Phil Gramm's tone-deaf remark about a "mental recession" shows that in picking advisers, on the economy or otherwise, John McCain doesn't have a clue.
Paul Waldman | July 15, 2008
In eulogizing the recently departed Jesse Helms, many praised the former senator from North Carolina for always standing up for what he believed in. He certainly did -- Helms never apologized for his racist beliefs, and there is little evidence he ever renounced them. Just why anyone should be admired for advocating despicable ideas unapologetically is less than clear, but, if nothing else, no one could mistake Helms for anything but what he was.
I was reminded of that supposedly admirable quality this week when John McCain found himself on the defensive because of something said by his friend, principal economic adviser, and potential Treasury secretary, former Sen. Phil Gramm of Texas. Speaking to the editorial board of The Washington Times, Gramm expressed his frustration with a public that doesn't seem to grasp how well the economy is really doing. In what will no doubt become one of the most memorable lines of the campaign, Gramm said, "We've sort of become a nation of whiners."
McCain was quick to distance himself from the remark, of course, though he should have seen it coming. The two men have been friends for years, and McCain campaigned vigorously for Gramm's abysmal 1996 presidential bid. McCain no doubt knows that for his entire career Gramm has shared with Jesse Helms an unwillingness to work too hard to dress up his repellent views. Most members of his party labor mightily to portray their trickle-down economic philosophy as driven by the interests of regular folks; Karl Rove once argued that President Bush's plan to eliminate the tax on stock dividends was an effort to help "the little guy." Gramm, on the other hand, is quite willing to tell you that as far as he's concerned, regular folks can go straight to hell. Once, when a colleague argued that a change to Social Security would harm 80-year-old retirees, Gramm replied, "Most people don't have the luxury of living to be 80 years old, so it's hard for me to feel sorry for them."
Gramm's unique combination of callousness and cluelessness has been evident for as long as he's been in public life. While this controversy may get him banished from a public role in the McCain campaign, one might have thought that his role in the mortgage crisis would have done so already. As David Corn of The Nation explains here, in 2000 Gramm slipped into an omnibus spending bill a 262-page amendment that enabled Enron to gin up the California energy crisis that cost consumers billions (in an amazing coincidence, Gramm's wife was on Enron's board of directors). Even worse, the bill guaranteed that credit default swaps, the instruments that enabled the mortgage market to get so out of control, would be exempt from federal regulation. So when financial institutions began to pour good money after bad in the mortgage market, there were no federal regulators with the power to stop it. (Though few have fingered Gramm with the responsibility he deserves, there is one small piece of poetic justice: UBS, the Swiss bank that employs Gramm, has itself lost $37 billion in the mortgage mess.)
So the problem isn't that Phil Gramm said something jaw-droppingly insensitive, the problem is that John McCain takes advice from Phil Gramm. Until last week, McCain had been going around praising Gramm as some sort of economic genius and touting Gramm's support as evidence of his own acumen on matters financial. In February, McCain even said, "There is no one in America that is more respected on the issue of economics than Senator Phil Gramm," which is kind of like saying there is no one in America more respected on the issue of health care than Jack Kevorkian.
http://www.prospect.org/cs/articles?article=its_the_economists_stupid
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