Newt’s World – Episode 814: Federal Budget Spending Priorities

Host: Newt Gingrich
Guest: Richard Stern, Director of the Grover M. Herman Center for the Federal Budget at The Heritage Foundation
Date: February 22, 2025

Overview

In this episode, Newt Gingrich hosts Richard Stern for a deep dive into the complexities of the federal budget process, legislative gridlock over spending and tax cuts, the challenges of “pork barrel” spending, and how historical and current political dynamics shape America's fiscal future. The conversation highlights the tension between institutional inertia and bold reform, often drawing lessons from history to illuminate today's crossroads.

Key Discussion Points & Insights

1. Understanding Budget Legislation Mechanisms

• Regular Spending Bill vs. Reconciliation Bill (03:24–04:45)

  • Stern explains the reconciliation process as a unique, expedited legislative route in the Senate that bypasses the normal 60-vote filibuster threshold, enabling major legislative actions with a simple majority (50 votes plus the Vice President as tiebreaker).
  • Quote:

    "You would think that having control over the House and the Senate means that you would, well, have control over the House and the Senate. But the truth is you need 60 votes in the Senate to be able to clear a normal spending bill... The thing that a reconciliation bill does is it unlocks a magic 50 vote threshold with the vice president as the tiebreaker."
    — Richard Stern (03:43)

  • Reconciliation originated as a tool to align actual and planned budgetary paths, not as a primary vehicle for major policy changes.

• Three Main Budget Vehicles

  • Appropriation Bills: Regular spending, require 60 votes in the Senate.
  • Reconciliation Bill: Expedites certain budget-related legislation via a simple majority.
  • Continuing Resolution (CR): Temporary measures to keep the government running when neither appropriations nor reconciliation have passed.

2. The Looming Threat of Government Shutdowns (06:26–09:11)

• CRs are being extended repeatedly due to congressional deadlock, with another expiration looming (March 14).
• Stern anticipates another short-term extension, because "Congress doesn't seem to have that resolve again, that there is that resolve in the admin... but it doesn't seem to exist within the Congress." (09:11)
• Newt reflects on his experience leading the GOP during the 1995 shutdown, emphasizing its political necessity at the time to show seriousness about balancing the budget.

3. The Challenge of Pork Barrel Spending (10:28–12:28)

• Pork barrel spending remains a critical obstacle, often tied to members seeking projects that benefit their districts at the national fiscal expense.
• Stern references de Tocqueville and warns of the "raiding [of] the public treasury for their own benefit," emphasizing how this dynamic "represents exactly that kind of pork barrel spending... breaking Congress of that habit... is essential." (11:10)
• Emphasizes a fundamental belief: "prosperity comes from the private sector, not from government redistributing wealth." (12:19)

4. Diverging Paths: House vs. Senate Priorities (14:36–18:29)

• Discretionary vs. Mandatory Spending (14:48)

  • Discretionary spending: Appropriations, e.g., defense, regulatory agencies.
  • Mandatory spending: Entitlements (healthcare, welfare), addressed mainly via reconciliation.

• Senate Proposal:

  • Minimal $3 billion in mandatory spending cuts, allows hundreds of billions for border/defense without requiring significant spending offsets.

• House Approach:

  • Requires $1.5 trillion in spending cuts over 10 years before authorizing border/defense increases and up to $4.5 trillion in tax cuts.
  • Quote:

    “The House is following what President Trump has asked for... But again, to unlock the tax cuts and to unlock the border and defense money... you would need to actually get the one and a half trillion of spending cuts.”
    — Richard Stern (16:35)

5. Tax Cuts, Deficits, and Economic Stakes (18:00–19:54)

• Newt warns that delay in passing tax cuts could weaken the economy and the GOP’s 2026 electoral prospects.
• Stern outlines the trade-off: Tax cuts needed for growth, but deficit hawks fear increased debt and inflation if not offset by spending cuts.
  • Quote:

    "...if the tax cuts don't get done early in the year, or frankly, if they don't get done at all, we would see thousands of dollars of tax increases on American middle class families, on American small businesses. That would of course tank economic growth or delay it..."
    — Richard Stern (18:29)

6. Fighting Waste, Fraud, and Systemic Inefficiency (19:54–22:19)

• Gingrich muses that “making America honest again” could save a trillion dollars annually lost to waste and fraud.

