NEWT GINGRICH TELLS THE GOP HOW TO WIN! 10/23/2013

BREAKOUT: A Strategy for Winning
and Governing for 2013-2017

The Current Situation

The Left broadly speaking--President Obama, most of the news media, left-wing interest groups, Democrats--believes it sees an opportunity to create a wave election similar to those of 1994, 2006, 2010 and retake majority control of the House of Representatives.

Their goal is to describe the Republican Party as an unacceptably radical party and defeat individual candidates by suppressing Republican turnout, driving independents away from Republicans and maximizing turnout of the Democratic base. In particular, efforts to control spending in Medicare and Medicaid and to reduce or eliminate funding for left wing activities will consistently be described as radical and unacceptable. Reading the polls after the recent government shutdown, the Left believes (mistakenly, I think) that this model is now even more likely to succeed.

Those same polls also reveal extraordinary opportunity for Republicans. The fact is that Americans are fed up with Washington, not just with Republicans. They believe America is on the wrong track, and President Obama's approval rating is now among lowest of his presidency.

While Republicans are currently on defense, the failures and costs of Obamacare, the continuing weak economy in jobs and take-home pay, growing government debt, and inevitable failures of bureaucratic big government will only make it more obvious that Washington and the bureaucracy is hopelessly broken. And the Democrats have very publicly reaffirmed themselves as the party of big government bureaucracy, most recently with the launch of Obamacare.

Republicans could respond to these failures of government by becoming the Party of Austerity. But the Party of Austerity can rapidly reduce its supporters as people are told what the austerity means for them personally. Policies of pain almost never work in the absence of a large crisis. They might also play into the Democrat caricature of Republicans as radical and unacceptable.

There is a different strategy, however, which could dramatically unlock the current policy gridlock in Washington and create a new conversation in which Americans find the Republican Party to once again be the party of hope and opportunity (as it was in the Reagan years and in the 1994 Contract with America campaign).

An Historic Opportunity

The dramatic breakthroughs in science, technology, and entrepreneurship are creating new policy opportunities for a better future with a better economy, more take-home pay, better health, more learning, greater national security, a better, smaller, modernized government, and a balanced federal budget.

In Washington insider terms this sounds like a fantasy or an impossibility. In the dynamic world outside Washington all of these capabilities are increasingly obvious but outside the political news media, the political language, and the thinking of politicians and their staffs and their consultants.

This historic opportunity requires a very substantial change in the thinking and behavior of Republicans and there will be enormous resistance to the change (see quotes in appendix at end of paper for thinking about real change).

A key Republican goal should be to have 80% of all communications for the next four years be positive about exciting breakthroughs, exciting opportunities, and a better future for virtually all Americans.

Nothing would do more to defeat the Left's current strategy than a positive Republican Party focused on opportunities for the future.

Offering Americans a Better Future

Our premise is that new science, technology, and entrepreneurship can lead to:

• A rapidly growing economy with more jobs, more take home pay and more economic opportunity


• A new system of better learning at lower cost for your entire lifetime


• A dramatic improvement in health outcomes and reduced costs leading to longer lives, greater independence for the elderly, and a dramatic increase in high value jobs marketing American health innovations throughout the world


• A modernized government that is much less expensive, more effective, and more reliable and accountable


• A better environment through sound science, entrepreneurship, and focused problem solving


• A stronger, leaner, less wasteful national security system


• A balanced budget within a decade through a combination of:
• greater economic growth
• more government revenues from a larger economy and from royalties from energy and other natural resources
• dramatic modernization of government to reduce waste and eliminate fraud
• breakthroughs in health dramatically lowering the cost of health care
• returning power to the states and to the people.

Budget Conference Strategy

Republicans in the Budget Conference should focus first on economic growth, second on increased revenue through increased energy royalties, third on modernizing government to reduce fraud and theft, and fourth on dramatic opportunities for better health outcomes at lower costs.

A tax increase for entitlement cuts agreement is a pain-pain agreement and can't possibly achieve our goals or be supported by the American people.
There is no democracy in our lifetime that has sustained an austerity-led reform program.

We need a new model of budget breakthroughs and this formula creates a new focus on a positive, opportunity-oriented future.

What we are proposing is to replace the argument of more versus less with an argument of better future versus failed present.

Today we have Republicans who want more savings and less taxes versus Democrats who want less savings and more taxes. Neither side is arguing for rethinking the fundamentals, learning from non-Washington developments, and modernizing government systems and policies.

Better future versus failed present would be a profound change in the very nature of the national debate.

It will require an equally profound change in the Congressional Budget Office (CBO). CBO is today incapable of measuring the impact of modernizing systems and adopting new technologies in government. Today CBO is a major "Prison Guard of the Past," blocking modernity and keeping budget talks in sterile and self-defeating strait jackets.

