Phil Gramm

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William Philip Gramm
United States Senator from Texas
In office January 3, 1985 – November 30, 2002
Preceded by	John Tower
Succeeded by	John Cornyn
Member of the U.S. House of Representatives from Texas's 6th district
In office January 3, 1979 – January 5, 1985
Preceded by	Olin E. Teague
Succeeded by	Joe Barton
Born	July 8, 1942 (1942-07-08) (age 66) Fort Benning, Georgia
Nationality	United States
Political party	Democratic (1978–1983) Republican (1983–present)
Spouse	Wendy Lee Gramm
Alma mater	University of Georgia
Occupation	Economist

William Philip Gramm (born July 8, 1942, in Fort Benning, Georgia, USA) is a US politician, who has served as a Democratic Congressman (1978–1983), a Republican Congressman (1983–1985) and a Republican Senator from Texas (1985–2002). He was a senior economic adviser to John McCain's presidential campaign from the summer of 2007 until July 18, 2008.

[edit] Early life and university career

Gramm was born in Fort Benning, Georgia on July 8, 1942, and grew up in nearby Columbus.^[1] Soon after his birth, Gramm's father Kenneth suffered a stroke and was partially paralyzed. He died when Gramm was 14. Gramm's mother, Florence Gramm, worked double shifts as a nurse to supplement the veterans disability pension. Gramm attended public schools and the University of Georgia, graduating in 1964.^[1]

Gramm received his doctorate in economics from the University of Georgia in 1967. He then taught economics at Texas A&M University from 1967 to 1978.^[1] In addition to teaching, Gramm served as a partner in the economic consulting firm Gramm & Associates (1971–1978).

[edit] United States House of Representatives

In 1976, Gramm unsuccessfully challenged Texas Democratic Senator Lloyd M. Bentsen, in the party's senatorial primary. Then in 1978 Gramm successfully ran as a Democrat for Representative from Texas's 6th congressional district. He was reelected to his House seat as a Democrat in 1980, and again in 1982.

Following his 1982 reelection, Gramm resigned his House seat on January 5, 1983, forcing a mid-term special election. Gramm ran in that election on February 12, 1983 to fill the vacancy that he had created, but as a Republican. Winning, he became the first Republican to represent the district since its creation. After he left the House the seat was retained for the Republican party by Joe Barton.

[edit] United States Senate

In 1984, Gramm was elected as a Republican to represent Texas in the U.S. Senate. He defeated Congressman Ron Paul, former gubernatorial nominee Henry Grover, and several other contenders in the primary. He then faced the Democratic nominee, State Senator Lloyd Doggett of Austin in the general election for the right to succeed retiring Republican Senator John G. Tower. Gramm polled 3,116,348 votes (58.5 percent) to Doggett's 2,207,557 (41.5 percent). Gramm was the first U.S. Senate candidate in the history of Texas to receive more than three million votes.^[2]

Gramm served on the Senate Budget Committee from 1989 until leaving office in 2003. Gramm and Senators Fritz Hollings and Warren Rudman devised a means of cutting the budget through across-the-board spending cuts if deficit-reduction targets were not met. They were successful in making the Gramm-Rudman-Hollings Act law, although portions were ruled unconstitutional. In the years following the passage of the Act, other sections were largely superseded by other budget-controlling mechanisms.

In 1990 Gramm failed in an effort to amend the Iraq International Law Compliance Act of 1990. An earlier amendment to the act, the D’Amato Amendment, prohibited the US from selling arms or extending any sort of financial assistance to Iraq unless the President could prove Iraq was in “substantial compliance” with the provisions of a number of human rights conventions, including the genocide convention. After reading the D’Amato Amendment, Gramm introduced his own amendment to counter the human rights sanctions in the D’Amato Amendment. Gramm’s amendment would have allowed the Bush administration to waive the terms of the D'Amato Amendment if it found that sanctions against Iraq hurt US businesses and farms more than they hurt Iraq.^[3] In the end, the bill passed the Senate without Gramm's amendment only a week before Saddam Hussein invaded Kuwait.

Gramm won his second Senate term in 1990 with a victory over Democratic State Senator and former Fort Worth Mayor Hugh Parmer. Gramm polled 3,027,680 votes (60.2 percent) to Parmer's 1,429,986 (37.4 percent), again receiving more than three million votes.

Between 1995 and 2000, Gramm was the chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. During that time he spearheaded efforts to pass banking deregulation laws, including the landmark Gramm-Leach-Bliley Act in 1999, which removed Depression-era laws separating banking, insurance and brokerage activities.

Gramm at a campaign Nashua, New Hampshire in 1995

As a senator, Gramm often called for reductions in taxes and fraud in government spending. He employed his "Dickey Flatt Test" ("Is it worth taking it out of Dickey's pocket?") to determine if federal programs were worthwhile. Richard "Dickey" Flatt owns a family run printing business started by his father and mother in Mexia, Texas, and is a longtime Gramm supporter".^[4] In Gramm's eyes, Flatt embodied the burdens that a typical Texas independent small businessman faced in the realm of taxation and government spending.

Gramm ran unsuccessfully for the Republican Party nomination in the 1996 presidential election, for which he had raised $8 million as early as July 1994.^[4] Although he began the race with a full war-chest and tied for first place with Dole in the 1995 "non-binding" Iowa Straw Poll, he finished 5th in Iowa's caucuses and withdrew from the contest on the Sunday before the New Hampshire primary. He threw his support to senatorial colleague Robert J. Dole of Kansas. Gramm, a proponent of free trade, also lashed out at Republican Patrick J. Buchanan, arguing that Buchanan was a "protectionist."

