American Enterprise Institute

February 7, 2008

[Edited transcript from audio tapes]

3:45 p.m.	Registration
4:00	Introduction:	Christopher DeMuth, AEI
	Speaker:	Newt Gingrich, AEI
5:30	Adjournment

Proceedings:

Christopher DeMuth:  Ladies and gentlemen, good afternoon, and welcome to the American Enterprise Institute, to this AEI Book Forum, where we will be focusing on the new book by Newt Gingrich, "Real Change: From the World That Fails to the World That Works," just out from Regnery Press, hearing from the author about the major arguments of this book, and a discussion to ensue.  Mr. Gingrich is a senior fellow at AEI and in his work here, and in a variety of other engagements, at Fox News, at his own Center for Health Transformation and American Solutions, as a member of several key government advisory committees, as an intermediate advisor to legislatures of both political parties, and as the author of now 10 books.  Newt has, in the nine years, since he stepped aside as Speaker of the House of Representatives, made truly extraordinary contribution to American political dialogue.

This book, "Real Change," is, I think, his most important to date.  In the few weeks since its publication, it has rocketed up the bestseller lists and I think I can reveal that it will number three on the New York Times' list next week.  I'd like to congratulate him on this great achievement, and I'd also like to thank Senator Obama for doing such a great job with the pre-publication publicity campaign, introducing a wide public to the book's themes.  In fact, Gingrich and Obama are both starting from different points on the political spectrum, engaged in almost exactly the same mission here, which is to transcend old partisan cleavages and positions and rhetoric in an attempt to address America's problems in a spirit that is intensely practical and factual, and results oriented.  In that terrific endeavor, Newt has done a wonderful job and set a very high standard with this book.  Can we all, please, give him a very warm welcome.

Newt Gingrich:  Well, let me thank all of you for coming out this afternoon and giving us a chance to have a dialogue about real change.  I must confess, Chris was right; we developed working with Margie Ross and her team at Regnery last summer.  We tried to think through building on what we had done with "Winning the Future."  How could we explain where America was and what America needed?  We decided that "Real Change" captured the concept better than anything we could come up with, having little idea that when we scheduled the launch, right in the middle of the primaries, that every candidate would have discovered "change" in 10 days before the book came out.

 I went to one of the television programs to help launch the book.  The host said to me, off the air beforehand, "When did you come up with this title?"  I said, "Well, last August."  He said, "Okay, if you're that prescient, what do you think the lottery number will be Wednesday night?" 

I've actually been, in a sense, on a journey, from the time I stepped down in January of 1999, in trying to understand what's happening in the larger world and what America has to do to be successful in that world.  One of the virtues of having been in public office, and then having time to go out and try to understand the world around you, is that you have a lot more time to learn and at the same time, having been Speaker of the House, I had access to a lot of people to learn from, and they were quite happy to spend time with me.  Very early, I concluded that one of the great drivers of the next quarter century would be science and technology, so I spent a lot of time at the National Science Foundation, and NASA, and NIH, and Stanford, and Georgia Tech, and MIT, just looking at the sciences and talking to various scientists about what they were working on. 

 Then I looked at the rise of China and India as economic factors that were facts.  They're not problems.  They're facts.  About a billion, 300,000,000 Chinese are going to try to pursue happiness; about a billion Indians are going to try to preserve happiness.  Our Declaration of Independence says they're endowed by their Creator with that right, and they're all going to roll up their sleeves and work really hard to find a way to be economically happy.  The question for us is, if that is a fact, then what are we going to do about it?  And historically, in order to compete successfully with China and India, we would have to have a very dramatic change in taxation, regulation, litigation, health, education and energy, just to name a few.  That's a pretty big effort.  So we developed, within the future, as the first effort to explain that.  But the more we looked at these things, and the more we looked, for example, at the global war on terror and the problems in Iran and Iraq and Afghanistan and Pakistan, declared was that we were in an overmatch in which our solutions were dramatically smaller than our problems.  We resembled the moment in "Jaws," where the Sheriff says, "We need a bigger boat." 

I have to particularly thank Chris DeMuth and the American Enterprise Institute for allowing us to engage in a very long journey of exploration.  There was no pressure to do anything in any particular sequence, but just to go and keep learning.  I would continuously bombard Chris with various emails as I was doing things.  I think that the speech I gave here, which is included in exerted form at the back of the book, and is in a complete form in the audio version.

 There was a speech I gave here on September 10th describing the world six years after 9/11 and suggesting that if we had taken the attack on 9/11, which killed more Americans than Pearl Harbor.  If we had taken it as seriously as Pearl Harbor, that we would today be in a very different place.  I think that speech literally could not have been given without the support and the encouragement of the many different scholars here at the American Enterprise Institute.

 In addition, Vince Haley, who's our Research Director here, and coordinates all of my non-health activities, was able to just bring together an amazing array of people.  In particular, we had one panel here on microeconomics and the problems of bad government that for me were kind of a revelation and began a process of thinking through, "If you know something is really bad and you know it really isn't working, why is it so hard to change?" 

And the case study, which I hope we'll do probably next year, is Detroit.  Detroit, in 1950, had 1,800,000 people.  It had the highest per capita income in the United States.  Today, it has less than 950,000 people.  That means literally half their housing stock has been abandoned.  It ranked 62nd in per capital income.  It is a case study in the consequences of bad government, in the human and financial cost of bad government.  And yet it hasn't been studied because the Right doesn't spend a lot of time thinking about these things, outside of a handful of think tanks; and the Left would never think about the cost of bad government, because it is a denial of their core belief system, which is that all government is good, no matter how bad it is.

 The result has been that we have tolerated a destruction of quality of life and a destruction of the future of young people in Detroit, in a way that will be looked back on some day as reveling Lincoln Stephen's discovery of the shame of the cities, at the turn of the last century, at the beginning of the progressive moment.  So it was from that process, as I looked at what wasn't working in national security; what wasn't working in health, which I work on at the Center for Health Transformation; what wasn't working in domestic policy, which we do so much of here at the American Enterprise Institute.

I began to realize that you had to draw a distinction between public relations' use of the word "change" and real change.  I did that, in part, because I could intuit.  Last summer, clearly the battle cry of 2008 was going to be change.  I mean, first of all, if you're the Democrats and you have a Republican in the White House for eight years, change is obvious slogan.  Second, if you're the American people, and by 68 or 70 percent margins, you think we're on the wrong track, change will be the obvious slogan.  So it was almost inevitable that change would be a slogan this year.

 The question was, how could you begin having a dialogue not about a political sloganeering focus group-driven advertising campaign that had no meeting, but about what would real change be like?  Now as a historian, let me just point out for a second.  I think we may be seeing the beginnings of some of this process, even with the rise of Senator Obama and with the victory of Senator McCain, each of which I would argue is implausible for different reasons. 

