David Stockman
Encyclopedia
David Alan Stockman is a former U.S.
politician
and businessman, serving as a Republican U.S. Representative from the state
of Michigan
(1977–1981) and as the Director of the Office of Management and Budget (1981–1985).
, the son Allen Stockman, a fruit farmer, and Carol (née Bartz). He is of German descent and his family's surname was originally "Stockmann". He was raised in a conservative family and his maternal grandfather, William Bartz, was a Republican county treasurer for 30 years. Stockman was educated at public schools in Stevensville, Michigan
. He graduated from Lakeshore High School
during 1964 and received a B.A.
from Michigan State University
, East Lansing
, during 1968. He performed graduate studies at Harvard University
, 1968–1970 and 1974–1975. He attended Harvard Divinity School
.
, 1970–1972, and was executive director, United States House of Representatives
Republican Conference, 1972–1975.
for the 95th Congress
and was reelected by two subsequent elections, serving from January 3, 1977, until his resignation January 27, 1981, to accept appointment as Director of the Office of Management and Budget for U.S. President Ronald Reagan
.
, he assisted the approval of the "Reagan Budget" (the Gramm-Latta Budget
), which Stockman hoped to be a serious curtailment of the "welfare state
", gaining a reputation as a tough negotiator with House Speaker Tip O'Neill
's Democratic-controlled House of Representatives and Majority Leader Howard Baker
's Republican-controlled Senate
. During this period, although only in his early 30s of age, Stockman became well known to the public during the contentious political wrangling concerning the role of the federal government in American society.
Stockman's influence within the Reagan Administration decreased after the Atlantic Monthly magazine published the famous 18,246 word article, "The Education of David Stockman", in its December 1981 issue, based on lengthy interviews Stockman gave to reporter William Greider
. The White House's public relations team thereafter attempted to limit the article's damage to Reagan's perceived fiscal-leadership skills. Stockman was quoted as referring to Reagan's tax act as: "I mean, Kemp-Roth [Reagan's 1981 tax cut] was always a Trojan horse to bring down the top rate.... It's kind of hard to sell 'trickle down.' So the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory." Of the budget process during his first year on the job, Mr. Stockman is quoted as saying: "None of us really understands what's going on with all these numbers," which was used as the subtitle of the article.
After Stockman's first year at OMB and after "being taken to the woodshed by the president" due to his candor with Atlantic Monthly's William Greider, Stockman became inspired with the projected trend of increasingly large federal deficits and the rapidly expanding national debt. On 1 August 1985, he resigned OMB and later wrote a memoir of his experience in the Reagan Administration titled The Triumph of Politics: Why the Reagan Revolution Failed (ISBN 0060155604), in which he specifically criticized the failure of congressional Republicans to endorse a reduction of government spending as necessary offsets to the large tax decreases, in order to avoid the creation of large deficits and an increasing national debt.
and later became a partner of the now very successful New York–based private equity company, the Blackstone Group
. His record was mixed at Blackstone, with some very good investments, such as American Axle, but also several large failures, including Haynes International and Republic Technologies. During 1999, after Blackstone CEO Stephen A. Schwarzman
curtailed Stockman's role in managing the investments he had developed, Stockman resigned Blackstone to start his own private equity fund company, Heartland Industrial Partners
, L.P., based in Greenwich
, Connecticut
.
On the strength of his investment record at Blackstone, Stockman and his partners raised $1.3 billion of equity from institutional and other investors. With Stockman's guidance, Heartland used a contrarian investment strategy, buying controlling interests in companies operating in sectors of the U.S. economy that were attracting the least amount of new equity: auto parts and textiles. With the help of about $9 billion in Wall Street
debt financing, Heartland completed more than 20 transactions in less than 2 years to create four portfolio companies: Springs Industries, Metaldyne, Collins & Aikman, and TriMas. Several major investments performed very poorly, however. Collins & Aikman filed for bankruptcy during 2005 and when Heartland sold Metaldyne to Asahi Tec Corp. during 2006, Heartland lost most of the $340 million-plus of equity it had invested in the business.
brought civil charges against Stockman related to actions he performed while CEO of Collins & Aikman. Stockman suffered a personal financial loss, estimated at $13 million, along with losses suffered by as many as 15,000 Collins & Aikman employees worldwide. Stockman said in a statement posted on his law company's website that the company's end was the consequence of an industry decline, not fraud. On January 9, 2009, the U.S. Attorney's Office announced that it did not intend to prosecute Stockman for this case.