The budget talks cannot allow the petty bureaucrats of CBO to reject everything happening in the rest of America and score only obsolete models of static and inherently false formulas.

Breakthrough Examples as Proof of the Real Opportunities for Dramatic Improvement in Public Policy

These examples can be extended dramatically. They are designed to create a sense of how widespread the breakthroughs are and why Breakout as a concept is largely a matter of transferring what is already happening outside Washington into public policy in Washington.

Each of these examples could lead to hearings, legislation, town hall meetings, and a variety of positive activities.

1. Theranos is a breakthrough biotech company which may save $61 billion in Medicare and $96.1 billion in Medicaid over the next decade. Its new technology conducts a battery of up to 1,000 common medical tests very inexpensively and from just one drop of blood. It has pledged that each of its tests will cost less than half of the Medicare rate. Today there are 64,980 price controls for medical tests in Medicare. Retail prices for tests are trade secrets so it is impossible to know what Theranos could save for federal employees, Tricare, Veterans Administration, etc. Just holding hearings and accelerating the rate of adoption would save tens of billions. The technology is already in use in a handful of pharmacies and will soon be available at Walgreens nationwide. You can see the menu/prices of tests here (this alone is revolutionary): http://www.theranos.com/test-menu?ref=for_providers

See Breakout Introduction, Chapters 3 and 11 for more on cost-saving health breakthroughs.

2. Booz and Co. have estimated that insurance administrative costs can be driven down from around $29 per member per month to around $5 per member per month. An 80 percent reduction in administrative costs would save substantial amounts in government health programs. The Federal Employee Health Benefits Program would save about $10 billion over the decade by moving to an Administrative Services Only (ASO) plan. Connecticut has moved Medicaid to an ASO plan and saved $41 million in 2012 and expects to save $80 million this year.

3. Moving from the broken “Fee for Service” model in Medicare to the ASO model would save close to $300 billion over the coming decade, according to UnitedHealth Center for Health Reform and Modernization. Those savings estimates assume a 5 year phase in. By the end of the decade, savings would be 5 percent of total Medicare spending.

4. A vastly more powerful step toward dramatic reduction in costs would be requiring that citizens and payers have the right to simple transparency in price and quality. Today the insurance companies insist that they own the data even for the plans that are self-insured. Medical device companies want a tax break but refuse to release price and quality information, claiming they are trade secrets. No single change would do more to reduce costs and accelerate innovation than insisting on a real market with real price and quality information. The savings could literally be several hundred billion dollars every year.

5. Two states (Florida and Texas) have initiated four year degrees for a total cost of $10,000. If every state adopted this program what would the impact be on the student loan program and its projected costs?

6. The revolution in online learning is accelerating. Kahn Academy has had 283 million views on YouTube and its website has six million students visit each month. Kaplan is developing very sophisticated real time feedback systems to maximize the effectiveness of online learning. Duolingo teaches six foreign languages for free and has over 10 million users. Udacity has signed a contract with Georgia Tech to produce a Master's degree in Computer Science for $7,000 (the residential degree costs $70,000 so Udacity is reaching its goal of reducing tuition by 90%). The implications of online learning for pre-school through adult learning have barely been considered. It has enormous power to change the world dramatically.

For more see Breakout Chapter 2.

7. Attaching online learning to unemployment compensation would create a dramatic new worker training program at virtually no cost. The 2012 federal-state spending of $94 billion to people to do nothing could be transformed into an enormous job training and skill development program (see Khan Academy's and Udacity's amazing free offerings as an example). It would be a major step towards rebuilding the middle class by rebuilding the knowledge base needed to succeed. For more see Breakout Chapter 10.

8. Achieving normal commercial standards of competence would save billions. One study by the IBM Center for Business of Government estimated $100 billion a year in saved costs by adopting commercial business practices in government operations. This process by modernizing the civil service, the procurement regulations, and the information systems to the norms of a modern multinational corporation would save tens of billions a year and improve performance. The fiascos of the F-35 fighter overruns and the Obamacare rollout collapse should provide more than enough incentive to profoundly modernize the management and information systems and cut through a 130 year old civil service model that is fossilized. Applying continuous improvement systems like Lean Six Sigma could save hundreds of billions over a few years.

For more see Breakout Chapter 9.

