Newt Gingrich’s dubious claim of a ‘normal’ no-interest charge account at Tiffany
Updated 7:00 p.m.
NEWT GINGRICH: You know, we don't do elaborate things.
BOB SCHIEFFER: Did you owe a half-million dollars to a jewelry company at one point?
GINGRICH: We had a revolving fund.
SCHIEFFER: Well, what does that mean?
GINGRICH: It means that we had a revolving fund. It was a –
SCHIEFFER: I mean, who buys a half-million dollars worth of jewelry on credit?
GINGRICH: No. It's a — go talk to Tiffany's. It's a standard, no-interest account.
SCHIEFFER: How long did you owe it?
GINGRICH: I have no idea, but it was paid off automatically. We paid no interest on it. There was no problem with it. It's a normal way of doing business.
SCHIEFFER: Well, I mean, it's very odd to me that someone would run up a half-million-dollar bill at a jewelry store.
GINGRICH: Well, go talk to Tiffany's. All I'm telling you is we are very frugal. We, in fact, live within our budget. We owe nothing.
— Exchange on CBS’s “Face the Nation,” May 22, 2011
Former House Speaker Newt Gingrich’s claim of being “very frugal” reminded us of this Reliable Source item from 1999:
When Newt and lady love Callista Bisek shared dinner at the Old Angler's Inn in Potomac Saturday night, he ordered the priciest item on the wine list — a $450 bottle of 1983 Chateau Latour. That's twice the price of the restaurant's next most expensive wine — a $220 Opus One Baron de Rothschild 1996 from California's Mondavi Vineyard.
Unfortunately for Gingrich, he overpaid — the 1983 was a mediocre year for the Latour vineyard. But perhaps he learned his lesson from overpaying for so-so wine and now he’s frugal?
We’re not sure. But we are also puzzled by his claim that he had a “standard, no-interest account” at Tiffany & Co. The disclosure filings that Gingrich’s third wife, Callista, provided to the House of Representatives when she worked for the Agriculture Committee listed debts to Tiffany of $250,001 to $500,000 on a “revolving charge account” for two straight years. (The disclosure forms also show debts of $15,001 to $50,000 to American Express.)
Would Tiffany really charge no interest for that period of time on that amount of money?
As Gingrich urged, we tried first to talk to Tiffany. We e-mailed and called three different spokesmen in the New York headquarters. One spokeswoman curtly said they were aware of Gingrich’s comments and they would try to respond. But so far, we have received no answer or explanation.
Then, we looked at the current installment credit application form posted by Tiffany on its Web site. (Please see update with comment from Tiffany here.) That form shows an annual interest rate of 21 percent for the state of Virginia, where Gingrich and his wife live. That interest rate is charged if you do not pay the balance off in full within 25 days after the close of each billing cycle.
That would be a hefty interest charge in a year—about $50,000 on a $250,000 loan. Gingrich’s wife’s filings cover the 2005 and 2006 calendar years, and indicated the couple at that time had between $1 million and $2.5 million in assets.
The filings also certainly suggest that the Tiffany bill was not paid off every month in full, since the same figure is listed for two years straight. (Callista Gingrich then left the staff of the House Agriculture Committee, and was no longer required to file a disclosure statement, so it is unclear whether or when the loan was paid off.)
We checked with credit-card experts. They said Gingrich’s comments made little sense.
“It doesn’t sound plausible to me,” said Ben Woolsey, director of marketing and consumer research at CreditCards.com. “Store credit cards almost never carry these kinds of terms, and it is highly unlikely for an exclusive retailer like Tiffany’s.”
Some department stores, such as Sears, might offer a few months of “same as cash” credit for buying major appliances. But Woolsey said a store like Tiffany is not going to offer zero-interest credit for purchases of jewelry, given the type of clientele it attracts. “Maybe with Zales, but not with Tiffany’s,” he said.
John Ulzheimer, president of consumer education at SmartCredit.com, said Gingrich’s comments made sense only “if he had some sort of no-interest grace period. You can't revolve a balance and not pay interest unless there is a zero percent interest rate. Carrying a balance of up to $500,000 and not paying interest is anything but ‘normal.’ ”
However, he added that Tiffany “isn't your normal retailer, and upscale retailers are notorious for cutting special deals with VIPs like entertainers, athletes, and political figures.”
We queried Gingrich’s spokesman, Rick Tyler, for further explanation but as usual did not get a response.
The Pinocchio Test
Gingrich’s claim that he had a “standard, no-interest account” as part of the “normal way of doing business” appears highly dubious. Tiffany does not appear to provide such a revolving line of credit account to regular customers. And Callista Gingrich’s disclosure documents clearly show the debt was carried for at least two years.
So either Gingrich and his wife paid high rates of interest on their Tiffany’s debt — or they received a special deal because of his political prominence. The fact that Tiffany won’t say a word — after Gingrich said to “go talk” to them — certainly raises questions.
Given the facts at hand, under the “reasonable-man” standard, Gingrich earns three Pinocchios for his statement. If new facts come to light, we could adjust this ruling.
UPDATE: Tiffany's responds. Please see this update.