. He is married to the former Jennifer Blei and is the father of two children, Rachel and Victoria. Jennifer Blei Stockman is a chairperson emeritus of the Republican Majority for Choice
, and President of the Solomon R. Guggenheim Foundation
Board of Trustees.
"(Extending the Bush tax cuts is) rank demagoguery. We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment, the Republican Party, as much as it pains me to say this, should be ashamed of themselves."
"The Republican Party has totally abdicated its job in our democracy, which is to act as the guardian of fiscal discipline and responsibility. They're on an anti-tax jihad -- one that benefits the prosperous classes."
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
politician
Politician
A politician, political leader, or political figure is an individual who is involved in influencing public policy and decision making...
and businessman, serving as a Republican U.S. Representative from the state
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...
of Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
(1977–1981) and as the Director of the Office of Management and Budget (1981–1985).
Early life and education
Stockman was born in Fort Hood, TexasFort Hood, Texas
Fort Hood is a United States military post located outside of Killeen, Texas. The post is named after Confederate General John Bell Hood. It islocated halfway between Austin and Waco, about from each, within the U.S. state of Texas....
, the son Allen Stockman, a fruit farmer, and Carol (née Bartz). He is of German descent and his family's surname was originally "Stockmann". He was raised in a conservative family and his maternal grandfather, William Bartz, was a Republican county treasurer for 30 years. Stockman was educated at public schools in Stevensville, Michigan
Stevensville, Michigan
Stevensville is a village in Berrien County in the U.S. state of Michigan. The village lies within Lincoln Township. The population was 1,191 at the 2000 census.-History:...
. He graduated from Lakeshore High School
Lakeshore High School
Lakeshore High School is a public high school located in Stevensville, Michigan. It is part of Lakeshore Public Schools.- Education :The high school was given a grade of A on a A-D scale by the Michigan Department of Education...
during 1964 and received a B.A.
Bachelor of Arts
A Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...
from Michigan State University
Michigan State University
Michigan State University is a public research university in East Lansing, Michigan, USA. Founded in 1855, it was the pioneer land-grant institution and served as a model for future land-grant colleges in the United States under the 1862 Morrill Act.MSU pioneered the studies of packaging,...
, East Lansing
East Lansing, Michigan
East Lansing is a city in the U.S. state of Michigan. The city is located directly east of Lansing, Michigan, the state's capital. Most of the city is within Ingham County, though a small portion lies in Clinton County. The population was 48,579 at the time of the 2010 census, an increase from...
, during 1968. He performed graduate studies at Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
, 1968–1970 and 1974–1975. He attended Harvard Divinity School
Harvard Divinity School
Harvard Divinity School is one of the constituent schools of Harvard University, located in Cambridge, Massachusetts, in the United States. The School's mission is to train and educate its students either in the academic study of religion, or for the practice of a religious ministry or other public...
.
Political career
He served as special assistant to United States Representative and 1980 Presidential candidate John Anderson of IllinoisIllinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
, 1970–1972, and was executive director, United States House of Representatives
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Republican Conference, 1972–1975.
Congress
Stockman was elected to the United States House of RepresentativesUnited States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
for the 95th Congress
95th United States Congress
The Ninety-fifth United States Congress was a meeting of the legislative branch of the United States federal government, composed of the United States Senate and the United States House of Representatives. It met in Washington, DC from January 3, 1977 to January 3, 1979, during the first two years...
and was reelected by two subsequent elections, serving from January 3, 1977, until his resignation January 27, 1981, to accept appointment as Director of the Office of Management and Budget for U.S. President Ronald Reagan
Ronald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
.
Office of Management and Budget
Stockman became one of the most controversial OMB directors ever during a tenure that lasted until his resignation during August 1985. Committed to the doctrine of supply-side economicsSupply-side economics
Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing...
