WASHINGTON – Lampooned for calling America a "nation of whiners" whose economic woes were mostly "mental," former Texas Sen. Phil Gramm stepped down Friday night as a co-chairman of GOP Sen. John McCain's presidential campaign.

For over a week, Democrats had used his comments to bludgeon Mr. McCain as callous to the struggles of ordinary Americans.

"It is clear to me that Democrats want to attack me rather than debate Senator McCain on important economic issues facing the country," Mr. Gramm said in a statement Friday night – the traditional time to release bad news. "To end this distraction and get on with the real debate, I hereby step down as co-chair of the McCain campaign and join the growing number of rank and file McCain supporters."

The resignation was meant to lance a festering political problem, but being forced to jettison a confidant, top adviser and longtime friend also represents a fairly serious setback for Mr. McCain.

When cash shortages, a bloated payroll and staff infighting left the McCain effort nearly dead a year ago, it was Mr. Gramm who stepped in and led the turnaround. He stumped for Mr. McCain, and with him, in early primary states.

But in an interview with the conservative Washington Times last week, the former Texas A&M economics professor argued that the nation's economic problems are largely "mental" – a message at odds with the feel-your-pain empathy Mr. McCain had struggled to emote. The nominee-in-waiting joked that he'd rather send Mr. Gramm to serve as ambassador in Belarus, an Eastern European dictatorship, than name him Treasury secretary.

Mr. Gramm, in a handful of initial damage-control interviews, stuck with his stance.

The McCain camp sent mixed signals. He remained a co-chair, though top aides said he would no longer speak for the campaign.

On Friday, conservative columnist Robert Novak reported that Mr. Gramm would in fact continue to both advise and speak on behalf of Mr. McCain. That fueled a fresh round of taunting from Democrats and led to Mr. Gramm's ouster.

The other side wasn't eager to let him off the hook.

"The question for John McCain isn't whether Phil Gramm will continue as chairman of his campaign, but whether he will continue to keep the economic plan that Gramm authored and that represents a continuation of the polices that have failed American families for the last eight years," said Obama spokesman Hari Sevugan.

Staff writer Dave Michaels in Washington contributed to this report.