Kirsten Gillibrand was the first woman elected to represent New York’s 20th Congressional District in the U.S. House of Representatives. Rep. Gillibrand spoke to us about voting against the bailout, the potential benefits to the Hudson Valley of Obama’s stimulus program, the political and cultural aspects of same-sex unions, and the biggest lesson of her first two years in Congress.InsideOut: You voted against the bailout. Why?
Kirsten Gillibrand: The thing about that bill was that fundamentally, it wouldn’t work—it did not have a strategy that the experts thought could actually address the problem. There wasn’t a real recognition of what the problem was, because a lot of folks were saying it was just a problem of banks not lending—a problem of liquidity, as they say.
The experts were saying it was a problem of insolvency, that these banks actually had so many outstanding liabilities that they were worth nothing. So what Paulson presented was a plan to overpay for bad assets. He was going to pay 90 cents on the dollar, as opposed to the market value of 10 cents on the dollar, or maybe the true value of 30 or 40 cents on the dollar. Overpaying for the bad assets to make the books look better wasn’t going to solve the problem.
IO: It seems self-evident as you speak. Why was this so hard to understand?
KG: Apparently—[and] I wasn’t in the negotiating room—[Treasury Secretary Henry] Paulson just played hardball. He did not want to buy the banks. I thought he should have an equity focus [on] buying preferred shares, getting voting rights, getting seats on the board, and actually making these banks recapitalize and become healthier institutions—to have that oversight, so you could actually determine, Are these banks insolvent? And what would need to be done to correct that?
He declined to do that during the negotiations. He said, “I don’t want to own banks. I’m not doing it. It’s my way or the highway.” Now, what happened, obviously, [is that] the bill failed the first vote. The stock market went down 700 points, and people were gravely concerned that the economy was in a spiral downturn. I agreed that we did need to do something, but my view was that this wasn’t the right something—that in fact, if we just did this, it wouldn’t work. And you’d waste $700 billion, you wouldn’t have another $700 billion to invest afterwards, and your one opportunity to right the ship would be lost.
IO: So what did you advocate?
KG: I worked all week during the first vote, before the second vote, to try to get the parameters of the bill changed. I wanted to have a large equity component. I wanted to have better oversight; I didn’t want Paulson put on the oversight board. I wanted to increase FDIC limits, which we did.
I wanted to regulate the credit-default swap market, which, still unregulated, is a very serious problem. I figured if everybody’s going to vote for something, let’s get the regulation out of the way. Let’s make sure all of these derivatives (derivatives are traded on an exchange so that there’s transparency, [so] we know what the volume is, and whether these banks are insolvent or not) have some capital requirements—because they were using these derivatives as insurance. And in the insurance industry, you have to have capital requirements.
In some instances, these derivatives are like Las Vegas bets. [A guy is] literally saying, “I bet you a billion dollars that Joe’s portfolio’s going to go up.”
And the other guy says, “Well, I bet you a billion dollars Joe’s portfolio is going to go down.”
So it’s kind of crazy that there are no capital requirements for any of these derivatives, no transparency, and no regulation
.
IO: It’s particularly crazy, given who the treasury secretary is.
KG: Yeah. He’s an investment banker.
IO: A very smart guy…
KG: Yes, but you’ve got to remember, his training and background [are] in investment banking. His job’s to make money. We needed someone who had a little bit more of an economist’s background—somebody who perhaps had a wider view. Because it wasn’t about making money. It’s about how do we fix our financial system?
I mean, the whole system was cratering before our eyes. I worked during that week to try to fix the bill. I was not successful. The Senate took it over. They kept the same bill in place, and just stuck all the tax cuts on it. So I didn’t vote for the second version, either.
IO: Congratulations on taking that strong stand. What’s your position on the “Detroit bailout”?
KG: What I wanted, and what the House got close to, was to create something like a bankruptcy restructuring. The industry said, “You can’t do bankruptcy, though, because if you did, no one would buy our cars.”
IO: That’s what they’d say…
KG: Because they’d be worried about parts and stuff, and [who] would buy a car from a bankrupt company? That’s fair enough, [but] if that’s true, then let’s create something like a restructuring—[and] not go to bankruptcy court. Instead of a bankruptcy administrator, they created a car czar, but [they] do all the hallmarks of bankruptcy: discontinue product lines that are not cost-efficient, don’t pay dividends, zero-out stockholders and bondholders.
Create a product that people are willing to buy. Make sure it’s energy efficient. Get rid of some of the debt that you have. Create a new, restructured company that’s leaner and more effective.
IO: It would appear that there’s going to be a lot of pain.
KG: It’s going to be awful. The reason to do the restructuring is to save an industry that must be saved. From my perspective—from a national security perspective—we must have the ability to create the platforms that our military needs. Whether it’s trucks or Jeeps or tanks, you need to have that manufacturing in this country. What you want is the industry to survive, and writing them a blank check will insure that they don’t survive.
I did want protection of employees and their life savings. I thought it was really important that if anyone’s going to be first in line, it would be an employee before a stockholder or a bondholder.
IO: We keep waiting for someone to ask, “If you really care so much about this, why don’t you give back, say, your $27 million compensation from 2007?”
KG: That’s exactly the kind of sacrifice that you need to see, because those executives have failed. And they shouldn’t be compensated on that level.
IO: It would be impressive if they gave it back, but they’re not being asked to do that. They’re being asked to come by car. We need less symbolism…
KG: …and more brass tacks. I think the executives should be replaced. I think they should return salaries. I think they should make those sacrifices for the good of the industry.
I think having these companies liquidate would be a very bad thing for my district. We would lose 3,000 jobs right away. And it would be bad for New York state, [which] risks losing over 80,000 jobs and $34 billion in revenue a year.
