An eight-term congressman from California, he joined the Clinton administration in 1993 as budget director and became White House Chief of Staff the following year. He left after Clinton's reelection in 1996. Interview conducted June, 2000 by Chris Bury

My real first experience with him was when he interviewed me for director of the Office of Management and Budget. I remember going down to Arkansas and into the governor's mansion. He came in and immediately dove into budget issues. He wanted me to talk about the budget process, how he would get his budget through. He talked about deficits. And it was clear to me that this was someone who was extremely bright and able to kind of grab the nuances that oftentimes a lot of congressmen can't grab in terms of the budget process. So my first impressions were: extremely bright, a good listener, and seemed very committed to trying to get something done.

During the transition, there is immediately an argument within the transition team about what ought to be addressed first. There's a group of deficit hawks, and there's a group of people who feel strongly about campaign promises that have to be fulfilled. What was the atmosphere like at that point during the transition?

The best thing I had going for me was that I was a deficit hawk who had worked on the budget, and had said to the president, "Look, if you don't control the deficit issue, you're simply not going to have the resources to commit to your priorities. The two go hand in hand. It isn't a question of either-or. It's a question of whether or not you're going to confront the deficit issue in order that you then have the resources to deal with education and health care, and the other things that you're interested in."

There was an ongoing debate, mainly because dealing with budgets is never easy. I've never found it to be easy, because you have to cut programs. You got to cut spending. You got to raise taxes. And a lot of people were concerned about the politics of the combination of the two, obviously. It's much easier to turn to priorities than deal with deficit reduction.

. . . I think the president understood that his first obligation as president is to present a budget to the country. And so it was pretty clear that his first priority was going to have to be to confront the budget issue, and he understood that and accepted that.

Some of the political people have said that they felt at that moment a sense of betrayal -- that the newly elected president was caving in to the old hands of Washington and ignoring the promises he made to the people to put people first.

With a lot of people who had fought in the campaign, when you talk about deficits, their eyes went blank, because they never thought of controlling the deficit as a sexy political issue; whereas when you're talking about education or health care, that's a lot more meaningful to them and to the American people. So it took a lot of work to try to convince them that the nature of the way a president and Washington work is that a new president's first obligation is to present a budget. And he can't go in and say, "Well, I'm going to ignore everything I said about the deficit." Don't forget, this president had also said to the country that he was interested in controlling the deficit, reducing it, and moving to a balanced budget. That had become a big campaign issue because of Perot. . . . You now have to consolidate the promises you made during the campaign to a lot of people into policy, and you can't make policy work unless you deal with the budget. Budget is not just about numbers. And I kept telling a lot of the consultants, "Look, budgets are not about numbers. They are about priorities, and ultimately what you do in a budget tells the country an awful about what this president is really about."

Part of the problem, though, to reach the deficit targets that you were getting is that it became clear some kind of a tax increase would be necessary when this governor had been promising, as a centerpiece, a middle-class tax cut. Was that the hardest part to reconcile?

		Clinton outlines the detalis of his economic plan. (2/17/93)

So when I went into the Clinton administration, we realized that the president had also committed to some kind of middle-income tax relief. But it was also clear that, if you're going to confront $300 billion annual deficits, that it's going to take a combination of both spending restraints, as well as revenue increases. That's always been the case. People have gone into contortions trying to figure out how could they avoid those kinds of tough choices, but that's where the choices were. The president, to his credit, was willing to confront that. And in the back of his mind, I think he always said, "If I can do this first, if I can get this budget in control, then there will be a time when I can fulfill my promise for a middle-income tax cut."

When you and others of the economic team told him, "Look, you've got to reach this number," and Greenspan is adamant about this, did he feel at that moment a little bit out of control?

He worried most about the political damage that would result from having to make some pretty tough choices on spending cuts. After all, we were talking about saving money in Medicare and Medicaid, in agriculture, in transportation. All of those areas impact on people and impact on constituencies. And if we're going to raise taxes, clearly he knew there would be some heat that would come from raising taxes. So I think the president's biggest concern was, "What's the political fallout of this, and how long is it going to take once we take this tough step? How long is it going to take for the economy to respond to that so that I can, as president, reap some benefits from the tough choices that we're going to have to make?" So I think his greatest concern was not so much whether or not it had to be done -- I think he accepted that fact. His biggest worry was, what price are Democrats going to pay for doing this?

How did he handle the fact that he had these factions at odds? He had this political team that had gotten him the election, and he had the veterans like you and Bentsen, and they were kind of at war. How did the president deal with that?

The president is someone who really loves to get the best information from the best minds that he can get ahold of. I have never seen him intimidated by an in-depth discussion about issues. He loves that. And I think he relished the fact that this debate was going on, and that very strong views were being presented. He never said, "Cool it. I don't want to hear it." He always was intense, he was interested. He wanted to hear the discussions, because I think in the president's own mind, he constantly was testing exactly, "How far can I go? What can I do?" But he was also smart enough to understand that, when he looked at some of the veterans he said, "These guys have been around a while, and they've seen these wars." And he recognized the fact that it wasn't Arkansas, that it wasn't just a question as a governor of a small state working with that kind of budget. He recognized the differences, and that's why I think he put a tremendous amount of trust in his economic team, which ultimately made the difference in terms of the final product.

You say the president-elect respected the Washington insiders. At the same time, there was enormous criticism that the transition was a disaster in terms of personnel choices, in terms of sending mixed messages. One of the main criticisms from people like David Gergen is they weren't grownups.

