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Warren Rudman, Senator Who Fought Budget Deficits, Dies at 82

November 20, 2012

Warren Rudman, Senator Who Fought Budget Deficits, Dies at 82

Former Senator Warren Rudman (R-NH), Chairman of the Council on Foreign Relations' Independent Task Force on Emergency Responders, speaks on NBC's 'Meet the Press' in this June 29, 2003 file photo in Washington, DC. Rudman has died. He was 82. Photographer: Alex Wong/Getty Images

Warren Rudman, the U.S. senator from New Hampshire whose dim view of government’s ability to make painful choices was enshrined in the 1985 Gramm-Rudman-Hollings deficit-reduction law, has died. He was 82.

He died yesterday, according to the Associated Press, citing Rudman’s Washington firm, the Albright Stonebridge Group. No cause of death was given.

The law devised by Rudman, fellow Republican Phil Gramm of Texas and South Carolina Democrat Ernest Hollings -- officially, the Balanced Budget and Emergency Deficit Control Act -- targeted swelling federal budget deficits by introducing the specter of automatic, non-negotiable cuts to domestic and defense programs. Unless the deficit was narrowed by some combination of spending reductions and tax increases by certain dates, the automatic cuts would take effect.

Congress would end up easing the Gramm-Rudman-Hollings deficit goals in 1987, then abandoning the law altogether in 1990. Still, its principle lived on. Lawmakers again turned to automatic spending cuts in 2011 when Congress and President Barack Obama stalemated in negotiations over the federal debt. Obama and congressional leaders opened talks Nov. 16 on how to avert the automatic spending cuts, which are due to start taking effect in January.

During two terms in the Senate, from 1981 to 1993, Rudman helped establish the image of the northeastern Republican as a moderating force on the party’s conservative push. He joined Democrats in signing the majority report on the Iran-Contra affair, which was sharply critical of President Ronald Reagan. He helped persuade President George H.W. Bush to nominate David Souter to the Supreme Court, an appointment that conservative judicial groups lamented for 19 years until his retirement.

‘Partisan Era’

“I saw myself not only as a man in the middle but a man of the middle, trying to keep America moving forward in an increasingly bitter and partisan era,” he wrote in his 1996 memoir, “Combat: Twelve Years in the U.S. Senate.”

First elected in 1980 in Reagan’s Republican wave, Rudman said he had serious doubts even as he voted to support Reagan’s economic plan, which rested on the belief that tax cuts would pay for themselves by fueling greater growth -- the bedrock principle of so-called supply-side economics.

“Within a year, supply-side clearly wasn’t working, and by the end of Reagan’s first term it had been a monumental disaster,” Rudman wrote in his memoir. “Instead of balancing the budget, as promised, it had led to record deficits and an incredible doubling of the national debt,” to almost $2 trillion in 1985.

Washington Stalemate

Efforts to reduce the deficit were stymied by Reagan’s opposition to any tax increases and the House Democratic majority’s opposition to reducing Social Security benefits. Rudman and Gramm charged their staffs with drafting legislation with mandatory, automatic cuts, and Hollings signed on as the bill was being written.

In its original form, the bill called for cutting the deficit by $36 billion a year from 1987 to 1991. If the deficit exceeded by more than 10 percent the specified level in any year, the president was required to “sequester,” or withhold, portions of congressionally approved spending.

Rudman himself called the bill’s automatic cuts “a bad idea whose time has come.”

“Many of the bill’s supporters, myself included, assumed that its doomsday machinery would never be used,” he wrote in his memoir. “We saw the legislation as a forcing mechanism. We thought the threat of automatic cuts would force Congress and the White House to compromise on a responsible budget.”

Triggered Cuts

To get the bill through the Senate and House, the sponsors had to agree to exempt numerous budget items, including Social Security, Medicare, Medicaid, existing defense contracts and interest on the national debt -- from the automatic reductions. Reagan signed the bill into law in December 1985.

The automatic-cut provision kicked in once, in 1986, and Reagan sequestered $11.7 billion in spending. After a successful legal challenge to a provision in Gramm-Rudman-Hollings, a watered-down version of the law was adopted in 1987. Rudman said mathematic “tricks” by the Office of Management and Budget held down deficit forecasts to avert cuts in 1989 and 1990, under President George H.W. Bush. Reliance on automatic spending cuts was then ended.

According to the Congressional Budget Office, the deficit as a percentage of gross domestic product dropped to 2.9 percent in 1989 from 5 percent in 1986. In 1992, it was back up to 4.5 percent. Under Obama, it rose to 10 percent.

‘Ducking It’

“In the end, Gramm-Rudman was defeated by politics as usual,” Rudman wrote. “The way it was undermined stands today as a textbook example of how politicians trick the American people into thinking they’re acting on a problem when in fact they’re ducking it.”

Warren Bruce Rudman was born on May 18, 1930, in Boston, the grandson of Jewish immigrants from Germany, Poland and Russia. He was the first of three children of Tess and Edward Rudman, who was co-founder of Old Colony Furniture Co. The family and company moved in the mid-1930s to Nashua, New Hampshire.

Rudman excelled in debate and boxing at Valley Forge Military School in Wayne, Pennsylvania, and attended Syracuse University in New York, graduating in 1952. He saw combat in Korea as an infantryman in the U.S. Army from 1952 to 1954.

Back home, he joined the family furniture company and attended Boston College Law School at night, earning his degree in 1960. His father and uncle sold the company in 1964, and Rudman practiced law full-time.

Defeating Incumbent

After working on the successful gubernatorial campaign of his longtime friend, Walter Peterson, Rudman became his chief of staff and then, in 1970, the state’s attorney general. Souter, his deputy, succeeded him as attorney general in 1976.

Rudman won the Republican nomination for Senate in 1980 and defeated the incumbent Democrat, John Durkin.

Beyond his budget bill with Gramm and Hollings, Rudman was perhaps best known for an exchange with Oliver North during congressional hearings on the Iran-Contra affair.

North was the Marine Corps officer and National Security Council staffer at the center of the secret effort to raise money by selling arms to Iran and sending the funds to help the anti-communist Contra rebels in Nicaragua. Testifying before a joint House-Senate panel in 1987, North said Congress had created a problem with a “fickle, vacillating, unpredictable” policy toward the Contras.

Lecturing North

Rudman told North that Congress had been following the wishes of Americans, who made clear they didn’t support funding the Contras.

“The American people have the constitutional right to be wrong,” Rudman said. “And what Ronald Reagan thinks or what Oliver North thinks or what I think or what anybody else thinks makes not a whit if the American people say, ‘Enough.’”

He also told North’s secretary, Fawn Hall, who had shredded and altered documents as the secret program was being investigated: “It wasn’t the KGB that was coming, Miss Hall. It was the FBI.”

Declaring himself tired of working in a government that was “not functioning,” Rudman retired rather than seek a third term in 1992. He became a law partner with Paul, Weiss, Rifkind, Wharton & Garrison. With former Massachusetts Senator Paul Tsongas he founded the Concord Coalition, which advocates for deficit reduction.

In 1993, President Bill Clinton appointed Rudman to the President’s Foreign Intelligence Advisory Board, of which Rudman was chairman from 1995 to 2001.

Rudman and his wife, Shirley, had three children.

To contact the reporter on this story: Laurence Arnold in Washington at larnold4@bloomberg.net

To contact the editor responsible for this story: Charles W. Stevens at cstevens@bloomberg.net


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