Question: What thinkers influenced your views on economics?

Dick Armey: Well, I'm a free market economist and of course in terms of real living economists during the time that I made the transition, Milton Friedman and Thomas Sowell were probably the two most important people that I worked with. But historically, I followed the Austrian school and that would be von Mises and Hayek. Clearly, I've studied all the economists in the history of economic thought and I consider the Austrians the best.

Also, I was largely influenced by a unique American contribution called Public Choice Theory that was pioneered by Dr. James Buchanan in the state of Virginia. So, I would say that my intellectual gantry is substantively the Austrian School of Economics and methodologically, as I apply it to public policy, The Public Choice Theorists. It's a fairly good grounding in preparation for a career in politics, or in office.

Question: What caused the recession and how can we fix it?

Dick Armey: Well actually, when we saw the magnitude of the financial catastrophe, it was really quite alarming to me. I just couldn't imagine how could it get so big? So, I went back and I reviewed the history of economic analysis and I kind of hit on, I got an important question, when was the last time I did something foolish with money? Because basically, what you had was a lot of people making foolish, irresponsible decisions with money. And the last time I did something foolish with money was the last time I had easy money, which stands to reason.

So, I take a look at the last two or maybe three decades of too much, too easy money, plus a government that kept prodding bankers, in particular in the home building industry, into bad decisions. And so basically I was drawn to even a firmer understanding that the Austrian School was essentially their understanding of prices and then in particular the price interest rate as an allocative function.

What happened is we had kept interest rates too low for too long and it had allocated capital into what was essentially a consumer good use rather than the capital goods use. Compare that, for example, with the extremely important boom period we had in the '80's when capital was allocated into the new electronic sector of the economy, the enormous growth in industry and jobs that was pursuant to that, what we basically created was this massive big housing bubble and it was funded by banks that were irresponsible because of “too big to fail.” They thought the government would bail them out and the government eventually did. Fannie Mae and Freddie Mac were government sponsored enterprises that were just sort of running amuck with the belief the government would bail them out, and eventually the government did.

And then I think the innovation was that mortgage backed bonds which enjoyed, for a while, the benefit of lax bond rating agencies that really didn't understand what was inside the bond and gave them too high a ratings and a false sense of security, so there was a lot of irresponsibility to go around.

Essentially from the public sector prompting it and the private sector, Armey's Axiom is, "In the private sector all bad habits are habits learned from the public sector."

What happened was with President Bush, and particularly his big bailout, and the Republicans with their free spending, “buy myself a victory in the Kentucky race with the appropriations process,” they became the part of Big Government. In fact, we even started hearing this concept, "Big Government Conservatives" which to many of us was quite a baffling notion. Then, of course, they lost and the Democrats, the real professionals at big government, got elected and now they're winning. And so you see now the emergence of a real awakening of small government conservatism, not within the halls of Congress or legislative bodies, but within the streets of America and this is this enormous uprising you see from all over this country with this idea, "We've got to try to reform one of the two parties, most likely the Republican Party, into being once again the party of small government conservatism.”

Question: Why did the Republicans lose in 2008?

Dick Armey: Well, the biggest factor -- the Republican Party lost because, first it vacated any commitment to small government conservatives and budget issues, you know, holding the line on spending and so forth. And then they elevated an aggressive assault on the social issues. And they got on the wrong side of these issues most often.

If in fact you take the social conservative and the economic conservative and you combine them, as Reagan did, as we did with the Contract, and resistance to the power of the state, you've got a happy coalition of people that can be successful and attractive to the voters. But if in fact, you go, as they did under the failing final years of the Republican majority, "We're going to expand the power of the state in order to impose our social values on the community," then of course, they even lost the evangelicals. They get confused by that and say, "Wait a minute, I didn't think we were about making the government bigger and stronger and more dictatorial in our lives. We thought we were about our freedom and our liberties, and so forth."