Just to prove I'm not all that prescient, if you had said to me last August and September, "What were the odds of Senator McCain resurrecting himself by sheer brute courage and an unwillingness to quit?"  I would have thought it was a very long shot.  So if you had said to me, "What were the changes we'd be holding this particular event on the day that Mitt Romney was suspending his campaign?"  I would have told you last July-- last August and September, I didn't think that was a very plausible scenario.  But it's a fact.  And whether you're for or against McCain, the sheer courage, the same courage that carried him through captivity in Vietnam, the sheer courage to get up off the mat, to get back on the airplane, to go back out and campaign, to refuse to give up, is in a sense a classic American story.  It's a story of the lone individual who does what they think is right no matter what everyone else thinks, and sometimes it works and sometimes it doesn't.  In this case, it's at least gotten him, I think, to the nomination.

 In the case of Senator Obama, if you'd said to me two years ago that the Clinton machine would be in the process imminent collapse because a relatively unknown first-term Senator from Illinois would sweep North Dakota, Minnesota, Colorado, Idaho and Alaska, I would have thought that was highly unlikely.  So you have a phenomena emerging on the Left and I think that phenomena relates directly back to the desperate desire for change, and to the sense that the system simply isn't working, and that people aren't being heard. 

 Granted that Senator Obama's current battle cry of change is a fairly shallow device, but frankly so was Franklin Delano Roosevelt's in 1932.  If he can get away with it, it is not irrational not to be defined.  I think, in that sense, we're meeting on a day when there are interesting currents in the American system that are underway, and the world isn't what anyone would have predicted.  Who would have predicted, six years ago, that the Republicans would keep the White House in 2004, gain seats in 2002, and collapse in 2006?  I just say all this as background.  I think there's an underlying turmoil that people are not evaluating it, at the same time that the Republicans are seemingly in trouble and that immigration is a big issue.

 Bobby Jindal, the first generation American of Indian dissent, is the first Republican Governor, the first governor of either party to win the Louisiana election on the first round without a runoff.  So here are the Republicans picking up a seat in Louisiana at a time when we all know we're in desperate trouble, but it turns out that in personality and in ideas, that Bobby Jindal may well be at a point of destiny in terms of the future of Louisiana, which is now a battered enough state to actually contemplate reform and effective government as an alternative to the way in which it's normally operating.  I say this as a graduate of Tulane, who got to see New Orleans politics at its most broke, and would regard any effort to bring order and transparency to Baton Rouge is a remarkable achievement.  It is was no accident that Governor Jindal's first act was an executive order posting all state's funding on the Internet, so they could be surveyed by the citizenry.  I think Jindal will be a fascinating person to watch. So there's a turmoil at large.

 Now let me describe for a second, historically, real change.  The founding fathers decided real change was unavoidable.  It was captured best by Benjamin Franklin, who went to England to represent the colony of Pennsylvania to the British government as a loyal British citizen.  After 10 years of dealing with the British aristocracy, he came back home to Philadelphia as an American, because he reached the conclusion that there was no future in which he would be treated with dignity and as an equal by the British aristocracy. It's one of the great migrations in American history because it's literally an internal act of conviction, which then leads him to become an adamant supporter of independence. 

Independence was a fairly big change.  It took an eight-year war against the most powerful nation in the world.  It took an extraordinary amount of privation.  It required Washington to leave Mount Vernon for eight years, only spending one night at home in that entire period, but it was real change.  Then it tuned out that the Articles of Confederation didn't work, that they were too weak, too loose and that the system was simply going to break down.  Washington came out of retirement, in a fairly cleverly managed process, went to Philadelphia, held a 55 day session in total secrecy.  He wrote a Constitution, which was clearly a Constitutional coup d’état, because they had no authority to do it.  He went back home and got 12 of the 13 colonies to adopt it.  That created the United States of America, and by any reasonable standard, that was real change.

 The Federalists were the dominant party but they found it very difficult to take their commercial attitudes and their northeastern base and translate it into compatibility with southern susceptibilities. Ultimately over time, Jefferson created the first genuine opposition party. In the election of 1800, they began the process of annihilating the Federalists.  By 1812, the Jeffersonians were so overwhelmingly dominant that gerrymandering emerged when Eldridge Gerry, who was one of the last of the Federalists, drew a map in Massachusetts designed to maximize the chance of the Federalists' survival.  Somebody said, "Oh, that district looks like a salamander."  The other person said, "No.  That is a gerrymander."  That is where the word comes from.  It was an effort to survive on the part of a party, which literally disappeared in the following years.

 To give you a sense of the Jeffersonian scale of change, the Federalists desperately between   back then, we got elected in November and inaugurated in March.  The Federalists used the period after the defeat of 1800, to pack the federal courts in order to block the Jeffersonians from being effective, and the response of the Jeffersonians, in an act, which I personally find very admirable, was to wipe out all of the new Judges, wiping out 18 out of the 35 Federal Judges, so they literally in the Judicial Reform Act of 1802 abolished slightly more than half of all Federal Judge.

 I am personally much more moderate and other than abolishing the Ninth Circuit, I wouldn't go much further than that.  But I do think there's much to it.  They didn't impeach anybody.  They just said, "Your job doesn't exist.  You're not getting paid and there is no court."  Several of the Judges, seeking redress under the Constitution, sought to file a lawsuit proving that the Jeffersonians were unconstitutional, to be told by the remaining Federalist Judges that they were insane.  Because if the Federalist Judges sided with them, the Jeffersonians were going to abolish their court, and it all died away.  Marshall, in a moment of extraordinary cleverness, established the Supreme Court's importance by not opposing Jefferson.  If you read carefully what happened in Marbury v. Madison, it's a wonderfully elegant slight of hand minimizing the risk that Jefferson will get angry, while still asserting that the court exists.

The Virginians consolidated power:  Jefferson, Madison, Monroe.  We had what was called "the era of good feeling," which meant that the people who wrote history liked each other and all got together.  In the year of good feelings collapsed in 1824, when the Jacksonians began to emerge.  The Jacksonians lost the election of 1824, in an event brilliantly covered by Remini in the election of 1828.  They waged a four-year unending campaign to destroy John Quincy Adams.  It is one of the most extraordinary moments in American history and it is an absolute eruption.  It's where populism comes from.  It is an absolute eruption of the working proletariat [sounds like] in the east and the frontiersman against the establishment.  And the election of Jackson is one of the most revolutionary movements in American history.

 Then the system sort of settles down into a fairly boring period of confusing people that don't do very well, presiding over the inability to resolve slavery until they emerge on the edge, on the precipice of the civil war, during which period, the Whig party disappears, the Republicans emerge.  We elect Lincoln in the North; the South secedes and we then have the bloodiest, the most difficult war in our history for four years.  That was real change.  The system then sort of tried to cope with modernity, and national economy and the rise of large corporations until late in the 1890's, on a bipartisan basis, a group of social critics began to emerge, and you created the progressive moment. 