• Stern estimates $400 billion in annual losses—$1,200 per family—but suspects the real number is much higher.

  • Quote:

    "On average in a year, the government is willing to admit that some $400 billion is lost in waste... I think you're absolutely right that a more honest capture of that is easily a trillion or more dollars a year."
    — Richard Stern (20:41)

• Fear in Congress of enacting real reform; skepticism rooted in years of unfulfilled calls for action.

7. Historical Analogies and Changing Dynamics (29:41–37:31)

• Comparison of Trump to Reagan and Andrew Jackson—Trump as a transformative, anti-establishment force.

  • Quote (Newt):

    "You now have a president who I think in his first month is already the most consequential president since FDR. And if he keeps going at this rate, he'll presently be the most consequential president after Washington and Lincoln...” (29:41)

• Stern adds that Jackson’s breaking of the establishment enabled America’s rise—parallels drawn with today’s need to confront the entrenched “imperial city, deep state.”

8. Restoring Civic Culture and Education (37:31–38:58)

• Both agree that successful reform must be accompanied by deep public education.
• Stern is optimistic about homeschooling and alternative models ("microschooling"), believing they will help future generations grasp the importance and depth of systemic reform.

9. Advice for Congressional Leadership (38:58–41:07)

• Newt asks Stern for direct advice to Speaker Mike Johnson:

  • Stern urges boldness and communication, to frame the case not just in terms of dollars but as a battle for core values.
    • Quote:

      “Take the case to the American public, make it in terms that are not about the numbers and sense, but are about the values that underlie the numbers in a budget.”
      — Richard Stern (39:07)

• Gingrich closes with guidance from Lincoln, Reagan, and Thatcher: winning public sentiment is crucial for meaningful legislative and societal change.

10. Closing Thoughts

• Stern: "You need visionary leaders... They were there to paint a boundary bold image of what the country meant, of what it can mean and what it can achieve in the future if we have the faith today to take those hard votes and to make those hard decisions.” (41:07)
• Newt emphasizes the need for revolutionary spirit and seizing the “historic inflection point” to achieve enduring reforms.

Notable Quotes & Memorable Moments

• On the importance of resolve:

  "Congress really is a soap opera most of the time, masquerading as a legislative body..."
  — Richard Stern (07:04)

• On pork barrel spending and public virtue:

  "...convincing voters that government spending always comes at your expense, whether it's your tax dollars or it's what triggers inflation, that's what's essential here."
  — Richard Stern (12:14)

• On the imperative for civic education:

  "That homeschooling revolution is going to ensure... the generations of Americans to come will really understand all of these things, the level of depravity, frankly, of the deep state."
  — Richard Stern (38:40)

• On the role of leadership:

  “First you win the argument, then you win the vote.”
  — Newt Gingrich (citing Margaret Thatcher, 40:45)

Timestamps for Key Segments

• Intro & Reconciliation Explanation: 02:10–06:22
• Shutdowns, Congress as "soap opera": 07:04
• Pork barrel spending: 10:28–12:28
• House vs Senate Budget Approaches: 14:36–18:29
• Tax cuts vs. deficit tradeoff: 18:00–19:54
• Fighting fraud & “Making America Honest Again”: 19:54–22:19
• Historical parallels (Jackson, Trump): 29:41–37:31
• Civic Education & Future Generations: 37:31–38:58
• Leadership Advice: 38:58–41:07
• Closing: 41:07–42:31

This episode is rich with historical insight, pragmatic analysis, and passionate calls for bold, visionary leadership to tackle America's fiscal and political challenges. Those interested in how Congress might respond to a transformative presidency—and what’s at stake for the country—will find this a compelling, instructive conversation.