Senator Ted Kaufman’s father went to Penn. His mother went to Penn, too. So did two of his sisters.
But Kaufman? Well, Kaufman bucked the trend. When it came time for college, he chose … Duke. “I wanted to get away from home,” Kaufman says. “You know — new experiences and all of that stuff.” He didn’t stay away for long.
Soon after graduation, Kaufman says he quickly realized all of the people making the important decisions at his company were the ones with business degrees. So he decided to get his MBA. And he didn’t think twice about where he was going to get it. He returned home, and enrolled at Wharton.
“I came to Wharton with a lot of questions,” says Kaufman, WG’66. “Questions about how you do administration, how you do accounting and finance and marketing. I really came in with a whole bunch of questions. And I didn’t miss a single class my entire time there.”
He got answers to all of his questions, too. Today, he’s especially thankful for that.
As new member of the U.S. Senate serving at a time of historic economic turmoil, Kaufman says he appreciates his Wharton experience more than ever. His Wharton degree, Kaufman says, has not only helped him diagnose some of the problems wreaking havoc on America’s financial system, but has also given his opinions a certain cachet in Washington. Even those loud-talking cable shows seem impressed.
“Only 1,800 people have ever been in the Senate of the United States,” Kaufman says. “It’s a great thing — a great thing to be able to do. And this is absolutely, completely, totally true: I am so glad I went to Wharton. I feel so much more competent to deal with these problems that the country is facing.”
Though technically a Senate freshman, Kaufman is not your typical newbie. He worked for 22 years as chief of staff to then-Senator Joseph Biden, ran several of Biden’s campaigns, and, last fall, also served on President Barack Obama’s transition team. Once he saw his old friend Biden off to the White House, though, Kaufman had anticipated that his political days might be over.
Then, in late November, while waiting to board a plane at the Philadelphia Airport, Kaufman’s phone rang. On the other end was Delaware Governor Ruth Ann Minter, asking him if he’d be interested in taking Biden’s Senate seat.
After some thoughtful consideration, and consultation with his family, Kaufman accepted. In the months since, he’s been busy both adjusting to life as a Senator and working with his colleagues to help right the U.S. economic ship.
We sat down with Kaufman for an hour-long conversation in early April.
Q: After graduating Wharton, you went to work for DuPont. How did you end up getting into politics — and working as Joe Biden’s chief of staff?
A: I went to work for DuPont and moved down here [Delaware]. I did a number of different jobs and moved to a number of different cities. In 1972 I ended up working on a development project, doing market development work, and I got involved in a very minor way in the Democratic Party. I met Joe Biden, who was then 29 years old, and he was running for the United States Senate against a fellow named Caleb Boggs. [Boggs] was beloved. He was probably the most beloved politician in the history of the state. And Joe Biden is running at 29. He’s running in a year when the top of the Democratic ticket was George McGovern, and the top of the Republican ticket was Richard Nixon. [Biden] asked me if I would help him with his campaign. I said I would, but I also told him he had no chance of winning. But I said the reason I would help him was … back in 1972, he was talking about the environment. Nobody else was talking about the environment. He was talking about the criminal justice system. No Democrat was talking about criminal justice. He was talking about fiscal responsibility. No Democrat was talking about fiscal responsibility. He was talking about all of those issues. So I told him, ‘It would be great to help you, to help your campaign — part-time.’ Then he pulled [the upset]. I would challenge anyone to find a greater upset than the one he pulled. As you know, six weeks later his wife and daughter were killed in an auto accident. He called me in January and asked, ‘Would you come and help me get the office started? Because I need some help.’ So I took a one-year leave of absence from DuPont. And I stayed for 22 years.
Q: What were those years like?