The progressive moment affected both parties and fundamentally altered our sense of the importance of the federal government and is actually, in many ways, a more decisive moment of change than the New Deal.  Because it began to assert the federal government could, in fact, control, for example, the Food & Drug Act.  It began to asset that the federal government could control large corporations, that in fact, in a conflict between economic power and political power, that economic power would lose. It was done on behalf of what was then thought of modernity.  It was the rise of the professional urban class and the corporate systems, which were then applied to politics. 

 Politics up until then had been basically a patronated system and had been basically a system captured brilliantly in "Plunkett of Tammany Hall," published in 1905, in which Plunkett explained how the machine worked, a system which could last be seen in Chicago, and which worked for a very long time.  We then, again, have a period of modest reform, and you get the Great Depression, and you get the rise of Franklin Delano Roosevelt, by any standard an extraordinary change, and you then have a fairly long stretch of digesting the New Deal.

I would argue that in 1979, it was not obvious that you were going to get Ronald Reagan.  If you look at the general trajectory of the country in 1979, there was no reason to believe you were going to have a sudden fundamental disruption.  Next month, I hope to come back -- if AEI will have me    and give a little speech on the 25th Anniversary of two speeches.  Because next month is the 25th Anniversary of the "Evil Empire" speech, and 13 days later, the 25th Anniversary of the speech for the Strategic Defense Initiative, which was called "Star Wars."  I would argue that those two speeches represented a fundamental disruption of the elite approach to foreign policy.  That in those two speeches, we went from tolerating the Soviet Union as a bad, but necessary, nuisance to describing the Soviet Union as an intolerably evil system, which had to be eradicated; and then outlining a technologically and scientifically based strategy that was designed to bankrupt the Soviet empire.

 When you look at those two speeches in that context, it is inconceivable that they would have been given by anyone but Ronald Reagan.  I would argue -- and this will be the trust of my speech next month -- that in the absence of Ronald Reagan, you still have a Soviet empire.  I think it's actually interesting to think through, had Reagan not gotten elected in 1980, if he decided after 1976 that he was old enough and tired enough, he and Nancy were going to stay at the ranch, certainly a reasonable choice, that you'd be in a different world. You'd be in a world where we were still negotiating with the Soviets.  It's that fundamental.

 So now we come to our time.  I wanted to lay those out for you, because I wanted you to understand when I talk about real change, I'm talking not a politician, but as a historian.  I believe, and I think Obama is a part of this.  Obama represents, particularly among younger Americans, where he has struck an emotional, psychological chord, and he has said, "Things can be different."  Now many of you who are experts will say, "Yeah, but what does he really mean by that?"  Well, I think for young people, what he means by that is, "Things can be different."  At the moment, he doesn't have to get much beyond that, because frankly, things have to remain the same.  I think his characterization of the way he's pitched the fight with Senator Clinton is brilliant.  "If you think we should go back to the 1990's, you have candidate.  If you think we need to move into the 21st Century, you have a candidate, which one do you want?"  Now if you think about it psychologically, that is a devastating choice.

So even if she says, "But everybody loves Bill."  Yes, he's the past.  Nice past.  Great nostalgia.  He's not the future.  I think it has totally disoriented the Clinton campaign, to such a degree that in South Carolina, they verged a pure racism.  I have never seen President Clinton to be more clumsy than he was in South Carolina.  And I think it's because they're totally disoriented.  I mean, they're fully prepared to fight a political campaign.  If they could find somebody to campaign against them politically, they would.  What they've got is a cultural figure, and that was the real meaning of Oprah, was that the campaign suddenly will move to a different zone.  Furthermore, it's a campaign largely being fought on the Internet.  This guy raised $3,000,000 yesterday on the Internet.  It's a different world.

 Now you can like that new world.  You can dislike that new world.  You can be frightened by that new world.  My only message to start with is, you had better understand we're on the edge of real change.  And by the way, this is only the tip of the iceberg.  Let me say, I'm a strategic optimist.  I'm going to explain why in a minute.  I believe it is almost inexorable that the United States will, in fact, move towards an even more center right coalition and will move towards reforms that are even more market oriented and more technologically oriented, and that is very, very unlikely, that you'll see the collapse of the Republicans and the collapse of the Bush administration turn into a sudden revival of socialism now.  The reason is objective reality in the world.  The old order doesn't work.  The old bureaucracies don't work.  The average person knows this. 

The very young people, who currently are infatuated with Senator Obama, are the most demanding consumers on the planet.  They want everything when they want it.  They want it prefigured for themselves.  They want it very convenient.  They prefer it on credit.  And if they're told, you know, you're going to have to wait in line for the bureaucrat to decide whether or not it's an appropriate moment for you," they're just not going to tolerate it.  I think you're going to see tremendous stress built as this gets to be as we articulated.

 Now here are the three principles I want to suggest for a real change.  The first principle, which is the subtitle of the book is, that there is a world that works; and there's a world that fails.  That government is mostly in the world that fails.  Most of you have heard me do this.  I want to repeat just because   I just repeated it for some 30 U.S. Senators and it worked with them.  Yeah. I was actually surprised.  I have a standard question, which is, "How many of you have ever tracked a package at UPS or Fed Ex?"  Just raise your hand.  Well, to my surprise, about half the Senators had too.  I stopped, and I do this deliberately, because I want to remind people.  Every once in a while, you'll see an article that says, "Gingrich has a lot of interesting ideas, but we have to be practical."  Okay.  Tracking packages at UPS and Fed Ex is a fact, not a theory.  There are 15,000,000 packages a day at UPS and 8,000,000 packages a day at Fed Ex.  So in the world that works, you have the writing of Drucker, Derringer and Womack .  You have Leeds Manufacturing; Six Sigma; Toyota Production System. You have entrepreneurs.  You have rewards for achievement, consequences for failure.  You have a market orientation.  You have an investment in information technology.  We know how this world works and it can track 23,000,000 packages while they're moving. 

In the world that fails, and here I use the federal government as a general notion.  Well, they can find 23,000,000 packages while they're moving, they can't find between 10 20,000,000 people while they're sitting still.  So one of my policy proposals that would be a real change, is to allocate about $200,000,000 to send a package to every person who's here illegally and when UPS and Fed Ex find them, then you know where they are.

 Now at one level, that's hyperbole.  But I've talked, I think, to probably 500 audiences in the last year and a half and almost 1,300,000 people have now seen this on YouTube, from the speech I gave last Spring at AEI.  It's called Fed Ex v. Federal Bureaucracy.  There's a very profound underlying point, which is part of what drives me nuts about modern conservatism.  I mean, if CPAC was consumer-oriented, they would have half of CPAC dedicated to the technologies and the productivities in the new symptoms that would explosively replace the failed bureaucracies of the past.  And they'd be saying, "Why isn't the Detroit School System actually trying to educate young people?”  “Why isn't the city of Philadelphia trying to avoid people being killed?" Philadelphia has had 3,000 murders since 1988.  Giuliani, using Com Stat, Computer Statistics, and using metrics and using evidence-based government, has made New York the safest large city in America.  It would reduce crime by 75 percent.  Why is there no conservative demand to save lives in Philadelphia, or in Washington, DC, or in Baltimore, by applying the same models?  And I think it's because a lot of conservatives find all this stuff boring, so they don't want to think about the practicalities. 