, he assisted the approval of the "Reagan Budget" (the Gramm-Latta Budget
Gramm-Latta Budget
The Gramm-Latta Budget 1981 and the Gramm-Latta Omnibus Reconciliation Bill of 1981, sponsored by Representatives Phil Gramm and Delbert Latta , implemented President Ronald Reagan's economic program. This included an increase in military spending and major cuts in discretionary and entitlement...
), which Stockman hoped to be a serious curtailment of the "welfare state
Welfare state
A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...
", gaining a reputation as a tough negotiator with House Speaker Tip O'Neill
Tip O'Neill
Thomas Phillip "Tip" O'Neill, Jr. was an American politician. O'Neill was an outspoken liberal Democrat and influential member of the U.S. Congress, serving in the House of Representatives for 34 years and representing two congressional districts in Massachusetts...
's Democratic-controlled House of Representatives and Majority Leader Howard Baker
Howard Baker
Howard Henry Baker, Jr. is a former Senate Majority Leader, Republican U.S. Senator from Tennessee, White House Chief of Staff, and a former United States Ambassador to Japan.Known in Washington, D.C...
's Republican-controlled Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
. During this period, although only in his early 30s of age, Stockman became well known to the public during the contentious political wrangling concerning the role of the federal government in American society.
Stockman's influence within the Reagan Administration decreased after the Atlantic Monthly magazine published the famous 18,246 word article, "The Education of David Stockman", in its December 1981 issue, based on lengthy interviews Stockman gave to reporter William Greider
William Greider
William Greider is an American journalist and author who writes primarily about economics.His most recent book is . Before that he published The Soul of Capitalism: Opening Paths to a Moral Economy, which explores the basis and history of the corporation and how people can influence further...
. The White House's public relations team thereafter attempted to limit the article's damage to Reagan's perceived fiscal-leadership skills. Stockman was quoted as referring to Reagan's tax act as: "I mean, Kemp-Roth [Reagan's 1981 tax cut] was always a Trojan horse to bring down the top rate.... It's kind of hard to sell 'trickle down.' So the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory." Of the budget process during his first year on the job, Mr. Stockman is quoted as saying: "None of us really understands what's going on with all these numbers," which was used as the subtitle of the article.
After Stockman's first year at OMB and after "being taken to the woodshed by the president" due to his candor with Atlantic Monthly's William Greider, Stockman became inspired with the projected trend of increasingly large federal deficits and the rapidly expanding national debt. On 1 August 1985, he resigned OMB and later wrote a memoir of his experience in the Reagan Administration titled The Triumph of Politics: Why the Reagan Revolution Failed (ISBN 0060155604), in which he specifically criticized the failure of congressional Republicans to endorse a reduction of government spending as necessary offsets to the large tax decreases, in order to avoid the creation of large deficits and an increasing national debt.
Fiscal legacy
President Jimmy Carter's last signed and executed fiscal year budget results ended with a $79.0 billion budget deficit, ending during the period of David Stockman's and Ronald Reagan's first year in office, on October 1, 1981. The gross federal national debt had just increased to $1.0 trillion during October 1981 ($998 billion on 30 September 1981). Four and a half years into the Reagan administration, upon Stockman's resignation from the OMB during August 1985, the gross federal debt was $1.8 trillion on 9 September 1985. Stockman's OMB work within the administration during 1981 until August was dedicated to negotiating with the Senate and House about the next fiscal year's budget, executed later during the autumn of 1985, which resulted in the national debt becoming $2.1 trillion at fiscal year end 30 September 1986 and becoming $2.6 trillion at fiscal year end 30 September 1988.Business career
Having left government, Stockman joined the Wall St. investment bank Salomon BrothersSalomon Brothers
Salomon Brothers was a bulge bracket, Wall Street investment bank. Founded in 1910 by three brothers along with a clerk named Ben Levy, it remained a partnership until the early 1980s, when it was acquired by the commodity trading firm Phibro Corporation and then became Salomon Inc. Eventually...
and later became a partner of the now very successful New York–based private equity company, the Blackstone Group
Blackstone Group
The Blackstone Group L.P. is an American-based alternative asset management and financial services company that specializes in private equity, real estate, and credit and marketable alternative investment strategies, as well as financial advisory services, such as mergers and acquisitions ,...