A: I was his chief of staff for 18 years, and was involved in everything he did — from [choosing] Supreme Court justices to his presidential race. I was there for the aneurysms — he had two. We didn’t have a Senator for seven months, and I was his chief of staff. I went through everything with him for 22 years, but in 1995, I decided I wanted to get involved in a bunch of different things. I started teaching at Duke University. I was appointed to the Broadcasting Board of Governors. I had a little consulting business, primarily doing consulting for Sen. Biden’s campaigns. I was involved in his 1996 campaign, his 2002 campaign, his 2008 campaign. I was involved in his presidential race. When that race was over, I was involved in his vice presidential campaign. Then, after he [was chosen], he and I were traveling somewhere and he asked me [if I would have any interest in replacing him]. And I thought about that for a while. It was going to be a real lifestyle change for me. I had really been in control of my schedule. But it didn’t take me long to say yes. Whether or not [the governor] was going to pick me or not, well, that was another matter.
Q: Well, she did. When did you get the call?
A: It was right before Thanksgiving. My youngest daughter and her husband and three of my grandchildren live in London, and my wife and I were going to go over there to renew the fact that, yes, these children are half American and there is a thing called Thanksgiving that we celebrate here. We literally had our bags packed and had gone to the airport, and then Ruth Ann called and said, ‘Would you like to be a senator?’
Q: What was your reaction?
A: That’s a good question. It was, ‘I hope I made the right decision.’ Because my life was really going to change. But my kids and my grandkids were so excited. And so many of the people that I really respect in the world, when the news came out, they called me and saw me and said, ‘This really is a great thing.’ So it wasn’t long before I said, ‘I’ve made a really good decision here.’ [laughs] But I wasn’t at all sure that I’d done the right thing right away. It’s a lot of stress, a lot of real lifestyle change. I knew what I was getting into. So I did have some concerns about that.
Q: You had been around the Senate for two decades as Sen. Biden’s chief of staff. But when you returned as an actual member, was it exactly what you expected?
A: It was really quite extraordinary to me just how quickly I felt absolutely comfortable. I just felt really, really comfortable. It’s incredible how, after the 22 years I did this, I never realized how welcoming senators are to a new senator, how nice they are to you and how friendly they are to you. I’m talking about Republicans and Democrats. I had very conservative Republicans call me and say, ‘Let’s go have a cup of coffee.’ That doesn’t mean there aren’t disagreements. But it’s much more [friendly] than when I left. When I left, the lack of civility was personal. There was a lot of personal animosity between members of Congress. I haven’t detected that and it’s really one of the big surprises to me. With most senators, there may be strong words about the economic recovery package or these other issues, but it doesn’t seem to carry over into personal relationships. Even on the floor, if you watch on C-Span, they’re very friendly with each other.
Q: Is the media coverage a little more ferocious today than it was when you worked for Sen. Biden?
A: Oh, not a little more. Much, much, much more. That’s one of the reasons for the perception that Congress is so partisan. The example I used in my [Duke] class is this: If there are two press conferences going on in the Capitol, and there’s one press conference that affects 95 percent of the people in the country and you have a Democrat and Republican up there to announce they’ve come to an agreement, and in the other part of the Capitol there’s an issue that affects 5 percent of the people — virtually nobody — but you’ve got a member of the Republican party and a member of the Democratic party up there shouting at each other, that’s where the cameras are going to be. A lot of this has to do with the shout shows, a lot of it has to do with the cable coverage, and there’s no doubt the media is a major factor in this perception of partisanship. But what people forget is … they become Republicans or Democrats because they have strong opinions about certain things, especially on economic issues. If you wake up a Republican at 3 a.m. and say, ‘There’s a downturn in the economy,’ they’re going to say, ‘Cut taxes.’ If you wake up a Democrat at 3 a.m. and say, ‘There’s a downturn in the economy,’ they’re going to say, ‘We’ve got to do something about jobs, and unemployment compensation, and health care so people aren’t getting hurt.’ That’s just the way they are. So when you start putting together a recovery package, the big argument about that, when you cut right through it, is what percentage should be tax cuts and what percentage should be about jobs.
Q: Can you give me a sense of what it takes to put a package like that together?
A: It takes Presidential leadership — the bully pulpit. It takes strong leadership in the House and the Senate. And it takes a lot of coordination between the three. I remember Jimmy Carter, after he was President, he was asked, “What’s the one thing you learned while President?” And he said, “You never propose comprehensive legislation.” The reason is, people may not agree on a single thing, but if you don’t like Title 1 and I don’t like Title 2, while we might not agree on everything else, we do agree that we’re opposed to the bill. That’s really what happens. And you can’t get much more comprehensive than the Economic Recovery Act.
