The Tech - Online EditionMIT's oldest and largest
newspaper & the first
newspaper published
on the web
Boston Weather: 33.0°F | A Few Clouds

Dole Loans Speaker Gingrich $300,000 for Ethics Penalty

By Sam Fulwood III
Los Angeles Times
WASHINGTON

In a surprising twist to his lengthy ethics ordeal, House Speaker Newt Gingrich announced Thursday he would accept a personal loan from former Senate majority leader Bob Dole to resolve an outstanding $300,000 ethics penalty.

After informing Republican colleagues of his decision during a closed-door meeting, Gingrich stood in the well of the House chamber to say he felt a "moral obligation" to reimburse taxpayers with "personal funds."

Terms of the loan require Gingrich to repay the principal and all interest accrued at 10 percent by 2005.

"I have arranged to borrow the money from Bob Dole, a close personal friend of impeccable integrity, and to pay it back," Gingrich said. "This is my duty as speaker, and I will do it personally."

The remarkable turn of events could make Dole, who at times has bitterly disagreed with the combative speaker, a financial white knight coming to the rescue of Gingrich's sagging political career with the stroke of a pen.

Gingrich, for his part, once called Dole the "tax collector for the welfare state" for suggesting that tax increases were necessary to balance the federal budget in the late 1980s.

In turn, Dole described Gingrich, then a fire-breathing backbencher, as more sound than substance. "His agenda is in getting attention so he has to go after large targets," Dole said dismissively. "He's making a lot of noise, but I haven't seen any impact."

Their bittersweet relations had not warmed much since then - at least publicly - despite Gingrich's vigorous support for Dole's presidential campaign last year. Dole told reporters that, before offering Gingrich the loan on Tuesday, he hadn't spoken with the speaker since just after the election. Dole also said he was offering the loan for the sake of the Republican Party, not simply as a financial escape hatch for Gingrich.

"It's an arm-length transaction between two friends," Dole said. "I wanted to help the Republican Party."

Whether this unusual deal will actually bring an end to Gingrich's political woes remains unclear.

In a harbinger of more political rancor likely to come, Democrats reacted to news of the loan with anger, lambasting Gingrich for escaping the penalty without any immediate financial pain and attacking Dole for offering a "sweetheart" loan to the speaker that would be unattainable to average Americans.

"Newt Gingrich has said for years that he's against the welfare state, but now we find he's on the Dole," said Rep. David Bonior, D-Mich., one of the speaker's most aggressive critics. "What average American could walk into their local bank, take out a commercial loan for $300,000 with no collateral, and no payments due until the year 2005?"

Last fall, Gingrich admitted that he had violated House rules by submitting false statements to the House Ethics Committee, which was investigating the tax-exempt status of a college course he taught.

Gingrich then struck the legislative equivalent of a plea-bargain, saying he had failed to seek proper legal advice and had sent erroneous letters to the committee, and agreeing to the committee's penalty - $300,000 to repay the federal government for the cost of the investigation.

On Thursday, Gingrich stressed that he wasn't paying a fine, but rather reimbursing "the American taxpayers $300,000 "

Democrats, however, disagree with that interpretation, and frequently refer to the payment as a "fine."

Whatever the legal definition, Gingrich had been unable to shake questions of whether the payment would come from his personal accounts or whether others would help him meet the obligation.

Many GOP leaders pressed Gingrich to pay with his own funds, fearing any effort to avoid personal responsibility would cause negative reactions among voters and in their party.

Yet Gingrich had said his wife, Marianne, objected to the use of their personal funds to pay the penalty, fearing it would cripple the family's future financial security.

"Marianne and I have spent hours discussing these options," Gingrich said on the House floor, adding that the couple eventually agreed it would be best to pay the penalty out of personal funds. "Any other step would simply be seen as one more politician shirking his duty and one more example of failing to do the right thing," he said.

But the couple reached that decision only after Dole offered the loan.

"Up to the last moment we were looking at a variety of options," said Christina Martin, Gingrich's spokeswoman. "At the last minute, we received this completely unexpected overture by the senator."