They basically got too aggressive on social policy and too complacent on economic policy and they were basically losing both of the two major components of their prior big tent that they had with Reagan that they had with the Contract. People got disinterested in them and disappointed in them and of course that set the stage for the Democrats to come rushing in with their big victory, mostly born out of disappointment in the Republicans.

Question: On which social policies did the party become too aggressive?

Dick Armey: Well, obviously the first one was this heartbreaking issue called Terry Schiavo, down in Florida. Here you have a lady on a life support system contesting between her husband and her parents on whether or not that should continue, and you had all of a sudden a resolution passed through the House, through the Senate, signed by the President that says, "The federal government will dictate to the Courts in Florida what should be their judgment." So, what they did with this, first of all they got involved in a family's private business. What's the federal government doing in that? Secondly, they vacated their historic notion of resistance to judicial activism, and they vacated the historic commitment to federalism, "Let the states run the state's business and keep the federal government out of it." They were historically opposed to mandates by the feds to the states, and so they said, "Well if a federal legislative body, and executive branch dictates to a state Court what their judgment must be, then all of these things are fine." Well, this was way, way heavy-handed and expanding the power of the state into the family's business, into the state's business at the federal level.

The other one that was frankly very difficult intellectually for a lot of these folks to grasp was the whole issue of homosexual marriages. In '96, because of an aggressive thrust by a governor in Massachusetts, and a Mayor in San Francisco trying to use the power of the state to impose homosexual marriage on the community, the Republicans who resisted that prospered electorally. They came back two years later and they said, "You know that was a good issue for us, let's start a new fight." So, they jumped from the defensive side of the ball to the offensive side of the ball and said, "We will expand the power of the state in order to give definition to marriage."

Well, all of a sudden, they think their issue is the homosexual marriage issue, but the issue is really in this case, are we resisting expansion in the power of the state for social policy purposes, or are we trying to advance the power of the state for those same purposes and different outcomes? And, of course, they lost again. So, this is just simply, again, not understanding the core value that binds conservatives together, resistance to growth of the power of the state and defense of individual liberty.

Question: Can the Republicans win in 2010 and 2012?

Dick Armey: They can. President Bill Clinton in '93 and '94 became a very big and scary disappointment. He built a stage – we got entrepreneurial and we jumped up on that stage with a creative vision for America and public policy for America. If the Republicans can recognize that this administration is building faster and even bigger stage of discontent and worry and get up on that with new ideas, new commitments to big notions of freedom, liberty, and small government restraint, responsibility, respect, they can do that. And the Democrats know that.

Right now, the Democrats see the power of small government conservatism as the big movement in America more clearly than the Republicans do. Republicans right now are still, like I say, wallowing around, entertaining themselves with their little "Itty bitty big tent" theory that requires very little, less commitment than candidate recruitment. “Let's go find ourselves a liberal, run them as a Republican and then we're sure to win.” That's a sure way to lose. The fact of the matter is, you're not going to be attractive to the voters you need, the swing voters.

By the way, let me just point out that in New Jersey, just across the river from New York, the small government conservative movements, when they saw a Republican that could win and beat the very liberal Democrat, they abandoned their candidate and went there. So, they can be very practical in how they cast their votes if they see a chance for a victory.

Question: Can Republicans only win by becoming more, not less, conservative?

Dick Armey: No, no. The center of politics in America today is small government conservatives, the fiscal conservatism. That's the center's stake in the big tent. Love of individual liberty. Well, the Democrats are scared and so they're taking or freedom away to control our own healthcare? So, what the Republicans need to do is understand the center. Basically what they want to do is they want to have a right-wing of the Republican Party and a Left-Wing of the Republican Party. They don't want the center body, which is where all the voters are standing, on middle ground. So, the center of political values in America, policy positions in America is small government conservatism. And what the Republicans need to do is say -- and I’ll give you an example. Mike Castle in Delaware is a good fiscal conservative. Now, the Evangelicals are never going to love him on social issues, but he will be elected the next Senator because he stands on that center ground of fiscal conservatism.