IO: We’re conducting this interview in Athens, a little town in Greene County. What, if anything, do you think the “Obama stimulus program” is going to mean for places like this?
KG: I think he could have a big impact. If he invests in infrastructure on a large scale—$500 billion to $700 billion over the next two years—that [will] allow our local government to have access to very necessary funds.
It will mean new stores, money for roads and bridges, money for high-speed rail—or light rail—for transportation. It’ll mean money for flood prevention. The Army Corps of Engineers will be funded. It will mean money for high-speed Internet, which is really important for the rural areas of our district for businesses to grow. It will mean money for healthcare and better Medicaid reimbursement rates, so our hospitals can treat more people.
IO: We have all this farmland around here. Will there be investment in energy efficiency?
KG: The second piece of his plan should be the $150 billion over 10 years that he promised during the campaign: tax incentives, tax credits, and research and development grants for alternative energy, conservation technologies and new products. That’s great for the entrepreneurial aspect of our district, because we have a lot of entrepreneurs. Farmers can create secondary revenue streams to create cellulosic—non-food-based—ethanol.
A lot of our farms have tried to go energy independent. We got money, in fact, this last year, for an anaerobic digester for one of our dairy farms to use manure to create methane. We also got money for solar panels to go on one of our barns to make the farm energy-efficient. So our farmers can have a huge role in alternative energy production and conservation technologies. All businesses can use the conservation technology.
Upstate New York [has] a manufacturing base, so we can actually manufacture wind turbines, new building materials that are energy-efficient, and fuel cells and battery technologies for any product that runs on an energy source. We’ve got the beginnings of this high-tech corridor already in our district, with IBM in the south, with AMD coming in the north. We can really create jobs. And for somebody who lives in Athens, those are great manufacturing jobs.
IO: What about transportation on the river itself? It used to be that these river towns were connected by ferries and boats.
KG: Water taxis are really valuable. For transportation, I’m hoping we get a light rail system up the [Interstate] 87 corridor. That would be my first choice. Second, we need a better bus system. Third, you could begin to invest in more barges and water taxis.
Because oil prices and gas prices were so high last summer, people were starting to [ask], “How do I reduce transportation costs?” One of the solutions, interestingly enough, was barge technology on the river.
IO: Do you think that the recent, precipitous drop in oil prices will adversely affect these technologies?
KG: I don’t think so. I think people really have a sense of urgency, and a sense of fear. They felt that they were being manipulated with speculation and other factors. They don’t want to see their businesses be in such a precarious place ever again. I think there’s a real sense of urgency now, because they saw how severe it could be: Manufacturing companies were reducing shifts because they couldn’t afford to have the plants open for the third shift.
They’ve seen it—and they’ve also seen that it’s a whim. Prices were going up for no reason. It wasn’t supply and demand: It was manipulation. I think there’s an enormous resentment now, that we do not want to be beholden to Middle Eastern oil ever again.
IO: If you were giving advice to someone who had just finished college and lived in this area, which fields would you suggest they go into now?
KG: I would suggest they go into [the] high-tech sector, and the energy sector in particular. Be the entrepreneur who builds the battery that can make a car get 240 miles per gallon. Be the engineer that figures out how to build a light rail system down the [I-]87 corridor. Be the person who invents the new building materials that are energy efficient. That’s what’s happening already.
Our graduates from RPI [Rensselaer Polytechnic Institute], Bard [College], the community colleges, the whole SUNY system: They are the solution. They are the entrepreneurs and the inventors that are going to figure out how to make us energy independent. So, I’d focus people on engineering, math, sciences, because I think that is where the solutions are going to be, and that’s where the jobs are going to be.
IO: A decent portion of our readers are gay. What’s your position on same-sex marriage?
KG: What I’d like to do legislatively, on the federal level—and I think we’ll be able to do this with the new president—is actually make civil unions legal in all 50 states, make it the law of the land. Because what you want to fundamentally do is protect the rights and privileges of committed couples, so that they can have Medicare benefits, visit in the hospitals, have adoption rights. All [the] things that we give to married couples, committed gay couples should be eligible for. And then the question of whether you call it a marriage or not, what you label it, that can be left to the states to decide.
[It’s] so culturally oriented. My mom’s generation, they want their gay friends to have every right and privilege that they should be eligible for as a married couple, but they feel uncomfortable calling it marriage. To them, a marriage is a religious word that they learned from the Catholic Church: It’s a covenant between a man, a woman, and God. So they feel uncomfortable with the word. But they don’t feel uncomfortable with the rights and privileges.
I think the way you win this issue is you focus on getting the rights and privileges protected throughout the entire country, and then you do the state-by-state advocacy for having the title.
IO: You’re a relatively new congresswoman. Looking back, what did you not “get” before you got here?
KG: The thing that I didn’t know when I started the job was how slow the process of change is. When I got elected, I thought we could get 50 miles per gallon, 51 percent renewable within 10 years—a lot of really exciting goals, and a vision for this country that I felt the electorate really asked for. That takes a long time. Last term, we passed 35 miles per gallon and 15 percent renewable by 2020—modest, incremental reform. The Senate is extremely slow: They have enormous difficulty passing the bills that even get through the House.
That’s the reality that I’ve recognized in my two years: that it takes time to change the world.
IO: And what’s the most fun for you?
KG: I love being in the district, talking to constituents. “Congress at Your Corner” is the most fun I have. I enjoy meeting with people one-on-one, trying to help them with their individual problems, trying to be an advocate for our farmers and our veterans and our seniors. I enjoy the fact that my office can really make a difference in an individual’s life.
