Stockman became one of the most controversial OMB directors ever, which lasted until his resignation in August 1985. Committed to the doctrine of supply-side economics, he assisted in the passage of the "Reagan Budget" (the Gramm-Latta Budget), which Stockman hoped would be a serious curtailment of the " welfare state". He thus gained a reputation as a tough negotiator with House Speaker Tip O'Neill's Democratic-controlled House of Representatives and Majority Leader Howard Baker's Republican-controlled Senate. During this period, Stockman became well known to the public during the contentious political wrangling concerning the role of the federal government in American society.

Stockman's influence within the Reagan Administration was negatively affected after the Atlantic Monthly magazine published the infamous 18,246 word article, "The Education of David Stockman", [7] in its December 1981 issue, based on lengthy interviews Stockman gave to reporter William Greider.

Stockman was quoted as referring to Reagan's tax act as: "I mean, Kemp-Roth [Reagan's 1981 tax cut] was always a Trojan horse to bring down the top rate.... It's kind of hard to sell 'trickle down.' So the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory." [7] Of the budget process during his first year on the job, Stockman was quoted as saying: "None of us really understands what's going on with all these numbers," which was used as the subtitle of the article. [7]

Business career[ edit]After leaving government, Stockman joined the Wall St. investment bank Salomon Brothers and later became a partner of the New York–based private equity company, the Blackstone Group. [14] His record was mixed at Blackstone, with some very good investments, such as American Axle, but also several large failures, including Haynes International and Republic Technologies. [15] During 1999, after Blackstone CEO Stephen A. Schwarzman curtailed Stockman's role in managing the investments he had developed, [16] Stockman resigned from Blackstone to start his own private equity fund company, Heartland Industrial Partners, L.P., based in Greenwich, Connecticut. [17]

On the strength of his investment record at Blackstone, Stockman and his partners raised $1.3 billion of equity from institutional and other investors. With Stockman's guidance, Heartland used a contrarian investment strategy, buying controlling interests in companies operating in sectors of the U.S. economy that were attracting the least amount of new equity: auto parts and textiles. With the help of about $9 billion in Wall Street debt financing, Heartland completed more than 20 transactions in less than 2 years to create four portfolio companies: Springs Industries, Metaldyne, Collins & Aikman, and TriMas. Several major investments performed very poorly, however. Collins & Aikman filed for bankruptcy during 2005 and when Heartland sold Metaldyne to Asahi Tec Corp. during 2006, Heartland lost most of the $340 million of equity it had invested in the business. [18]

Collins & Aikman Corp.[ edit]During August 2003, Stockman became CEO of Collins & Aikman Corporation, a Detroit-based manufacturer of automotive interior components. He was ousted from that job days before Collins & Aikman filed for bankruptcy under Chapter 11 on May 17, 2005.

Criminal and civil charges[ edit]On March 26, 2007, federal prosecutors in Manhattan indicted Stockman in "a scheme ... to defraud [Collins & Aikman]'s investors, banks and creditors by manipulating C&A's reported revenues and earnings." At the same time, the Securities and Exchange Commission brought civil charges against Stockman related to actions he performed while CEO of Collins & Aikman. [19] Stockman suffered a personal financial loss, estimated at $13 million, along with losses suffered by as many as 15,000 Collins & Aikman employees worldwide.

Stockman said in a statement posted on his law firm's website that the company's end was the consequence of an industry decline, not fraud. [20] On January 9, 2009, the U.S. Attorney's Office announced that it did not intend to prosecute Stockman for this case. [21]