So, again, if he stands there and says, "I'm going to defend against irresponsible spending, I'm going to try to fight against the unreasonable and unnecessary growth of power of government and defend individual liberties." He stands on safe ground. He's hardly a right-wing conservative, for example in the mold of Dick Armey. But he can stand comfortably on that ground. And that ground is the center ground.

Question: How can the GOP appease both its evangelical and non-evangelical members?

Dick Armey: You really need to get these social issues to the back burner. And I happen to be an evangelical. And I'm very serious in my appreciation of the Lord Jesus going to the cross for me personally. And I am very committed to the life of the unborn. But, when I ran in 1984, I met with the head of the Texas Right to Life and he said, "What's your position on right to life?" And I stated my position and he says, "That's great, we love you're for it, now keep your mouth shut about it. You don't need to talk about these issues. Don't get them out there in front. Talk about the economic issues and what you need to do." Certainly I wouldn’t suggest to anybody that they should not have a clear resolve on this. But what you have right now is two competing theories of big tent. And it's kind of interesting to watch this. There is right now what I call, "The itty bitty theory of Big Tent," which is, we need Republican candidates, and the whole tent should be defined by the behavior of our candidates. And we need some candidates that act like Ronald Reagan, and some candidates make it clear they are willing to acquiesce to the liberal’s agenda.

So, this is what I would call the "little schizophrenic Tent," and it's just going to confuse the voters, it's not going to inspire them and they're just going to go away.

Or you can take the massive big tent notion which is, "We are a party that's committed to policy principles with the wonder of the Constitution, the magic of individual liberty, the restraint of big government, and these principles will govern our behavior. And there is room in this tent for everybody irrespective of party labels and things of this nature. Nothing superficial about us, this is a very substantively defined big tent." That is the tent that the Republicans have always won in, in the past and can win in the future. They will not win in the "Itty bitty little tent."

Question: Do you see a strong leader emerging within the GOP?

Dick Armey: Well, there are a great many opportunities for that leader to emerge. And by the way, when the Republican Party has itself embraced this concept, it has prospered with the voting electorate.

Well, I think right now, for example, Sarah Palin is a possibility, although you have to understand, in politics, which is about 50% personality contest, or beauty contest, or talent contest, people of deep substance can be at a disadvantage. But Sarah Palin's out there, certainly Governor Pawlenty is a very attractive option out there, Governor Romney, Governor Haley Barber from Mississippi. There are a great many people that can possibly emerge as leader. But they cannot win the embrace of these folks unless they show a deep-seated commitment to the conservative, small government principles.

I'll give you an example. George Herbert Walker Bush, before you were born, won the Presidency, which was in effect, Ronald Reagan winning a third term. He quickly became a bitter disappointment to this same block of voters when he raised taxes in 1990 in violation of his tax pledge of 1988; that "Read my lips. No new taxes." He lost his Presidency, his chance for a second term when he raised those taxes in the fall of '90. That created this large of group of disappointed voters who what? They went to Ross Perot.

Now everybody said, well Ross Perot came in as a spoiler and took George Bush's winning chance away, but that's not true at all. Those voters were made available to Ross Perot by George Bush in 1990. So, bang, they were left with that. Then there was the confusion that had Clinton – all of a sudden, these same voters are reawakened by the Contract and they come back to the Republican Party and supported the Contract. Now what you see is those same voters got disillusioned with everybody and stayed home. Barack Obama wins the election and then the next election, which you are going to see is a reawakening of these voters on behalf of the Republican Party if the Republican Party can once again comprehend it and come home to these voters. They can win a lot of elections with these folks.

Question: Can Palin ever unite and not divide voters?

Dick Armey: Yeah. First of all, I feel bad for Sarah Palin. First thing you've got to understand about Sarah Palin is she is her own person and she made her position in life on her own terms. She wasn't somebody's wife, she wasn't somebody’s daughter, she got out, and she won the governorship of Alaska – no small task all on her own with nothing paving the way for her. So, in some respects, she's everything that Hillary Clinton pretends to be; an independent woman making her own way on her own terms.