I feel this very deeply.  You can't just be an anti-government movement unless you're determined never to win.  Because by definition, if you win, you're in charge of the government.  An anti-government movement that's in charge of the company has nobody who knows what to do with the government once they get it.  So they all sit around going, "Boy, this is really bad."  And they're then totally bamboozled by the bureaucrats because they suddenly realize they don't know anything and they're so desperate to not look ignorant and the bureaucrats hand them stuff that at least sounds plausible.

 If you watch Republicans, Republicans get owned by bureaucracies with stunning speed.  Now, if they're not owned by the bureaucracies, the bureaucracy promptly starts to leak to destroy them.  And because they don’t have large enough cadres that know how to counter the leaking, they can't defend themselves.  It's a very profound problem. Changing large powerful bureaucracies is like waging war. It is an unending, constant campaign.  It's very different than the problem FDR had.  FDR was starting new bureaucracies.  That’s easy.  The hard thing is to take existing systems that are deeply entrenched, that have enormous staying power and fundamentally change it. 

So I would argue that one of the great excitements, it's going to be an extraordinarily fa-- [14 seconds blank]  If people are truly incompetent, they've got to be fired. That's a very radical position.  But you go talk to Fed Ex and UPS and say, "If you had the current U.S. Civic Service rules, could you track packages every day?"  They'll tell you they couldn't track packages in a month, because you couldn't have any sense of rewarding brilliant people and getting rid of people who are incompetent.  That's a very dramatic break with what has been a civil service reform going back the 1880's.

The second principle I want to suggest to you is parallel but very different.  The world that works is just objective.  It is "What is productivity?  What is technology?  Why can't we go out and bench mark?"  If you want to deliver a gooder service, who's already doing it brilliantly and what can you learn from them?"

There's a second principle, which is much more fundamental and will require a much different argument.  There are policies that work and there are policies that fail and we need to have a fundamental debate about this.  I would argue that one of the great opportunities for conservatism in the next decide is to develop a real program on the human and financial cost of bad government and the human and financial rewards of good government. 

Let me give you three examples, which some of you heard me talk about before.  First, if you look at South Korea and Ghana, they had the same per capita income in 1960.  South Korea, today, is the 11th wealthiest country in the world.  Now there's a lot to be learned by asking, "Why has one country grown so dramatically and the other country not?"  Except it's very politically incorrect.  You get into things like the rule of law.  We want to have conferences on poverty in Africa, without discussing the absence of the rule of law in places that impoverished.  And so they don't talk about the cost of predatory government; the cost of corrupt government; the cost of dictatorship, all of which drive away capital and drive away smart people and leave you in situations with normalcy, we're not getting.

 Let's leave that comparison and go to Europe.  Forty years ago, the largest export in Ireland was its young men and women, and it had been for 200 years.  Because there weren't enough jobs in Ireland, so people left to get a job.  The Irish adopted a series of changes.  They cut taxes dramatically.  They became extraordinarily pro investment, so that unlike America's largest cities -- Detroit being a classic example, which is anti-jobs, anti-business -- Ireland actually made it easy.  They said, "Gosh, if you'd like to build a factory here, we'd like to help cut the red tape.  We'd like to make it easy.”

 Third, they reformed their education systems.  They had a work force that could work.  Fourth, they invested in infrastructure, largely roads and ports, secondary to airports.  What happened?  Ireland, today, has a higher per capita income than Germany.  The Bundesbank estimates that by 2030 Ireland will be the second highest per capita income country in the world after the U.S.  That's inconceivable 40 years ago.  You could have won a bet on that anywhere in Ireland, and yet it's real change, because policies work.

 A third example, incited by Sarkozy [phonetic], in his book, "Testimony," which he wrote before he ran for President.  Before Margaret Thatcher, the French economy was 25 percent bigger than the British economy.  Today, because of her reforms in cutting taxes, cutting regulations, bringing the unions into the modern world and insisting on emphasizing entrepreneurial spirit, the British economy is 10 percent bigger than the French economy.  That is an extraordinary change.  Today, there are 300,000 young French men and women who work in London, because it is objectively a better place to earn a living than Paris.  Now, again, good policies, bad policies.

 I already cited my fourth case, which is Detroit and Michigan.  When John Engler left the governorship of Michigan, Michigan had the lowest unemployment rate in its history, 3.3 percent; a AAA bond rating and was borrowing money for infrastructure at the lowest cost.  Within two years, a leftwing legislature and a leftwing governor had broken the AAA bond rating, so that the cost of all bonds went up and had set Michigan on a path to drive business and jobs out of Michigan, and as a result created an artificial recession, at a point when the entire rest of the country was doing well.  Other than states hit by Hurricane Katrina, Michigan was the only state to be in recession and it jumped from 3.3 percent unemployment to 7.4 percent unemployment.  And as a consequence, 40 percent of the graduates of Michigan and Michigan State said that they intended to move out of state to get a job, because they saw no hope of staying in state.

 So if you take these as case studies, part of our argument in real change is that we need a very principled and consistent application, and we need to apply it to the whole country.  That is, we need to go out and we need to say to people across the whole country, "You have two futures.  You have a future with higher incomes, a better environment, a better health system, a longer life, a better opportunity to be physically safe. Or you have a system where you're likely to have a greater danger of crime, fewer jobs, lower incomes, higher taxes and bureaucracies that don’t deliver." 

And we have to make it vivid in terms of people's lives.  Nobody that I know of is going to study, for example, in Detroit at the cost of bad government for African-American neighborhoods that bought their houses.  But housing prices in Detroit compared to housing prices in communities that have had good government are stunningly lower.  So in a sense entire neighborhoods have been impoverished as the indirect consequence of bad government.  Yet, nobody's gone out and said, "Gosh, don't you wish your house was worth $150,000 more?"  Nobody's translated it at the human personal level into a believable story that allows people to understand why they want real change.  And so people shrug and said, "Well, I guess this is just an unusual act."

 Lastly, not only do we have this enormous opportunity for real change, by moving from the world that fails to the world that works, and an enormous opportunity of real change by moving from policies that fail and government bureaucracies that fail, to policies that work and effective systems that work.  But the American people mostly favored it.  At the back of the book, there is a section called "The Platform of the American People," which is also at AmericanSolutions.com.  The Platform of the American People was developed at AmercianSolutions, by having 100,000 people participate in workshops in September.  Over 25,000 people participated in telephone and town hall meetings and we then did six national surveys.  We had the following simple criteria.  For an issue to be in the platform of the American people, it had to have a majority support among Democrats, among Republicans and among independents.  So it was literally a tri-partisan issue. 

