Phil Gramm & John McCain: Together Again

Once the best of friends personally and politically, then divided by the bitter 2000 campaign, Phil Gramm and John McCain are back on the same side for 2008.

Mr. McCain is emerging as a top GOP presidential contender. Mr. Gramm is back both in his good graces and as an increasingly influential adviser on spending, entitlements and trade.

The former Texas senator says he's happy with his new life as an international bank executive with the Swiss-based UBS AG Bank and doubts he'll return to public life. But the former Texas A&M economics professor, once touted as a possible treasury secretary or Federal Reserve chairman, didn't totally rule it out.

"I don't know," he said. "As of today, I don't think so."

The McCain-Gramm relationship has been one of the more interesting ones in Republican politics over the past two decades. They fought spending and the Clinton health plan in the Senate.

In 1996, Mr. McCain was national chairman of Mr. Gramm's unsuccessful presidential bid.

But four years later, the Texas senator backed his home-state governor, George W. Bush, over his old friend.

Mr. Gramm said it's "not true," as was widely reported, that he announced for Mr. Bush without telling Mr. McCain. And he said their personal ties were always stronger than their political differences.

"McCain and I have always been good friends," he said. "We spent massive amounts of time together over the years. We've disagreed on issues vehemently. But we've always had a good personal relationship."

John Weaver, a 1996 Gramm adviser who is Mr. McCain's top political operative, said the two speak regularly. "He obviously gives us advice on economic issues, and he always was a very good political strategist," Mr. Weaver said, noting they share especially close views on the budget.

Mr. Gramm gained renown in Congress as co-sponsor of the Gramm-Rudman-Hollings law that curbed federal spending in the mid-1980s. Mr. McCain has been highly critical of current spending practices.

"He has been the strongest advocate of fiscal restraint, certainly since I've been there," Mr. Gramm said, adding he thinks Mr. McCain would act strongly to curb federal spending, something conservatives say Mr. Bush failed to do.

"Would he veto spending bills?" Mr. Gramm asked. "That's like asking whether water will wet you, fire will burn you and a mad dog will bite you. There's no question he will."

He also said Mr. McCain would take on the burgeoning costs of entitlements. "We're going to have to do a lot of unpopular things like raise the retirement age," he said. "The question is who would actually do something about it."

The former senator praised Mr. McCain for backing free trade at a time of growing protectionism.

"I work all over the world now, spend about 25 percent of my time in Asia," he said. "A movement toward protection would be devastating by the U.S. McCain is right on that issue, and he's been courageous on that issue."

And he said Mr. McCain has "great credibility" on Iraq, "having been a warrior and a hero."

He even cited as a positive Mr. McCain's occasionally explosive temper, something that has raised past questions about whether the ex-Vietnam prisoner of war is temperamentally suited for a high-pressure job like the presidency.

"One of the things I like about McCain is that he has not lost the ability to be outraged," Mr. Gramm said. "I think that is a good thing. Americans like passion."

Besides giving policy advice, two former aides said Mr. Gramm, who once memorably described money as "the mother's milk of politics," has been helping the Arizona senator with fundraising.

A key figure in his 1996 fundraising operation, Carla Eudy, now works for Mr. McCain. And former Texas Rep. Tom Loeffler, a key fundraiser for Mr. Gramm and Mr. Bush, is helping Mr. McCain.

When Mr. Gramm was in the Senate, opponents said the most dangerous place was between him and a camera. But since he retired in 2002, he has kept a low profile.

"I made a decision when I left that there's nothing worse than a guy who leaves who won't leave," he said. "I'm doing something else now. Part of my happiness is closing the door."

New York-based, Mr. Gramm also spends time at his Goat Cave Ranch outside San Antonio.

"I'm in a happy position," he said. "I've been in public life. I didn't leave it feeling unfulfilled. And if I do something, I'm going to do it in a very low-profile way."