Now, her problem was, she became a Vice Presidential candidate. This is a fatal place to be. Now what happens, we saw the same thing years ago with Dan Quayle. As soon you become the Vice Presidential candidate, a new attractive face on the block, and you have a great success like her first acceptance speech at the convention. The Presidential candidate's staff begins to sabotage you. Because the last thing they want is the new Vice Presidential candidate to outshine their guy.

So, she was subjected to all of the difficulties that naturally befall in politics; which is a curious form of juvenile delinquency – so she got battered pretty badly. She has to come back from that and make her own way again on her own terms and not be – and I don't know whether it will be possible for her to do so. She is so demonized by so many different forces; it’s very hard to come back from that. Right now, the fashionable thing is to be intellectually and morally superior than those Palin supporters, and fashionableness has a lot of influence over people's behavior politically.

Governor Pawlenty, for example, has a chance to make a fresh new start without that difficulty that she had to experience. I think the new fresh face – this is another thing, nobody can look at Pawlenty and say, "Well, you were a part of that gang that broke our heart just a few years ago." So, he's got a great opportunity to make a good start. I don't know what happens with Mitt Romney. One of the problems in politics is they're so shallow and short-sighted. If you didn't win four years ago, it is presumed that you can't possibly be the guy that can win now. I guess they forget Ronald Reagan losing in '76 and coming back and winning in '80.

So, there are a lot of people, but they're going to have to make a new and hard revival of their standing with people and they can do that within this context of the new energy in the politics in America, the dominant energy in politics in America is a small government, conservative movement.

Question: Since Iraq, have Republicans lost voters' trust on foreign policy?

Dick Armey: Yeah. I think – and I argued with President Bush going into Iraq. I saw no need to go in there. Small government conservative basically says this. In order for the government to take a course of action, there must be two conditions that must be met. First, it must be the right thing to do, and secondly, it must be the necessary thing to do.

It was possible that the Iraq war might have been the right thing to do, I don't think so, but it's possible because it violated a fundamental tenet of American history. We don't make attacks on nations that haven't first provoked us by attacking us. Then secondly, it wasn't necessary. And I talked to the President and I said, "Mr. President, if you get involved in this war it's going to define your whole Presidency, it's going to consume all your time and resources, you'll never be able to get back to your domestic policy agenda, and you're going to end up being a big, bitter disappointment to even your own supporters." I think that's exactly how it turned out.

The Democrats always had the argument that, "We shouldn't have been in Iraq, but we should have cleaned out Al Quaeda out of Afghanistan. They got out of Iraq and now they're moving into Afghanistan and are finding their own difficulties there. The problem is, we must defend ourselves against international aggression and terrorism, but we need to do that in a manner that is smart. We're talking about what's got to be the most precious thing in the world we have to spend; the lives and limb of our children. The most precious people in the whole world to us are our children. We don't put them on a field of battle without first making definitive ownership of that field. With our resources, we should never deploy one single young American person onto any field of battle unless our presence is first definitive. None of this moving insufficient troops around the board and so forth. And what right now what I believe to be the fatal and devastating history of the Bush adventure into Iraq is now history and now the nation is coping with, "All right, now how do we deal with another rather bumbling, stumbling President in a new adventure in Afghanistan." And I think President Barack Obama is becoming as equally frightening and disappointing to the American people in Afghanistan as Bush had been in Iraq.

Question: What is a specific winning strategy in Afghanistan?

Dick Armey: Well, insofar as to say, all right, we're going to defend America from international terrorism by cleaning Al Quaeda. Let's say, we think Al Quaeda is a place to clean them out is Afghanistan, we're going to go in there, our presence is going to be definitive, we're going to go in, we're going to get the job done, and we're going to get out of there. We're going to do this and we're going to have an implementation of deployment that is so overwhelming that our people are at minimal risk for the loss of their life and limb.

