I think I’m having aflashback.
To old hands in Washington, David A. Stockman will always be the long-haired numbers cruncher who led the cheers for Reaganomics but nearly lost his job for privately denigrating the administration’s budget at the same time he sold it to the public.
Stockman’s trip “to the woodshed” with President Ronald Reagan and his denouncement of the “rosy scenario” of White House fiscal policy helped coin political phrases that linger in the capital’s lexicon more than two decades after he left government.
Now the man who put one over on Congress could face far more severe consequences for possibly misleading Wall Street.
Lawyers at the Securities and Exchange Commission recently notified Stockman that he could face civil charges related to upbeat statements he made to investors two months before an auto parts company he ran sought bankruptcy protection last year, according to sources familiar with the issues who spoke on condition of anonymity because the investigation continues.
Securities regulators are examining the role Stockman and other former executives played in alleged financial irregularities at Collins & Aikman Corp., with an eye on whether Stockman may have lied to investors by telling them the company’s finances were being “managed quite effectively” when he was aware of mounting problems. Federal prosecutors have also subpoenaed financial records from the company.
A self-described Michigan farm boy who won a House seat before becoming one of the youngest Cabinet officials in history, Stockman was a key player in pushing Reagan’s “supply side” economic platform, a crucial facet of the president’s domestic policy, which reasoned that benefits from big tax cuts for corporations and wealthy individuals would trickle downhill to the middle class.
But as he made bold public pronouncements supporting the plan, Stockman and William Greider, a Washington Post editor at the time, for months privately discussed “Trojan horses” and “magic asterisks” that hid mounting budget deficits. Stockman grew disenchanted with politics, criticizing opponents and his own party for failing to cut entitlement programs and bring the deficit under control. Greider eventually published a magazine story containing Stockman’s statements, which almost got the young White House aide fired.