First of all, we found the American people were relatively smart. Most of them want long-term change, not quick fixes.  Most of them believe those changes require focusing on 513,000 elected officials, not just the White House or Washington.  Most of them believe that science is extraordinarily important for our future.  Most of them believe we have to expand our creativity and our innovation to compete with China and India.  When you go through the platform, I think you'll be startled about how much common sense there is and how relatively popular smart ideas could be if people articulated.

 Two examples, 87 percent of the American people believe English should be the official language of government.  Now 87 percent meets an absolute majority of Democrats, an absolute majority of independents, an absolute majority of Republicans.  And, by the way, an absolute majority of Hispanics, and so it makes you wonder why the elite spine is so hard to adopt it, when in every single part of American society, except the elites, it's obvious.  I think it's something which is on the edge of being inevitable, because I think the American people ultimately win these kind of fights.

 A second example.  By the way, what we're doing is recommending on AmericanSolutions that people adopt at every level.  I spoke, last night, to the Idaho County Commissioners, about 700 people in Boise.  I suggested they go back home and adopt it at their county level and just start the fight.  I think you'll see this kind of thing.  We now have people in California, Wisconsin, Iowa, Michigan, Idaho, Maine and Georgia, all moving the concept of the Platform of the American People.  I think by the end of February, it'll be in every single state, with people pushing it and talking about it.

 A second example, 84 percent of the American people would like the option of a single-page tax form with a flat tax.  Now 84 percent is a large enough number that, again, you start realizing, "Gee, that means a majority of Democrats favor it."  A number of Congressman, I think, in March, are going to mail out a single-page tax form to their constituents with an explanation on the back side of the sheet of what the option would be like.  My guess it is going to start a conversation that will catch on.  Because interestingly, a majority of Americans do not believe that the rich should pay more.  The Left doesn't understand this.  But by 54 to 43, the country doesn't think you should actually ask people who are successful to pay more.  They should pay the same amount.  Because if they pay the same amount of a much bigger income, it turns out to be a lot more money.  It's very interesting.  This is not the country the elites think it is.  When you read the Platform of the American People, you'll see that.

 Let me just close with this observation and then throw it open to questions.  I've been watching the campaigns so far and trying to understand the patterns that are evolving.  It has reminded me of how complex this country is.  I talked to David Brody the other morning.  I said, the thing that has always struck me, since I first started looking at politics in 1958 and became active as a volunteer in the Nixon-Lodge campaign in 1960 in Columbus, Georgia, is in the end, the American people teach us a lot more than we teach them.  There is a huge national conversation underway.  I think that that national conversation is actually going towards real change.  When the real change comes, it's going to lead much more towards the world that works, because the American people aren't stupid. It's going to lead much more towards policies that actually work in the real world, because the American people aren't' stupid.  And it is going to lead, I think, to a whole sell [sounds like] change either in the attitude of the current elected officials, or in the elected officials. 

I think you're going to see it happen in both parties.  I will personally be active in 2009 and 2010 in trying to recruit people in Democratic districts to run in Democratic primaries.  Because I think the answer to gerrymandering is to recruit people in the primaries who share the values of the vast majority of the American people and say, "Fine.  You're safe in a general election but you won't get there." 

 I think you're going to see a level of interest and a level of desire for real change.  It'll be amazing.  I have no idea how this fall is going to work out, because I think that this conversation and this dialogue about real change has only begun.  I don't think it's just a slogan and I think that whichever party is successful this fall, and whichever party is successful in the next 4-12 years will be a party which somehow captures both the concept of real change.  It captures a willingness to fundamentally change the bureaucracies and captures a willingness to move towards a broadly-centered right value system, which is actually occupied by somewhere between 70 90 percent of the American people.

 As you see if you look at the data, either in the "Platform of the American People," at the back of "Real Change," or go to AmeicanSoutions.com and click "Research," where we've put all the polls, all six surveys.  $400,000 worth of data is sitting there, that you can look at the cross tabs.  That’s a sweeping overview of why I wrote the book and what we're trying to accomplish. 

What I'd like to do is just toss it open, if it's okay Chris, for a couple minutes, for questions.  I think we have microphones, is that right?  Microphone type people, okay.  Who has a microphone?  Do you want to do that?

Part II.  Question and Answer Session

 Frank Fletcher:  My question, Mr. Speaker, is...

 Christopher DeMuth:  Is that on?

 Frank Fletcher:  It doesn't seem like it's on.

 Christopher DeMuth:  Let me see.  Let me help you.  Try it.

 Frank Fletcher:  Thank you.  My question, Mr. Speaker, is how important is fiscal conservatism to conservatives, or to the American people?  I haven't seen any leadership or action from Republicans on this issue.  It seems that spending and even the size of bureaucracy continues to increase.  I remember the '96 campaign, when to be conservative was to favor a 6 percent increase in Medicare spending, as opposed to 8 percent by Democrats.

 Newt Gingrich:  Well, I would argue that   in fact, when we balanced the budget for four consecutive years while cutting taxes, we did so in part because we had the first period of controlling domestic discretionary spending since 1981.  Actually only two years in which domestic discretionary spending went down.  The other was 1995, and we reformed Welfare, which reduced by 65 percent, the number of people who were on Welfare.  They either went to work or went to school.  I think for the country, controlling spending is a very big deal.  I think it's one of the interesting things that, again, it depends on how you ask the questions, how you structure the polls.

 But I would argue that we have an opportunity to describe the cost of bad government in a way which will lead to a dramatic increase in the desire for fundamental change.  I also think that the country instinctively believes in a balanced budget in part because the country knows you have to have some yardstick for saying no by the politicians, and that if you have an unbalanced budget as an acceptable behavior, every politician basically just adds more pork.

 You live in a period, by the way, I had two pollsters that came in last week.  No one would have dreamed 5-6 years ago, that "earmarks" would be a term the average American understood.  And one of the pollsters said to me, they don't understand it.  The average person can tell you about 3-5 earmarks they think are stupid.  You see for the first time.  We described it in "Real Change."  There's a section in "Real Change" on Earmark Reform, and I was a little surprised and very pleased when both John Boehner and the House Republicans took up earmark reform, which is now being fought out on the House floor.  The President announced he's issuing an executive order to basically ignore all the committee earmarks.  Those are non-trivial steps towards a more fiscally conservative policy.  They're not giant steps but they are steps and they are a real change from where we were.

 Audience member:  Mr. Speaker, you'd mentioned about conservatives abandoning the big cities and solutions there and not focusing on that it's CPAC.  Isn't part of the problem that basically conservatives have voted with their feet to abandon the cities or areas to the suburbs, they may commute in or even telecommute now.  Basically they've left the pathologies and the problems for the liberals, in part because they don't want to go back into the fight to be accused of being racist, bigoted, homophobic, whatever the entire litany that's going to be there.  What would be the solution to other than just put your chin back up and get in there and toughen up, to get back engaged in those areas?  Because we're basically abandoning the field, as you pointed out.