You have to keep your troops safe. Our superiority is our technology. You must have a full deployment of our technology in order to let our troops on the ground be mission effective and as safe as they can possibly be. Right now, we've got out folks out wandering around in the desert over there in the worst kind of danger without the proper backup, without the proper equipment. We're losing lives everyday with very little mission accomplishment that attaches through the terrible heartbreaking cost of that loss of life. There needs to be a much more expansive effort, or get out. Either get in, get the job done, or get out of there and fight them on another field.

Question: What specific stance should we adopt toward Iran?

Dick Armey: The first thing I would do is let them know that we will brook no nonsense from these folks. We're going to find out the truth of the matter with respect to this. Understand, Israel is not going to sit around and wait until the Iranians have all these weapons and all this capacity to attack them. And understand that Israel can have a definitive impact here and let them know that we are not going to be fooling around with you about this. We don't trust you, we want definitive proof of good intentions and disarmament, or we will in fact, in alliance with Israel, or whomever, take definitive action.

The fact of the matter is, Iran has always hoodwinked our State Department and our efforts in the past. We should let them know, no nonsense now, we don't like you, we don't trust you, and we don't ever expect you to ever be reasonable people in the world scene. But we do believe that we have the capacity to control your behavior and to disarm you from the most insidious forces of mass destruction and we are prepared to do that if you don't come to terms.

Question: Is the “Tea Party” movement factionalizing the GOP?

Dick Armey: No. Not at all. I think a lot of people don't understand this at all. First of all, understand that in the state of New York there has been a very active Conservative Party for decades. It elected Senator Buckley in the 70's. And if you look at the history of Congressional races in New York and probably a lot of other races I've seen it through two Congressional races, the Conservative Party oftentimes nominates a person. Historically, they've been the good sports that have been willing to step back and throw their support to the Republicans in the interest of stopping a more liberal Democrat from getting into office.

Now what happened in New York 23rd, was a handful of people got into a backroom, and nominated a Democrat. And the first thing we heard, for example in my shop at Freedomworks, is from our grassroots activists in the north country in New York. They said, "The Republicans have just lost this race. This woman can't possibly win this race. She would not have won a Republican primary."

[Question: Why?]

Because she was too liberal. There's no way she would have won a Republican primary.

So, what happened was, the Conservative Party said, "Oh, my gosh, the Republicans are about to lose this race." And they fielded a candidate. So, what happened was, there were three candidates from three different parties in the race, two liberals in the Republican and Democrat nominees, and one Conservative.

The Conservative candidate, although he was a first-time candidate, quite naive and innocent in the ways of politics, he grew so fast in his standing with the electorate, that she got knocked out of the race. Once she got knocked out of the race, what did she do? She made a deal with the White House and Chuck Schumer and endorsed the Democrat.

So, the first validation that I see in this is, our grassroots activists called that correctly, didn't they? They did in fact nominate a Democrat. And the Conservative Party failed to win that election.

Now, this is a short-term victory for the Republicans. They can celebrate it all they want because a year from now, the Democrats will lose that seat because the Republicans will have an open primary, they'll nominate a conservative Republican, or at least a middle of the road Republican, and that person will win the race back from the Democrat. So, that Democrat will only sit in that office for about a year.

And when that happens, the conservative party will once again play their role of being in support of their principles and working the Republican nominee a little bit more to their perspective on public policy and then helping him beat the Democrat.

Question: Was the candidate “too liberal” for the party fiscally or socially?

Dick Armey: No, that was a very – social issues were so much – I was up there. I mean, socialists were just simply not a part of the debate in that race. The Democrat candidate, when it was just the two of them in the race, the Democrat was running against her as a big spender. And so, her first transgression was, she was for big budgets, she was for cap and trade, she was for card check, the mandatory union plan that denied workers a secret ballot. On economic issues – and I saw no discussion of social issues in that race. On economic issues, she was so liberal that even the Democrat was running against her for being too liberal.

Question: How can the Tea Party movement help Republicans?

