At the November 4 Rotary Club of San Antonio luncheon, former U.S. Sen. Phil Gramm set aside his planned talk on income inequality and poverty to discuss the election held the day before. Had he known he would be speaking the day after what he called a cataclysmic election, he joked, he would have asked for another date.
Past President Lane Mitchell of Mitchell Construction introduced Gramm, recalling that he first heard him speak to the club shortly after joining in 1984. Gramm taught economics at Texas A&M University before serving in the U.S. House and Senate, and has since worked in finance and written several books, most recently The Triumph of Economic Freedom, co-written with economist Donald J. Boudreaux. President Armen Babajanian recalled hosting Gramm at the University of Warsaw in 2015.
Gramm's ties to the club go back further. In 1974, as a 32-year-old economics professor, he wrote a Wall Street Journal article arguing that the energy crisis came not from running out of oil and gas but from not letting the market work. After he testified before the Senate Finance Committee, H.B. Zachry invited him to speak to the Rotary Club of San Antonio and sent his plane to pick him up.
Echoes of 1994
The election most like this one, Gramm said, was 1994, when he chaired the Senate Republicans' campaign committee and the party gained eight Senate seats. Off-year elections, he said, are about checking the power of the incumbent.
In his view, Republicans in Congress did not oppose the president's positions even when they disagreed, including on tariffs he said he would have fought had he still been in the Senate. As a result, the desire to check presidential power was probably stronger than in any election in his lifetime. He had expected Republicans to lose the House and would not have been shocked to lose the Senate, he said, but he was surprised they lost every statewide office in Texas, a broader sweep than in 1994.
Gramm did not read the result as a vote for a state income tax or against school choice. Instead, he said, voters felt they were not getting ahead. “One of the saving graces of the American political system is that Americans will not tolerate a bad economy.” He noted that Democrats held every statewide office when he first spoke to the club in 1974, and said he expects Republicans to hold them again.
Deficits, Tariffs and Inflation
Asked about the federal deficit, Gramm said countries do not go broke because of how much they owe, but when they can't or won't pay the interest. He recalled the Gramm-Rudman law, which set deficit-reduction targets and forced Congress to either raise taxes or cut spending to meet them, and the 1983 bipartisan Social Security agreement led by President Ronald Reagan and House Speaker Tip O'Neill. He expects similar action again, but only once there is a crisis.
To fight inflation, he would strip the president of the power to set tariffs unilaterally, which he said would lower prices outright. Tariffs, he said, add $8,000 to the cost of a starter home and are paid entirely by American consumers. Lower interest rates require the government to borrow less, which means spending less or taxing more. He called the campaign debate over affordability “phony,” saying he heard no candidate offer a plan to make anything more affordable.
Questions From Members
Members also asked about money in politics, migration from California, socialism and the federal government taking equity stakes in private companies. Gramm said he would not limit people's ability to back candidates they believe in, and called the election “a homegrown revolt” rather than the work of newcomers. Asked why socialism is feared, he pointed to Eastern Europe, the Berlin Wall, Cuba and China, and named sugar tariffs as a socialist policy already on the books. “Government is power, and power is dangerous, and it needs to be controlled,” he said, “whether it's a Republican president or a Democrat president.” He said he opposes the government holding equity in private companies.
On foreign policy, Gramm, who now works for a London-based private equity fund, said he once discounted soft power but has seen how much America's standing abroad affects its ability to do business, and how “needless enemies” made recently are beginning to hurt it.
Around the Club
The club welcomed His Excellency Wilbard Hellao, Namibia's Ambassador to the United States, and the embassy's deputy chief of mission, guests of the City of San Antonio's global engagement office. Windhoek, Namibia's capital, has been a San Antonio sister city since 2016.
Past President Rick Cavender invited members to the club's 29th Kingdom for Kids build this Friday and Saturday at Charles Arnold Elementary School, where volunteers will build two playgrounds for 650 children, plus a basketball court, a trike track for children with disabilities and a reading theater stage. Past District Governor Jim Berg reported on the club's bid to host the Rotary International Convention in 2033, 2034 or 2035. The club hosted the 2001 convention, which drew 24,000 Rotarians from 130 countries, the largest U.S. convention to date. Members were also reminded of An Evening at The Monarch on November 12, Light the World beginning November 16, and the district raffle.
Next week's Veterans Day program features Scott Jackson, Director of Military and Veteran Affairs, followed by City Manager Erik Walsh. Board member Gladys Gonzalez led the Four-Way Test.