 Newt Gingrich:  Well, I think, first of all, it's an enormous mistake to think in red versus blue terms and to think you can be a successful governing majority while writing off Americans.  I think people instinctively want leadership that is inclusive of the whole country.  I think that's an enormous mistake. 

I think, second, you're partially right.  It's at two levels.  One is, this stuff is really hard.  When you start thinking about how you're going to fix Native American reservations.  How are you going to fix the worst neighborhoods in Detroit?  What are you going to do about the poorest parts of Baltimore?  These are really hard problems.  So people go, "Well, would I want to spend my time doing that, when I can golf, or I can go sailing, or whatever?"

 The second is the point you made, where I think Margaret Thatcher had it exactly right.  When she was Prime Minister, she used to repeat over and over again, "First you win the argument, then you win the vote."  Now a couple of years ago, an entrepreneur offered to put up $200,000,000 in Detroit to pay for charter schools to save the kids, and was promptly attacked as a racist by the Detroit Teachers Union on the grounds that he was white and he had no right to interfere with what they were doing with black children.  Now the fact that nobody stood up and said, "Wait a second.  For you to destroy the lives of young African-Americans while blocking them from getting help is the most destructive kind of racism."  Nobody had the nerve to say, "Let's debate this.  Let's fight this out."  And you see it in Washington, the number of parents who show up and want the right to choose a school for their kids?  There are an amazing number of African-American parents who care more for their child than they care for the teachers' bureaucracy.  But that requires them then to have champions who are prepared to stand next to them and wage the fight. 

I would urge Senator McCain to go places, like the center of Detroit, and the center of Philadelphia, and the center of Baltimore, and say, "I'm for real change and I'm glad Senator Obama's for real change.  Here are real changes, which ones will he support?"  And then let Senator Obama choose between a corrupt union that is destroying children and real change.

 Christopher DeMuth:  I'm going to take the question over here.

 Cary Mitchell:  Thanks.  Cary Mitchell, from "The Mitchell Report."  Mr. Speaker, one of the things you haven't talked about here, and I'm interested in, is how this world that works versus the one that doesn't, and policies that work versus the one that doesn't.  How that related to parties that work and parties that don't.  I guess my question is, is it your assumption that a party will come to its senses and do the right things?  Or is it more likely that this is going to be a bipartisan, at least not a significant challenge to the two-party system itself?

 Newt Gingrich:  It's a good question.  I don't think it's a challenge to the two-party system.  I think that there's a stability going back now to 1856, that's pretty hard to change.  But I think what you will probably see happen is the emergence in both the Democratic and Republican parties of real change activists, where you have people in both parties who say, "I want real change and I understand that means going to the 'World that Works' and I understand that that means adopting policies that work."  And I think you're right.  You see, some of this with Mayor Fenty here and with Mayor Booker in Newark.  When you see an effort, there are people wrestling with these things in both the Democratic and Republican parties.  It's an ironic challenge.  It's easier for the Republicans to be for "Real Change" because it's not their bureaucracies, their special interests and their ideology.  But it's harder for Republicans because they don’t actually do serious intellectual work. 

 When you go out and you talk to practical Republican politicians, they don't have these kind of ideas.  They don’t get involved in these kind of discussions.  So the Democrats are lots of people who talk all the time, can't reform the institutions that ought to be reformed because it's their institutions.  And the Republicans, who could reform them, don't think enough about what reform would be like.  So the average person just watches the system keep decaying.  I think what we're trying to spark, both with the book and with AmericanSolutions and with the things we're doing here at American Enterprise Institute, we're trying to spark, in both parties, a next generation of political leadership.

 By the way, I found much more receptivity up on Capitol Hill than I expected, as Chris knows, because he put up with me on several long occasions.  I'm a believer in prizes.  I think that prizes are one of the ways you break out of bureaucracy and I'd like to see more prizes.  I think there are going to be an entire wave of bills introduced this year, creating a variety of prizes in various areas.  I think that's going to become a whole new conversation that wasn't there before.  I think you'll see similar kind of waves of new ideas.  I'm a little encouraged that there are more people reaching out for ideas this year than at any time I can remember, since 1994.

 Audience member:  [breaking up] ... She said, "I would call it sound, but unimaginative.  So if I take your theme about prizes, even transfer it to games.  In the military, when we fight wars, a lot of that is done in simulation and war-gaming and a lot of our soldiers that actually fought a war in a virtual reality before they even go on the battlefield.  Is it possible to simulate among the 535 elected officials, along with some private sector folks, some real life situations where as a public official, or as a private business person, much less the same as the game civilization?  You put in your solution and actually show people who are playing that game what the outcome is, so that they can see the negative impact or the positive impact, as opposed to being told or maybe mistakenly being relied to read about what it might be? 

It's less theoretical, if they're actually playing it out and they can see, "Of you adopt this solution, 3,000 kids, or 3,000 homeowners in Detroit are going to blow it."  "If the guy offered up $200,000,000 to save Detroit's kids, what would have been the impact, if he had offered the $200,000 as a prize and incentivized 10 CDC's in Detroit to come forth with a plan as to how they would spend that $200,000,000?"  That might have required him to go out and collaborate and come up with a solution that they would believe in, rather than asking them to adopt one that we had already preconceived.

 Newt Gingrich:  I think that's a terrific idea.  I hadn't thought about it before.  It would kind of be fun now to develop a game where you simulate the Renaissance of Detroit.  There are a number of places you can do that with.  I like the concept very much.  I do think it makes a lot sense.  That's a very good idea.

 Hezel Chaer [phonetic]:  Mr. Speaker, my name is Hezel Chaer.  I thought over the concept of the change and real change, and also we heard a lot about the transformation.  But to go through the change and real change or transformation, those things, as you said, it takes time.  In the history, some change demands nine years, four years, five years.  I wonder with your prescient insight whether you have thought of the change, which is now professed by Democratic presidential candidate Barak Obama, when that called for change, get more appeal and be accepted by the Americans, how you imagine that change will come about and would produce the landscape of the American politics as the global environment?  If that only is just a very short temporary call and people feel very fascinated by, maybe, submerged with victory by Senator Hillary Clinton, or by the Republican presidential candidate.  These kinds of a call or appeal to the change or real change, how that could be accommodated, because the changes are very, very-- sometimes a risky concept to the people, maybe to the establishment, or to what you said, the federal government.  Thank you.

 Newt Gingrich:  There are a couple of things that are interesting about America.  The first is this is probably the most change-oriented culture on the planet.  If you look at the number of Americans who move annually, if you look at where people go to vacation, or where they go to school, Americans are really stunningly active and stunningly eclectic in their willingness to churn [sounds like] and be very high energy.  As an aside, I couldn't help but think when you were talking about, I don't think this is only about Obama.

We wrote a book called "Real Change," based in part on the work of a 527 called AmericanSolutions and we picked the term "American Solutions" deliberately.  Partly coming out of a Ronald Reagan speech in 1966, when he was running for Governor.  It was called "the Creative Society," in which he said that it is the duty of a leader to provide principled solutions that work, and that people have every right to demand of their leaders that they actually figure out how to get things to work.