Dick Armey: Well, at some point, everybody who is seeking office, or wanting to hold office, at some point they have to respond to the voting constituency whose votes they want. And right now, the Republicans who are in office are kind of confused about that. This Tea Party Movement which is what you see right now is most visible at grassroots conservatism, is a thousand points of entrepreneurial light in advocating small government constructivism has popped up all over the country and it is the most genuine, largest grassroots movement I've ever seen on particularly the economic issues.

The officeholders are starting, "Oh, I get it. If I want to be reelected, I better be responsive to what these guys are telling me." That's what all the energy – there’s no greater source of energy in public policy discourse and politics today then the small government conservatives.

The orthodox Republican Party is dispirited and confused and going through a massive identity crisis where they're trying to basically ask the questions, "Who are we, and what are we doing here?" The Democrats are inflicted with probably the most severe case of buyer's remorse they've ever had, even worse than with the Clintons in '93 and '94, and they have no energy to bring to the field. So, the field is right now is dominated by the extremely big tent of small government conservatism, which has Democrats, Republicans, Independents, Libertarians, Evangelicals, people of all stripes and color and religious orientation, and they're all happily joined in resistance to a growth in the power of the state that they find frightening for their personal liberties.

Question: How can the Republican Party win over young and minority voters?

Dick Armey: Well, first of all younger voters are ideological. They're idealists. They want you to stand for something. They don't understand pork; they don't need pork. So, to them, it's not about, "All right, what's in it for me?" It's, "What do you stand for?"

When the Republican Party has stands for a vision of freedom and independence from the intrusions of big government, individual’s opportunity to be creative and entrepreneurial. Look at how many college dropouts created a new and wonderful product in the 80's because they had a world where you could get the money for your investment and your work would be honored. And that was a big draw to the – Hispanics are the same thing. They are an entrepreneurial group of people and they could and should be quite available to the Republicans if the Republicans hadn't, once again, taken an overly aggressive big government approach to immigration.

If they had remembered that Ronald Reagan stood there and said, "Mr. Gorbachev, tear down this wall." Instead of going to San Diego and saying, "I'll tell you what, let's build a wall." They offended the Hispanic voter. Bless their heart, I love the Hispanic people, they have got such a great entrepreneurial energy. But you know, Armey's Axiom is, "You can't call her ugly all year and expect her to go to the prom with you." So, a lot of natural Republican constituent votes in the Hispanic community were lost simply because people said, “I'm not going to vote for them, they don't like me,” because again, they had a short-sighted, politically defined view of immigration that had a mean spirit to it. And the Hispanics, I think they took exactly the correct approach to the Republican. Why should I vote for these guys with their attitude towards me?

Get expansive about things that are bigger than ourselves. This is a great free land built by immigrants who had entrepreneurial opportunities and used them to make their families better off. And let’s have these doors open and then let’s civilize the government. Make the INS an agency that isn't mean, cruel, and indifferent. Make it one that is a service in the lives of real people wanting to be free, as it should be.

So the Republican has had a failed political vision and the government fails in its duty to a very large and exciting, energetic immigration population for this country.

Question: Can the party ever bring back African-American voters?

Dick Armey: Well I think they could. Yes. This is a very interesting thing because you've got to remember the Republican party was born with the Emancipation Proclamation. It's very difficult to reach out to African voters, but it starts with just the beginning of making the effort.

In the end, we are all the same. We have the same dream for our children, and we all love freedom. We all love independence. The biggest problem that Republicans have in reaching African voters is gerrymandering. The Democrats have by and large sequestered the African-American voter into areas where Republicans just simply don't hold office because they've gerrymandered the vote. And it's a tough issue for them. It's again; Hispanics are the easy opportunity for Republicans to get back on the ground, they ought to stand on with the Hispanic community. African-American communities are much harder, but it is certainly not a community that isn't available to our value if we speak about values. Things that are great and sacred and important to Americans.

Recorded on November 11, 2009
Interviewed by Austin Allen