Stockman Quits, Will Take Job on Wall Street : President Says Controversial Budget Director Served With Distinction; No Successor Named

David A. Stockman, the brash, brilliant champion of the Reagan Administration’s campaign to slash the federal budget, announced his resignation Tuesday as director of the Office of Management and Budget to take a job on Wall Street.

Stockman, 38, who took Washington by storm in 1981 when he emerged as the boyish yet indispensable architect of Reagan’s initial attempt to reverse years of escalating spending on entrenched domestic programs, will remain as budget director until Aug. 1.

Stockman survived several uproars over his outspoken positions on touchy subjects, in part because he served as a lightning rod for criticism that might otherwise have been directed at Reagan and some of his other advisers. He offered to resign in December, 1981, after being quoted in the Atlantic Monthly as questioning the rosy assumptions behind Reagan’s economic policy.

Taken to ‘Woodshed’

But the President rejected the offer after summoning Stockman to the White House “woodshed” for a well-publicized “spanking.” And in a statement accompanying the White House announcement of Stockman’s resignation, Reagan said:

“David Stockman has served with dedication and distinction. His tireless effort to bring fiscal discipline to the federal government and ensure economic stability for the country are deeply appreciated.”

Stockman, a two-term Republican member of Congress from Michigan before he was appointed to his Cabinet-level job in the Reagan Administration, will become a managing director of Salomon Bros. Inc., a leading New York investment firm, as of Nov. 1. Salomon Bros. declined to disclose his salary, but it surely will exceed his $75,100 as budget chief.

No successor for Stockman was named. But speculation both inside and outside the Administration focused on Commerce Secretary Malcolm Baldrige, Deputy Secretary of the Treasury Richard Darman and White House policy assistant John A. Svahn. Several officials suggested that the White House would pick a dark-horse candidate.

Stockman’s departure this year had been widely expected. He had expressed increasing frustration as he tried to achieve the politically painful spending cuts that he viewed as necessary to shrink today’s $200-billion-a-year budget deficits. Despite Reagan’s frequent assertions in the past that economic growth would solve the problem, Stockman consistently maintained that it would never produce sufficient tax revenues to erase deficits of that magnitude.

The announcement of his resignation left both his supporters and his adversaries with a mixture of admiration and exasperation over his efforts to prod not only Congress but also others in the Administration into action.

‘Knew the Numbers’

“When they lose Dave Stockman,” said Sen. Lawton Chiles (D-Fla.), who acknowledged he once tried to hound Stockman out of office, “they lose the only man they had that really knew the numbers.”

Senate Majority Leader Bob Dole (R-Kan.), a chief of the congressional team pushing for deficit reductions, said Stockman has faced a “a few bumps in the road over the past five years, but overall he’s done an outstanding job.”

Dole, in a dig at House Republicans who have resisted many Draconian budget cuts proposed by Senate GOP leaders, added: “Those who believe you can leave it all up to growth and supply-side economics will probably break out the champagne tonight, but one bottle ought to be enough for that crowd.”

One Administration official, who asked not to be identified, said Stockman had transformed the budget office into the controlling lever over the government’s entire social policy. But he worried that Stockman’s resignation would leave the White House with a huge gap that might prove impossible to fill.

Called a ‘Babe Ruth’

“How do you replace the Babe Ruth of the budget?” he said. “He has been the most important policy official in the Administration for the last five years.”

Reminding reporters that Stockman is certain to receive a large salary increase when he goes to Wall Street, Senate Assistant Majority Leader Alan K. Simpson (R-Wyo.) joked that Stockman would “earn five times what he earns here. He’ll earn as much as any third baseman in the American League.”

White House officials insisted that the announcement of Stockman’s departure would not upset delicate negotiations with Congress over next year’s budget. “I can’t see him being a lame duck,” one official said. “He’ll still be the smartest guy in the room.”

Stockman, who previously had served two terms as a nearly unknown representative from Michigan, came to Reagan’s attention during the 1980 campaign when he acted as a surrogate for the presidential candidate’s opponents in trial debates.

Impressed by Brazenness

Reagan, jesting that “I lost every debate to Dave Stockman,” was impressed by his brazenness as a sparring partner and decided to make Stockman the youngest Cabinet-level appointee in more than 150 years.

Stockman, managing to memorize hundreds of spending programs even before assuming the task of riding herd over the budget, overwhelmed objections to cutbacks from Reagan’s slower-moving Cabinet heads and was crucial in ramming through Congress a budget that called for $40 billion in domestic spending reductions.

After that initial blitzkrieg, however, Stockman dropped into the background when the Atlantic article forced him to apologize for what he called “poor judgment and loose talk.”

Forged Alliances

But even though Stockman got himself and the Administration into trouble politically from time to time, he survived when others might have lost power because of his ability to forge alliances with White House officials who believed what he said but were unwilling to say it publicly themselves.

Several months ago, Stockman told White House Chief of Staff Donald T. Regan, a former rival for control over economic policy, that he would resign this year, according to OMB spokesman Edwin Dale, and privately disclosed his plans to leave last week to key Administration and congressional leaders.

He will depart, however, having demonstrated how difficult it is “to overcome the institutional inertia against fundamental change,” said David Gergen, former White House director of communications under Reagan. And John M. Albertine, an Administration ally as head of the American Business Conference, said that several years of “tough, tough negotiations” had left Stockman “feeling the burdens of office. He was getting awfully weary.”

Praised by Critics

Even critics, such as conservative supply-side economist Alan Reynolds, said Stockman has “been an extraordinarily competent OMB director,” while insisting that his emphasis on huge budget cuts had “been a definite liability for the Reagan Administration.”

And John Bickerman, research director of the liberal Washington-based Center on Budget and Social Policies, acknowledged that Stockman was “so effective early on because he maintained his intellectual integrity.” But he argued that Stockman sometimes “politicized OMB by producing analyses that turned the facts on their ears.”

Stockman is married and recently became a father, interrupting his hectic schedule for only a few hours to join his wife at the birth of their daughter.