9. STOP PAYING THE CROOKS. This is capitalized because it is so much money it is outrageous, and yet Washington is determined to ignore it. In 2009 Jim Frogue wrote a book by this title outlining for Medicare and Medicaid alone how big the fraud problem is. The estimate at that time was that Medicare and Medicaid combined, as paper based bureaucratic systems, had fraud in the range of $70 to $120 billion a year paid to crooks. That is more than $1 trillion dollars over a decade. Nothing systemic has been done. American Express, Visa, and MasterCard among others have very serious systems for stopping fraud. The fraud and theft are not simply Medicare and Medicaid. Earned Income Tax Credit false payments are in the 25% range because of IRS mismanagement and incompetence. That is an estimated $12 to $15 billion a year--or $132 billion over the last decade to be precise. Food Stamp fraud and mispayments have skyrocketed as the program has grown dramatically larger. Even the government's own website on accuracy lists high error rate programs amounting to about $100 billion a year ($1 trillion over a decade not counting the interest on the debt it would accrue).

For more see Breakout Chapter 8.

10. Dramatically greater revenues can be generated without a tax increase by opening up government lands to oil and gas and mineral development and opening up offshore opportunities to develop oil and gas fields. This makes sense for national security and jobs reasons. It also makes sense for government revenue reasons. Scott Noble of Noble Royalties has commissioned studies which estimate that government opportunities in oil and gas would lead to a $5 trillion increase in the economy over thirty years, a $780 billion increase in royalties to the government and a $1 trillion dollar increase in tax revenue from a bigger energy industry. In other words a sound American energy policy would add $1.78 trillion in government revenue and create hundreds of thousands of jobs while improving our national security and energy independence.

For more see Breakout Chapters 4 and 5.

11. Even more revenue increases would come from a dramatically bigger economy. The number one goal of the current budget negotiations should be to restart the economic dynamism of small businesses and baby businesses (the former are designed to remain relatively small, the latter are launched in the hopes they will grow). The Small Business Committee should bring in small business and entrepreneurial witnesses (including the self-employed) and identify every unnecessary burdensome regulation which slows down job creation and business creation. Today red tape is often a bigger hindrance than taxes in creating jobs. A Small Business Independence Act should be developed with the goal of reducing by 80% or more the regulatory burden on entrepreneurs and small business owners. That would substantially accelerate job growth.

12. Regenerative Medicine is one of the greatest areas of breakthrough in improving human health and creating very high value American jobs, as well as in permanently curing many of the most common and most expensive medical problems. The field is currently crippled by the Food and Drug Administration which requires that regenerative technologies meet the demands of two regulatory paths simultaneously. This means it is almost impossible to bring the technology to market, since it's hard enough to meet the requirements of ONE regulatory track. This is an area where lives can be saved and improved, costs can be reduced, and high value American jobs can be created.

For more see Breakout Introduction, Chapters 3 and 11

13. Self-driving cars will be a reality within a few years. They have enormous implications for infrastructure development, safety, and a host of other aspects of life. The regulatory hurdles to their adoption, however, are quite significant. We should have extensive hearings on how to accelerate this development and how it will improve our lives. For more see Breakout Chapter 6.

Conclusion

There are an extraordinary number of opportunities to improve lives, create jobs, increase government revenue without taxes, balance the federal budget and improve services while lowering costs.
We should be committed to an intense period of becoming the advocates of a Breakout which can move us far beyond the current policy gridlock.

With positive, optimistic ideas that will improve people's lives, we can re-engage the American people in their own self-government and their political process.

We can reach out to the "Pioneers of the Future" who are actually developing the ideas that will change our lives.
We can bring together the "Champions of the Future" who know that this will lead to better lives and who want to help implement the developments of the Pioneers.

We will inevitably be attacked and opposed by the "Prison Guards of the Past" who oppose the changes that may make America better but may harm their interests or privileges. Some of those "Prison Guards" will be entrenched in the Republican Party. Remember that the future has publicists but the past has lobbyists, and sometimes the future doesn’t even have a publicist.

Finally, many Americans today are "Prisoners of the Past" not because they are trapped but because in their own minds they can't imagine a new and better world. Our job is in part to reach them with a message of hope and a program of real opportunity that liberates them from the past and draws them into an exciting and fulfilling future.

For more details, see my new book Breakout.

Appendix: Key Principles for Real Change

Prime Minister Margaret Thatcher: "First you win the argument, then you win the vote."

Albert Einstein (attributed): “The definition of insanity is doing the same thing over and over again and expecting different results".

President (and General of the Armies) Dwight David Eisenhower: "Whenever I run into a problem I can’t solve, I always make it bigger. I can never solve it by trying to make it smaller, but if I make it big enough I can begin to see the outlines of a solution.”

President Abraham Lincoln Message to Congress December 1, 1862: "The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise -- with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country."

Following these principles will lead America to a dramatically better and more desirable future.

Your Friend,
Newt

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