After exiting the presidential race, Gramm defeated Victor Morales of Dallas in November 1996 to win his third and final term in the Senate.

Gramm was one of five co-sponsors of the Commodity Futures Modernization Act of 2000^[5]. One provision of the bill is often referred to as the "Enron loophole" because some critics blame the provision for permitting the Enron scandal to occur.^[6]. Some argue^[who?] that it is significant that Gramm's wife, Wendy Lee Gramm, was on the board of directors of Enron when it collapsed, and she was named in many of the Enron shareholder lawsuits.

In December 2002, Gramm left his Senate seat a few weeks before the expiration of his term in hopes that his successor, fellow Republican John Cornyn, could gain seniority over other newly elected senators. However, Cornyn did not gain additional seniority due to a 1980 Rules Committee policy.^[7]

[edit] 2007 mortgage and 2008 financial & economic crises

Some economists state that the 1999 legislation spearheaded by Gramm and signed into law by President Clinton — the Gramm-Leach-Bliley Act — was partly to blame for the 2007 subprime mortgage crisis and 2008 global economic crisis.^[8][9] The Act is most widely known for repealing portions of the Glass-Steagall Act, which had regulated the financial services industry. One provision of the act allowed Credit Default Swaps.^[10]

Gramm responded to criticism of the act by stating that he saw "no evidence whatsoever" that the sub-prime mortgage crisis was caused in any way "by allowing banks and securities companies and insurance companies to compete against each other."^[11] The Act passed the House by an overwhelming majority and passed by unanimous consent in the Senate, though it was introduced on the last day before Christmas holiday and never debated by either congressional body. ^[12]

Gramm's support was later critical in the passage of the Commodity Futures Modernization Act of 2000, which kept derivatives transactions, including those involving credit default swaps, free of government regulation.^[13]

In its 2008 coverage of the financial crisis, The Washington Post named Gramm one of seven "Key Players In the Battle Over Regulating Derivatives", for having "[p]ushed through several major bills to deregulate the banking and investment industries, including the 1999 Gramm-Leach-Bliley act that brought down the walls separating the commercial banking, investment and insurance industries".^[14]

2008 Nobel Laureate in Economics Paul Krugman, a supporter of Barack Obama, described Gramm during the 2008 presidential race as "the high priest of deregulation," and has listed him as the number two person responsible for the economic crisis of 2008 behind only Alan Greenspan.^[15][16] On October 14, 2008, CNN ranked Gramm number seven in its list of the 10 individuals most responsible for the current economic crisis.^[17] In January 2009 Guardian City editor Julia Finch identified him as one of twenty-five people who were at the heart of the financial meltdown. ^[18] An Internet poll currently ranks Gramm #1 among 25 people selected by Time as candidates to blame for the economic crisis. ^[19]

[edit] John McCain 2008 presidential campaign

Gramm was co-chair of John McCain’s presidential campaign^[20] and his most senior economic adviser^[21][22] from the summer of 2007^[23] until July 18, 2008.^[20] In a July 9, 2008 interview on McCain's economic plans, Gramm explained the nation was not in a recession, stating, "You've heard of mental depression; this is a mental recession." He added, "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline."^[24] Gramm's comments immediately became a campaign issue. McCain's opponent, Senator Barack Obama, stated, "America already has one Dr. Phil. We don't need another one when it comes to the economy. ... This economic downturn is not in your head."^[25] McCain strongly denounced Gramm's comments.^[26] On July 18, 2008 Gramm stepped down from his position with the McCain campaign.^[27] Explaining his remarks, Gramm stated that he had used the word "whiners" to describe the nation's politicians rather than the public, stating "the whiners are the leaders."^[28] In the same interview, Gramm said, "I'm not going to retract any of it. Every word I said was true."^[29]

[edit] Current employment

As of 2009, Gramm is employed by UBS AG as a Vice Chairman of the Investment Bank division. UBS.com states that a Vice Chairman of a UBS division is "...appointed to support the business in their relationships with key clients."^[30] He joined UBS in 2002 immediately after retiring from the Senate.^[31]

[edit] Personal

Gramm lives in Helotes, Texas and is married to Dr. Wendy Lee Gramm, a native of Hawaii, who is associated with George Mason University's Mercatus Center in Virginia. They are the parents of two sons: Marshall is a professor of economics at Rhodes College, and Jeff played in the indie pop band Aden.

[edit] Quotations

• "If you are willing to tackle the tough issues, you don't need to worry about stepping on anyone's toes; they will stand aside and shove you to the front." — As quoted by former Gramm staffer Wayne A. Abernathy;^[32] September 12, 2002, before the Senate Committee on Banking, Housing and Urban Affairs.^[33]

• "I have as many guns as I need, but I don't have as many guns as I want."^[34]

• "In economics, we define labor exploitation as paying people less than their marginal value product. I recently told Ed Whitacre [former CEO of AT&T, who retired with a $158 million pay package] he was probably the most exploited worker in American history because he took Southwestern Bell, which was the smallest of the former Bell companies, and he turned it into the dominant phone company on earth. His severance package should have been billions."^[35]

• "We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness."^[24]

[edit] Works

• "Laissez-Faire and the Optimum Quantity of Money". Economic Inquiry 12 (1): 125–132. 1974. doi:10.1111/j.1465-7295.1974.tb00232.x. 

[edit] References

[edit] External links

• Biography at the Biographical Directory of the United States Congress
• Voting record maintained by The Washington Post
• Phil Gramm at the Internet Movie Database

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