 So American is a unifying word, as opposed to red versus blue.  We wanted to create a red, white and blue thing.  Well, we began AmericanSolutions last Spring.  I don't know, have you noticed in the last two weeks what Senator Clinton's slogan has become?  "Solutions for America."  We now have two wings.  We have AmericanSolutions over here and we have "Solutions for America" over here.  I didn't make this up.  It's true. 

 So I still have the premise that I think it's going to be relatively unlikely that you're going to get an anti-change candidate this fall.  It depends in part on how Senator McCain evolves in the next month or so.  But it would be an act of such totally irrationality that it's almost certain that the market effect is going to be that all the candidates are going to be favor of change.

 Now the question is going to become, "Okay. So what would a change-oriented platform look like?  What would a change-oriented campaign look like?  And now that we've agreed on change, what kind of change are you talking about?"  This is where, frankly, I think the Democrats have a different set of problems than the Republicans.  The Republicans have the problem that they are still the party of the current government, as they interpret it psychologically, so they are too inclined to defend and protect the current mess, which I think is a huge mistake. 

We have never controlled the bureaucracies.  This is not our government.  We are merely, as Paul Wolfowitz once said to me, "We are the summer help and the bureaucracies seek to outlast us on every front."  Instead of defending the bureaucracies, we should be exposing them and saying, "You're right.  This is the world the Democrats built and it doesn't work.  It would be great if Senator Obama wants to change this stuff."

 Okay?  Now on the Democratic side of the challenge they're going to face is, once you bellow the phrase, what are they talking about?  I mean if real change is higher taxes, bigger bureaucracy, more of the same, I think the average American is going to say, "Wait a second.  That's not real change.  That's just the same old game."  I think we have a long time from now to the generation election.  Ironically, we may have a longer national dialogue about what these candidates mean then would have seemed possible, because the difference is going to be so dramatic.  I think it'll be interesting to see how it gets played out.

 Christopher DeMuth:  We have several questions and just a few minutes.  I'm going to try to get to everybody but I'm going to ask that the questions be brief and crisp.  This gentleman here and then we'll move across.

 Audience Member:  [can't hear beginning of question] ...since we moved to an information based economy, all patents and trademarks are being violated by India, China, Brazil, Paraguay on a regular basis and our companies are losing untold amounts of money to this.  Now how are we ever going to enforce these patents and trademarks, when these people hold our debt?

 Newt Gingrich:  Well, you raised two different questions.  First of all, on port security, we have to build a system of safe corridors that start overseas and the inspections have to occur before they leave the other country, not when they get here.  Because the kind of weapons you're most worried about, you can't afford to have get here before you discover them.  I think we will have to build a much different system.  Our position has to be pretty simple.  "You want access to the largest market in the world?  These are the ground rules.  You don't want to obey the ground rules, you're not going to have access to the largest market in the world."  But we're not the people who would suffer a Depression if we didn't buy Chinese goods.  The Chinese would.

 Same Audience Member:  We're buying American goods that illegally made.

 Newt Gingrich:  That's the second question.  I'll get to that.  But I want to first start with the port security.  Second, I believe that the next U.S. Trade Representative should be a really, really successful trial lawyer.  Because I think you need to get away from the diplomatic model of USTR and you need to move into a very aggressive, very confrontational litigation model.  I'll give you a good example, which I think tells you everything about real change in trade policy.  We have one cow with Mad Cow Disease in Washington State, and the Japanese for four years have refused to buy American beef, and we tolerate it.  The Chinese send over products that kill our pets and we do nothing.  Now a country that has one-sided a trade policy is just stupid.

I'm for international trade.  I successfully campaigned over and over in favor of international trade.  I helped pass NAFTA.  I was the whip when we did it.  I'm for it, but I want it to be honest, accurate and I want the United States to get its fair share.  When countries willfully and deliberately steal from us, I want somebody who is brutally tough going after them and I want us to use the power of our market to say no.

 I'll give you one other last example.  The French, one time, got in a big fight with the Japanese over a trade issue, and simply announced that all Japanese electronic consumer goods would come in through Poitier in one place where they would all be inspected by one set of inspectors, who would take really long lunch breaks.  Two weeks after this started, there were so many trucks backed up waiting to be inspected that the Japanese announced that they had obviously misunderstood the French concern, that they were confident they could resolve the issue very quickly.

 But other countries are relentlessly tough with us, either in pure theft, or in setting up one-sided trade deals, and we're patsies.  This is not about, "Are you for or against international trade?"  It's, "Are you prepared to engage as intensely as your competitors, in making sure that you aren't disadvantaged by their trade policies?"

 Christopher DeMuth:  I want to pledge to our Speaker and audience that we're going to move to a "Real Change: to a World that Works" in the AEI microphone system.  Thank you for your patience.  We have a few questions here.  Here, here and here.  Move right along.

 Audience Member:  I just have one brief question.  Speaker, why didn't you not make the race?  We've heard about more about real change in a half an hour from you than we've heard from the candidates in both parties in the last six months.

 Newt Gingrich:  Calista and I discussed it at length last September.  The fact is you can either develop a program or you can campaign.  It was physically impossible.  I had a candidate call me when we announced that we would not run.  We had a candidate call us who had done 58 fundraisers in September.  I don't see how you go out.  Reagan had from October of 1964 to 1980 to develop his program, not by desire, but that's the way it worked out.  So by the time he finally got elected, he had a huge wave of information.

 We've had very successful meetings today with some 30 U.S. Senators and about 15 U.S. House members, laying out an entire new layer of ideas.  We had 700 people at the County Commissioners in Boise last night, laying out a whole new generation of ideas.  Chris knows, because we talked about it.  I think we probably have three more years yet, of idea development before we have fully flushed out the scale of real change that's coming.  At that point, I'd be willing to talk to people about whether or not there's something beyond developing ideas.  I think if you don't develop the program before you start campaigning, you will never have the energy to develop the program once you start campaigning, and you will never be able to train a cadre you need to actually implement the campaign.

 Same Audience Member:  That means we can count on you...?

 Newt Gingrich:  No, no.  It means we can talk about it.

 Audience Member:  Firstly, you mentioned several examples about the Internet.  Can you cite some more of what can happen if real change on the Internet?

 Newt Gingrich:  There are a lot of things about using it.  I'll give an example I often try out with audiences.  How many of you get money out of automatic teller machines outside the United States?  Raise your hand if you've ever gotten money out of an ATM outside the U.S.  So think about the process. You walk up to an anonymous machine in a foreign country.  It's available 24 hours a day, 7 days a week.  First you put in a plastic card.  The screen comes up with 6-12 languages.  You pick the money you're most comfortable in.  You then put in a four-number code.  It reaches out 7,405 miles, finds your bank, crossing international boundaries.  It verifies who you are.  It validates you have money.  It changes it to the local exchange rate at a slightly bad exchange rate, but better than your hotel.  It gives you the money and takes less than 11 seconds.  Okay?  Is that approximately the reality?