Q: Were American business leaders generally supportive of the bill? Republicans quite obviously were not.
A: We couldn’t have gotten it passed without business support. The U.S. Chamber of Commerce endorsed it. I can’t think of a time in all the years I’ve been here where even 70 percent of Republicans voted against a bill supported by the Chamber of Commerce. So the idea that 99 percent of House and Senate Republicans voted against a bill supported by the Chamber? Incredible. The one thing I love about this stuff, and I’ve been around it for 36 years, is that you’ll see everything. Just about the time you think you’ve got it all figured out, something will happen and you’ll go, ‘Oh, my, how did that happen?’ I think business knew how absolutely essential it was to get this thing passed.
Q: Does the size of the bailout concern you?
A: Oh, absolutely. But it’s like that old joke — how are you going to worry about draining the swamp when you’re up to your thighs in alligators? The one [comparison] I always use is that this is like fighting a forest fire. You build a break. You spend hours and hours and cut down trees and build that break and if you miss by one foot — if one spark comes over to the other side — all that work is for nothing. So if you don’t put enough stimulus in the stimulus package in order to get the economy moving again, you’ve just thrown away all of that money. The real concern here is that we have got to get the economy moving again. Do you realize the deficits we’re going to have if we don’t turn this around real quick? If this thing goes another year beyond where it has to go? Look at Japan. Japan tried to piecemeal it [in the 1990s], and they had 10 years of rough going.
Q: There are some who would say that government cannot regulate against the next financial meltdown — that any regulations crafted today would be crafted for the last meltdown, not the next one.
A: This isn’t about the details of regulation. It’s about whether we’re going to even have regulation. One of the things I took away from Wharton is that I am a full believer in the power of markets. I think markets are absolutely incredible. I think markets and democracy are the two ideas that are going to make the world good and make the world better. But I’ll tell you what — you need regulation. You need police. You don’t pull police off the street. That’s not what you do. In fact, the president recently signed a piece of legislation into law that I introduced earlier this year to address just this — the fact that critical resources were diverted away from the agents and prosecutors who handle financial fraud cases. With reports of mortgage and corporate fraud at an all-time high, the Fraud Enforcement and Recovery Act will ensure the financial fraud that significantly contributed to our economic downturn no longer goes unregulated. This is also not about whether we’re going to change or not. You don’t go through one of these things and then have people say, ‘Oh, OK, let’s move on.’ We are going to change. The world is never going to be the same. We’re going to have to get back to certain things — some things I learned at Wharton … like the whole idea of conflict of interest. Somehow we lost track of the fact that if you have somebody who is a broker and also a dealer, that maybe they’ve got a conflict of interest, and when you’ve got a conflict of interest you’ve got to do something about it. This goes back to the old arguments when the accountants were doing consulting. You can’t have accountants doing consulting. But then we did it, and we broke it apart. So now we’re going to have to break up these conflicts of interest. We made some mistakes that led us into this thing.
Q: You were working with Senator Biden during the downturn in 1981-82 and the one in the early 1990s. So I have to ask: How does this crisis compare?
A: This is the worst since the big one. And it’s not over. That’s the scary part. Here’s my rule: Until housing prices stop going down, and until unemployment stops going up, anybody who gives you a timeframe on when this is going to end — I would treat their [opinion] very carefully. Because nobody knows. We’re in a rough spot here. But I think we have a good plan. I think the economic recovery package was a good first step. I think we’ve got good people working on it. Geithner, Summers, Bernanke, they’ve done a great job. The one positive thing I’ll say is this. There was the old Wharton MBA rule [when I was in school] that the first thing you’ve got to do is define the problem. Until the last two weeks or so, I don’t think we knew, definitely, the size of the problem. We didn’t know how credit default swaps worked. When AIG loses $62 billion in one quarter? Ha. I don’t think anyone in the world thought AIG could ever lose $62 billion in its lifetime. So clearly, we didn’t know what was going on there. But now, the feeling from the administration and from the Fed is that they’re finally getting a handle on the scope of the problem, and the dimensions of the problem.