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GOP Needs to Regain Fiscal Discipline, Stockman Says: Tom Keene

GOP Needs to Regain Fiscal Discipline
Senate Minority Leader Mitch McConnell, criticized for working to preserve the Bush tax cuts for the wealthiest U.S. taxpayers. Photographer: Ken Cedeno/Bloomberg

Aug. 3 (Bloomberg) -- Balanced budgets and an aversion to debt are no longer Republican Party standards, said David Stockman, director of the Office of Management and Budget during the Reagan Administration.

Republicans, the “conservative economic party, the party of discipline, the party of restraint,” have their lost way, leaving the U.S. with “two free-lunch parties and a $9 trillion debt that’s rising at a really dangerous rate,” Stockman said during a radio interview with Tom Keene on “Bloomberg Surveillance.”

In a July 31 op-ed article in The New York Times, Stockman criticized Senate minority leader Mitch McConnell and others in his party for working to preserve the Bush tax cuts for the wealthiest U.S. taxpayers. He said it follows a pattern of abandoning conservative fiscal principles.

“Over the past 30 years, the Republicans, component by component of the budget, have ruled spending cuts out,” Stockman said today. “They won’t cut Social Security, they won’t cut farm subsidies. They’re as big on education spending as the Democrats.”

He said abandoning the Bush tax cuts would yield $300 billion in federal revenue, but added he is not optimistic.

“I see nothing that suggests that’s going to change over the next couple of years,” Stockman said. “That’s a ticket for disaster.”

Business Setbacks

Stockman, 63, in 1986 published “The Triumph of Politics: Why the Reagan Revolution Failed,” and is working on a book about the latest financial crisis. He left politics for Wall Street and later successfully defended himself against a 2007 fraud indictment linked to his leadership of a failed auto-part maker.

His private-equity firm, Heartland Industrial Partners LP, paid $260 million in 2001 for Collins & Aikman and purchased other companies in a bid to create the dominant supplier of fabric, consoles and components for automakers. In May 2005, Collins & Aikman, with more than $1 billion in debt, filed for bankruptcy protection as Ford Motor Co. and General Motors Corp. slashed production.

To contact the reporters on this story: Alex Kowalski in New York at akowalski13@bloomberg.net; Tom Keene in New York at tkeene@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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