. His record was mixed at Blackstone, with some very good investments, such as American Axle, but also several large failures, including Haynes International and Republic Technologies. During 1999, after Blackstone CEO Stephen A. Schwarzman
Stephen A. Schwarzman
Stephen Allen Schwarzman is an American businessman and investor and the chairman and co-founder of the Blackstone Group, the private-equity and financial advisory firm.-Early life and education:...
curtailed Stockman's role in managing the investments he had developed, Stockman resigned Blackstone to start his own private equity fund company, Heartland Industrial Partners
Heartland Industrial Partners
Heartland Industrial Partners is a private equity firm focused on industry consolidation and growth capital investments in middle-market industrial companies....
, L.P., based in Greenwich
Greenwich, Connecticut
Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
, Connecticut
Connecticut
Connecticut is a state in the New England region of the northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, and the state of New York to the west and the south .Connecticut is named for the Connecticut River, the major U.S. river that approximately...
.
On the strength of his investment record at Blackstone, Stockman and his partners raised $1.3 billion of equity from institutional and other investors. With Stockman's guidance, Heartland used a contrarian investment strategy, buying controlling interests in companies operating in sectors of the U.S. economy that were attracting the least amount of new equity: auto parts and textiles. With the help of about $9 billion in Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
debt financing, Heartland completed more than 20 transactions in less than 2 years to create four portfolio companies: Springs Industries, Metaldyne, Collins & Aikman, and TriMas. Several major investments performed very poorly, however. Collins & Aikman filed for bankruptcy during 2005 and when Heartland sold Metaldyne to Asahi Tec Corp. during 2006, Heartland lost most of the $340 million-plus of equity it had invested in the business.
Collins & Aikman Corp.
During August 2003, Stockman installed himself as CEO of Collins & Aikman Corporation, a Detroit-based manufacturer of automotive interior components. He was ousted from that job days before a Chapter 11 filing on May 17, 2005.Criminal and civil charges
On March 26, 2007, federal prosecutors in Manhattan indicted Stockman in "a scheme ... to defraud [Collins & Aikman]'s investors, banks and creditors by manipulating C&A's reported revenues and earnings." At the same time, the Securities and Exchange CommissionUnited States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
brought civil charges against Stockman related to actions he performed while CEO of Collins & Aikman. Stockman suffered a personal financial loss, estimated at $13 million, along with losses suffered by as many as 15,000 Collins & Aikman employees worldwide. Stockman said in a statement posted on his law company's website that the company's end was the consequence of an industry decline, not fraud. On January 9, 2009, the U.S. Attorney's Office announced that it did not intend to prosecute Stockman for this case.
Personal life
Stockman lives in Greenwich, ConnecticutGreenwich, Connecticut
Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
. He is married to the former Jennifer Blei and is the father of two children, Rachel and Victoria. Jennifer Blei Stockman is a chairperson emeritus of the Republican Majority for Choice
Republican Majority for Choice
The Republican Majority for Choice is a Republican organization in the United States dedicated to preserving legal access to abortion. The group also supports federal funding for all kinds of stem cell research, including Embryonic stem cell research.....
, and President of the Solomon R. Guggenheim Foundation
Solomon R. Guggenheim Foundation
The Solomon R. Guggenheim Foundation is a nonprofit corporation founded in 1937 by philanthropist Solomon R. Guggenheim and artist Hilla von Rebay. The first museum established by the foundation was the "Museum of Non-Objective Art", which was housed in rented space on Park Avenue in New York....
Board of Trustees.
Quotes
“I invest in anything that Bernanke can’t destroy, including gold, canned beans, bottled water and flashlight batteries.""(Extending the Bush tax cuts is) rank demagoguery. We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment, the Republican Party, as much as it pains me to say this, should be ashamed of themselves."
"The Republican Party has totally abdicated its job in our democracy, which is to act as the guardian of fiscal discipline and responsibility. They're on an anti-tax jihad -- one that benefits the prosperous classes."
External links
- Ronald Reagan, Ron Paul, & the Fed: Q&A with David Stockman, Reason.tv
- Fixing America’s Finances interview on On PointOn PointOn Point is a two-hour call-in radio show hosted by Tom Ashbrook, a former The Boston Globe foreign editor and reporter, author and Internet entrepreneur. It is produced by WBUR in Boston and syndicated by National Public Radio...
.