 So the next time you hear people tell you about how complicated electronic health records are, ask them if they're comfortable opening up their bank account across international borders.  Ask them if they trust the machine's accuracy so much that they don't even check the exchange rate, which no one does that I know of.  Okay?  And then explain it to me.

 I'll give you one other example.  We were in Milwaukee two weeks ago.  They were saying that in the Milwaukee public schools up to a third of the students were absent on any given day, because the schools take homeroom in the beginning of the year.  They get the pay for children based on the first day of the year.  Then they actually don't care at that point.  I said, "At McDonald's and Wal-Mart, they ring up every sale, all day."  And there are [31,000] McDonald's worldwide and they report every night, all [31,000].  I said, "What if you just gave every teacher a Blackberry and they took attendance in every class and it was filed electronically every night and the school's per diem was based actual attendance plays authorized absences?"  You would suddenly have every teacher in the school going, "Well, you mean, they actually have to be here for me to get paid?" Then you get into an interesting values question, "Why do we have the room?  Why are we paying a person to be there? What is the object of this exercise?  And if it isn't educating the kids, why are we doing it?"  Now that's an example using modern technology to take away every excuse for not having accurate information in virtual....

 Remember, you live in a country where government is so bad that the Los Angeles school system cannot get its computer to work to pay the teachers.  So in Los Angeles, there are 6,000 teachers not getting paid while other teachers were getting paid more than they were supposed to get and they spent $300,000,000 on a no-fault contract, where they had to pay the company, even if it didn't work.  This is in the state that has Silicon Valley. 

 In DC, last year, according to the Washington Post, they paid over $600,000 to a consultant to try to figure out how may teachers they were paying, and they couldn't figure it out.  Now if you can't figure out who you're writing checks to, the gap between the world that fails and the world that works is so wide, that the endless opportunity to be in favor, basically to occupy Leno and Letterman every night.  You know, "The 10 dumbest things government did today."  We need to get back to generating the sense of continuous unrest that says, "We deserve to have a government in the 21st Century that ought to work, it ought to be honest, it ought to be accountable, and it ought to be as modern as any other part of our life."  I think you can build a very large mass movement around that principle.

 Christopher DeMuth:  I'm going to try to go through four questions, three. This gentleman, and then in the back. Three question.  This gentleman in the green shirt.

 Audience Member:  Mr. Speaker, a question about accountability.  In the business realm, the transactions are done on a daily basis and the share price goes up or down.  In the political realm, the transaction between the electorate and the elected officials have an occurrence every 2-4 years.  How are we going to get to that transaction cycle where they're more responsive to citizen needs and what the public is demanding, in terms of performance?

 Newt Gingrich:  Well, actually you can have transactions every day.  The power structure of the U.S. Senate and the President of the United States agreed last summer they were going to pass an Amenity bill, and within six days, it collapsed because the transactions were of such great intensity that the bill melted down under the sheer weight of public anger.

 You can have much more direct transactions, if you want to.  The step that Bobby Jindal is taking, and he's not the first.  The first was Governor Perry in Texas.  But this act of putting every transaction on the Internet so it's accountable to the entire country is a step towards a whole new style of government responsibility and government accountability.  I think you'll see more and more things moving and migrating in that direction.

 I think the right to know is one of the most powerful of all American beliefs and I think that in the age    I helped put the Thomas system online the second day after I was Speaker.  It made it possible to access all sorts of things in the U.S. House without having to have a Lobbyist or belong to a Trade Association.  I think you're going to see that trend continue across the whole system.  I think you're going to see more accountability in that sense, not less.

 Audience Member:  Thank you, Chris.  You mentioned the electronic health record, which we don't have.  What we do have is a healthcare component of the economy, which is both the largest and the fastest growing and a government where the debate is between more and even more.  There's the Part D, or HIPPA debates, any of the things that government has been doing.  Now we're discussing mandates, which are inflationary and budget-busting.  How do you bring good solutions, real economic solutions to a morass, like healthcare, where both sides are debating the wrong things?

 Newt Gingrich:  Well, we have two chapters in the book on this, and it's part of why I founded the Center for Health Transformation.  Remember, the areas of American society, which operate least effectively are the areas which have had the most intense government intervention.  So we start with education, which is almost entirely government dominated, which has been on the K-12 level, an extraordinary collapse of capability.  Then you shift to health, which is largely mediated and defined by government and paid by government, and where government has made it, I think, probably 40 percent more expensive than it needs to be. 

What we've tried to do at the Center for Health Transformation and what we tried to do in the chapters in "Real Change," is begin to outline the kind of future, which gives you better health for a longer time, at a lower cost in a way that enables you to only get to a $300,000,000 payer insured system, because people can afford it.  I think it's possible to do that but it's a dramatically different solution than you're going to get from the Left.

 Audience Member:  Mr. Speaker, [inaudible].  Let me suggest a somewhat revolutionary approach to this idea of change.  We live in the most successful nation in the history of the world, which you are eloquent in enunciating.  The candidate ran and said, "Why should we change?  The process is working very, very well."  As Ronald Reagan used to say, "Stay the course."

 Newt Gingrich:  I think if people thought you were talking about changing the fundamental underlying system, they would agree with you.  I think people believe the system is in permanent need of being tweaked and that there is a perennial drive.  I don't want to go to somebody who can't currently buy health insurance, is paying what they think is a dramatically more for gasoline than they thought they would when they bought the house 25 miles from town, and is worried about losing their job to an Indian or Chinese competitor, and say to them, "Everything's fine," because I don't believe you.  I think that they're actually closer to Right than Washington. 

I used to try to tell my Republican colleagues in the last three years, that all the macro numbers were misinforming.  Because people at a personal level, seems themselves working harder to make ends meet, doing so at a time when the rate they're saving for their kids' college is going up slower than the cost of colleges going up and doing so at a time when their copay is going up and their fear of losing their health insurance is going up.  And doing so at a time when the cost of gasoline is going up.  So for the average person, there wasn't this vast sense of, "Boy, this is a great economy."  There was a sense of, "I don't know how I'd work harder.  So if I'm barely getting along in this economy, I can't imagine what it would be like if we had a severe recession." 

 I think that there's a really deep sense, underlying sense of things not working at the present time.  I think in that sense, it's not that the underlying structure.  I agree with you.  The underlying structure is the most productive, the most creative and free society in the world is sound.  But there are a lot of surface manifestations that are not very sound and they're most vivid in places like Philadelphia and Detroit and Native American reservations.  But there are more than enough things to fix to justify our being involved.  Thank you all very much.

 Christopher DeMuth:  Newt is much too shy to say this, but I want to remind people that copies of his book are for sale in the other room during the reception.

Thank you.

[End of session.  End of transcript]