Skip to main content

Meet John McCain's Economic Brain: Phil Gramm

  • Author:
  • Updated:

Phil Gramm gave his first political interview in years to Stephen Moore in the Wall Street Journal's weekend edition. The interview is clearly meant to reassure conservative voters about Republican presidential candidate John McCain. What separates McCain from Obama, Moore writes, is that although neither of them know much about economics, "McCain has the good sense to know where to turn to for first-rate advice."
Gramm was something of a hero to a lot of conservative activists. He cut his teeth as a Reagan Democrat in the House of Representatives, championing Ronald Reagan's tax cuts in the early eighties. Later he switched allegiances to the Republican party and got elected to the Senate. With the GOP victories in 1994, Gramm became the chairman of the powerful banking committee. Moore writes that he played a "decisive role in nearly every fiscal conservative victory in the 1980s and 1990s."
But that was then and this is now. Gramm is now 65 years old, and he vanished from the political stage six years ago when he took a high-rolling investment banking job at UBS. So what does Gramm offer voters now?

He's a skeptic of financial regulation."Mr. Gramm's biggest worry about Wall Street is that, in the wake of the Enron scandal and now the subprime meltdown, the reguatlory pendulum has swung too far toward more government meddling--which could put America's financial-market supremacy at risk," Moore writes.
He wants cuts in the corporate tax."Mr. Gramm urged Mr. McCain to add a corporate income tax cut (to 25%) as part of his economic package."
Spending cuts and deficit reduction.Gramm says that McCain will win the wars in Iraq and Afghanistan, and then cut the defense budget by making major procurement reforms. The savings will be used to reduce the deficit, and strict spending limits put in place.
That sure sounds great but we're skeptical of any promise that begins with a project as big as winning wars. It's like Dick Fuld promising that Lehman Brothers will be totally profitable again once the credit crisis is over.
CEOs Are Underpaid. "Today, CEO decisions about whether to acquire or not acquire a company, get into a market, get out of a market, where those decision means billions of dollars, is it surprising that people are willing to pay tremendous amounts of money for people who make those decisions right?"

The Return of Dr. No
[Wall Street Journal]