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Phil Gramm

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Phil "Mental Recession"[1] Gramm (1942–) is a former Democratic and Republican Congressman and Republican Senator from Texas, and former economic policy advisor to John McCain's 2008 presidential campaign. In 1996, he ran for the Republican presidential spot and finished 5th out of three. He is currently a high-ranking member of the criminal gang financial giant UBS.

Gramm authored the Reagan tax cut that brought about mourning in America and boasts of writing the Reagan defense budget that destroyed the Soviet Union and ended the Cold War.

Gramm was at the very core of manufacturing both the Enron disaster and the Great Recession. (Marx couldn't have had a better wet dream.)

Political identity crisis[edit]

His economic policies can best be described as a libertarian, due to his claim to have extreme hatred of all government regulations. He has said in the past that government regulation of the economy is "akin to communism". That didn't distinguish him a lot as Senator, or stop him from being McCain's economic adviser.

Whether he experienced cognitive dissonance for wanting to fund NASA is something we might never know.[2]

When Gramm switched from Democrat to Republican, it caused a furor in his family. His grandmother said it wasn't the yankees who burned down her house in the Civil War, it was the Republicans.

Playing for Enron[edit]

As a major contributor to Gramm's political machine, Enron was able to have the Senator, with his power as Chairman of the Senate Committee on Banking, make some modifications to the Commodity Futures Modernization Act of 2000 (CFMA). The bill was passed during the final month of the Clinton administration and contained, among other things, Enron's request for legal certainty with regard to certain futures and derivatives transactions.

Enron's Washington weasel lobbyist summed it up nicely in an email to the home office on the eve of the bill's passage: " are no longer subject anti-fraud and anti-manipulation as contained in Sec. 107 of the House passed legislation. This would be good for us."[3] This exemption from government regulation and public disclosure allowed the sociopaths at Enron to commit fraud on a grand scale. By coincidence, Senator Gramm's wife, Dr. Wendy Gramm,[note 1] enjoyed a seven-figure salary as a board member at Enron during these heady days.

When Enron could no longer conceal its criminal behavior, it collapsed, becoming the largest bankruptcy in US history. More than 20,000 employees lost their jobs, their retirement savings, and their children's college funds. Enron's accounting firm, Arthur Andersen, was also found dead at the scene.

Somebody stop him[edit]

The Enron loophole was only part of the double-whammy of stupidity Gramm unleashed on the financial markets. In 1999, he helped engineer the Gramm-Leach-Bliley Act, which repealed parts of the Glass-Steagall Act of 1933. Specifically, the provision separating commercial banks, investment banks, and insurance agencies was erased, which allowed banks to get into stocks, bonds, and all sorts of exotic financial instruments and ultimately gave us financial black holes deemed "too big to fail" like Citigroup.

Gramm then decided that banks just didn't resemble casinos enough. In addition to his Enron loophole, Gramm pushed for barring any regulatory oversight of credit default swaps (CDS) and got a provision doing so placed in the CFMA. The CDS was characterized as an important financial "insurance" instrument, however, in operation, it was much closer to naked short selling, aka securities fraud.[note 2] Nevertheless, the CFMA enjoyed bi-partisan support and was hailed as a law that would allow for great new "financial innovation" that would keep us "competitive in the global market" (though Warren Buffett referred to them as "financial weapons of mass destruction"[4]). Gramm, and most others, didn't blink when the CDS market grew to twice the size of the stock market.[5] (By coincidence, shortly after passing the legislation, Gramm took up the position as Vice-Chairman at investment bank UBS.)

Gramm then told people to stop whining right before the shit really hit the fan in fall of 2008. By the time the inevitable economic downturn happened, banks the world over were saddled with massive debts that most have written off, and the main mortgage lenders in the US, Freddie Mac and Fannie Mae were nationalized, leaving US taxpayers a potential $200 billion bill. The fallout continued when investment bank Lehman Brothers filed for Chapter 11 bankruptcy protection in the US, and rival Merrill Lynch, no longer confident of its own financial position agreed to be taken over by Bank of America to the tune of $50 billion.

Millions of people around the world are now unable to get credit, due to loss of liquidity in the money markets, hence the term, and so the consumer-led economies of the West are facing a downturn.

Phil Gramm remained an unofficial economic advisor to John McCain as late as 2008, and possibly later.

He's Just An Asshole[edit]

Back when Gramm was in the Senate, he had a reputation for being one of the most unpleasant people in all of Congress--and that's saying something. Highlights include, but are by no means limited to:

  • Him saying we should cut food stamps because "We're the only nation in the world where all our poor people are fat."[6]:153
  • When told a piece of legislation he supported would harm people over eighty, 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."[6]:153
  • He once told an elderly black widow who said his proposals for Social Security and Medicare would make it difficult for her to remain independent by saying "You haven't thought about a new husband, have you?"[6]:153


Like many fighters for the free market, Gramm may hate government, but that doesn't stop him from living off of it. David Segal of The Washington Monthly looked into Gramm's life, and here's what he found:

The government helped bring him into this world (he was born into a military hospital), funded his upbringing (his father was an army sergeant), paid for him to attend private school (with GI insurance money Gramm's mother received when her husband died), and even picked up the tab for graduate school (thanks to a National Defense Fellowship). After getting his Ph.D., Gramm got a job at Texas A&M, which is state-run, was elected to the House of Representatives, and then to the Senate. In sum, Phil Gramm joined the government rolls the first day of his life and has never left.[6]:154

The Most Dangerous Place[edit]

In Al Franken's book Rush Limbaugh is a Big Fat Idiot and Other Observations[6], Franken wanted to figure out who the biggest attention whore in all of Washington D.C. was, so he ran a Lexis search for "dangerous w/10 [within ten words] between w/15 camera."[6]:161 Specifically, he was looking for examples of the joke "The most dangerous place in {blank} is between (blank) and a camera."[6]:160 Of the forty one stories Franken found with the line, nineteen of them were referring to Gramm, including the line's earliest use back in 1982.[6]:162

See also[edit]

External links[edit]


  1. Not a real doctor.
  2. Superficially, it works like an insurance policy on some debt obligation, with some glaring differences: The owner of the CDS is not required to have any stake in the debt itself or have any capital to put down should the debtor default. In other words, imagine walking into the nearest casino and up to the roulette wheel, declaring "$1 million on double zero," and not having to put any money down on the table.


  1. Mental Recession, Nation of Whiners!
  2. Time to travel back to 1991...
  3. Gramm and the Enron Loophole, The New York Times
  4. Buffett warns on investment time bomb, BBC
  5. Credit Default Swaps: The Next Crisis?, TIME (Who coulda seen it coming, right?)
  6. 6.0 6.1 6.2 6.3 6.4 6.5 6.6 6.7 Rush Limbaugh Is a Big Fat Idiot and Other Observations by Al Franken (Delacorte Press, 1996) ISBN 0-385-31474-4