. The United States has been “utterly foolish as a country to be sending hundreds of billions of dollars overseas to finance people who don’t necessarily like us, some of whom have recently proven they would like to kill us,” Gingrich told the crowd.

He defended the federal tax subsidy as an immediate solution and suggested that a federal mandate should require gasoline stations to offer alternative “flex fuels” to customers.

“Look at all the other things the government mandates,” Gingrich said.

Gingrich also hailed the economic benefits of the ethanol industry in farm states like Iowa. “I would rather have the next building boom in Des Moines than in Dubai,” he told the crowd. He criticized the “big city attacks” and “big urban newspapers” that condemn government ethanol subsidies as wasteful.

The Journal fired back in an editorial that called Gingrich “Professor Cornpone” and accused him of pandering to farmers and ethanol producers.

“Given that Mr. Gingrich aspires to be President, his ethanol lobbying raises larger questions about his convictions and judgment. The Georgian has been campaigning in the tea party age as a fierce critic of spending and government, but his record on that score is, well, mixed,” the newspaper said.”

Gingrich responded with a letter to the editor. “I am not a lobbyist for ethanol, not for anyone,” he wrote. “My support of increased domestic energy production of all forms, including biofuels and domestic drilling, is born out of our urgent national security and economic needs.”

The dust-up between Gingrich and the Journal was representative of the difficulty faced by conservatives over ethanol policy. Free-market doctrine frowns on the idea of government subsidies, but the ethanol mandates and tax breaks are popular in Midwestern battleground states and especially in Iowa, an early caucus state in the presidential nominating process.

“There are politicians who use this politically” even as evidence about ethanol’s poor cost effectiveness undermines the case for subsidies, said Schatz. He noted that Gore recently confessed to the “mistake” of supporting ethanol during his presidential campaign.

Big producers are drawn to the industry by its tax breaks and mandates—even libertarians like the owners of Koch Industries, whose subsidiary Flint Hills Resources purchased four ethanol plants in Iowa in the last year.

“Mandates, subsidies, protective tariffs and over-regulation are neither market-based nor helpful to society in general; however, they are—especially in the case of ethanol—the law,” Koch told its employees in an in-house newsletter in January.

“Because of government mandates, we believe ethanol will be part of the transportation fuels market for years to come,” said Flint Hills president Brad Razook. “We… want to remain competitive. It’s really as simple as that.”

And when Sen. Tom Coburn, a conservative Republican from Oklahoma, proposed to eliminate the main ethanol tax break as a wasteful “tax earmark” last fall, he got into a skirmish with Grover Norquist, the president of the conservative group Americans for Tax Reform.

Norquist maintains that the elimination of any tax break represents a tax increase, because it would increase government revenues unless offset by a cut in taxes elsewhere.

The ethanol tax credit is “a sucky thing,” said Norquist. His organization, he said, receives no support from ethanol interests. But deleting a tax break without an offsetting tax, he said, promotes government spending.

Coburn, who has been working with other senators on proposals to reduce the federal debt and deficit, took issue with ATR’s stand. “Your organization is working to protect an ethanol subsidy the Heritage Foundation and others have called a tax earmark because it is a special interest giveaway targeted to a narrow group of recipients,” Coburn said, chiding Norquist in a letter. 

Newt Gingrich has been paid hundreds of thousands of dollars to consult for the ethanol industry. 

 

Emma Schwartz

Reprinted by Permission © 2013, The Center for Public Integrity®. All Rights Reserved.

About the Author

Staff Writer

Farrell is a prize-winning journalist and author. He spent his early career, and won a George Polk award, at The Denver Post. At The Boston Globe, he covered the first Iraq war, several presidential campaigns and served as the Globe’s White House correspondent and Washington editor, among other assignments. Farrell returned to The Denver Post in 2003 for four years as national columnist and Washington bureau chief for the newspaper and the MediaNews chain. During that time he helped lead the paper’s political coverage...

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