Going back over the Clinton administration, there's the good and there's the bad. That was true even for the transition. The president, to his credit, took an awful lot of time selecting his cabinet, because he wanted to get some very good people as part of his cabinet team. So the whole concentration was on the cabinet selections, and a process that was supposed to take, originally, about a month, started to drag into January. And it was because the president really was focusing on trying to make sure that he had good people, that it reflected a cross-section of the United States, that they were people that he could work with, felt comfortable with, respected. To his credit, his cabinet selections were outstanding. Even though he ran into a few bumps at the beginning, the reality is -- at least from my perspective as director of the Office of Management and Budget -- that I have never seen that good a team come together and really work as a team supporting the president...

You suggest that the focus on choosing a cabinet came at some kind of a price?

The price paid for taking all of the time to focus on the cabinet selections was that they didn't take the time to focus on the staffing of the White House. Maybe, in part, they thought that that was just easier. They thought about the experience in Arkansas and the fact that, if you get a few key staff people, you don't have to spend an awful lot of time working on staff in the White House. And so suddenly January 20 comes, and this is the inauguration, the President of the United States is now taking office. And I think they suddenly asked, "What are we going to do for staffing?" So what they did was they turned to a lot of people from the campaign to fill those spots, which is a natural instinct. Any time you run a race, you always try to reward the people who have worked for you in the campaign. But the problem is, as President of the United States, you're talking about positions that have huge responsibility in the White House, that demand some experience in Washington, that demand some experience with the constituencies that you're dealing with. And there were just an awful lot of people who didn't have that. Part of the problem is they just never focused on staffing with experience, and they also did not focus on any kind of structure to insure that there would be discipline within the White House operation itself.

In that first couple of weeks, the administration ran into trouble on the Zoe Baird nomination, and then there was the huge hue and cry that developed over gays in the military. Do you consider those to be examples of missteps on the part of the staff?

Anyone with an ounce of experience in Washington knew that you certainly don't want to take on the gays in the military issue as one of the first ones after going into office. You're trying to lead with your best foot forward. You try to deal with the budget issue and get that in place, your economic plan -- that's what the country cares about. That's not to say that you shouldn't deal with the issue of gays in the military, but obviously, it's one that demanded a lot of work, both with the Congress as well as with the military. To have that suddenly kick off as one of the first issues was what tends to happen in the White House and in Washington. If you allow a vacuum to be created in which you're not delivering your message, a positive message, then into that vacuum will come some very controversial issues that then will dominate your agenda. I think that's the lesson that they learned in that first instance, in the failure to have some continuing messages that they were going to deliver as a new president to the United States. What happened is that both the Congress and the press made gays in the military the first issue. They suddenly found themselves with a controversy they had to confront. I think that was, in part, a problem with . . . too little experience in the White House.

You by then had been director of the Budget Office, you had been a veteran Democratic congressman, you had extensive contacts on the Hill. In those first few weeks, how was this administration going over, even among Democrats on the Hill?

Members of Congress, by their very nature, are a nervous group. They tend to react to almost every headline. They get nervous about whether or not there's a clear, organized focus that will not only help the president, but will certainly help the Democrats. I think their initial reaction early on was that there's some chaos here, and that made them very nervous.

How was the president dealing with this? He has some plans for the transition, and bingo, every headline is Zoe Baird, and then, for days on end, it's gays in the military.

One of the convenient things that was going for me as director of OMB is that, contrary to being chief of staff, I didn't have to deal with a lot of those other issues. But we were in the process of trying to resolve the budget issues. It was pretty clear at the time, as we were trying to pull together the economic plan, that the president was clearly being distracted by these other controversies. That concerned me from the point of view of, is his focus really there in terms of wrapping up these final budget issues? He is very good at compartmentalizing. He is very good at walking into a room and then focusing on the issues that are there. But you can also sense that he was bothered, because this is not what he wanted.

What Bill Clinton wanted from the very beginning is to continue to have that kind of large support that he had in the election and build on it, because that's his nature. He is a person who wants to succeed in everything, and I think it was disturbing to him that these kinds of controversies were beginning to hold him back, and they were bothersome. It was kind of a rude awakening to what Washington was all about, in the sense that Washington wasn't responding to his agenda; Washington was creating its own agenda. Again, that's the nature of that town . . . It isn't like Arkansas, where you can pretty much set the agenda, work with the press. There are a few writers there. You can walk onto the floor of the legislature and lobby yourself for the issues that you want. It's a different ballgame.

They understood it was a different ballgame, but at the same time, they resented the fact that a young president was not enjoying the kind of broad support that they thought they could have, the kind of honeymoon that they thought they could have from going into office. I think they really thought that, like the Kennedys, they would immediately be able to get an awful lot of support from an awful lot of people without having to work it. And in Washington you've got to work it. If you don't, you're going to get killed.

In April of 1993, the White House is in some disarray, and you have an on-the-record meeting with a group of reporters. And the next day, the headline of the Washington Post is: "Panetta: President in Trouble on Hill, Agenda at Risk, Trade Pact Dead." How did that go over with the new president?

In the time that I've been in politics -- over 25 years at that point -- I had always maintained a very honest relationship with the press. And I'm not a very good spinner. I'm basically somebody that says what I feel. And what happened was I met with a group of reporters, and we had a conversation about a number of issues. And then one of the reporters said, "What do you think is going to happen with NAFTA?" And I gave him an honest answer. I said, "At this point, if the vote were held tomorrow, we'd probably lose it," which I think was accurate. So that made the headlines.

And I got up that morning, looked at the Washington Post, and I said, "Oh, man. Well, welcome to . . " Frankly, for me having been in Washington for as long as I had, it was not that much of a surprise. But I called the president. I apologized for the fact that that was the headline, but that it was the answer I gave, that I thought we were in trouble and that a lot of work had to be done, particularly on the NAFTA issue. That's what the focus was. And he said he didn't disagree with that, but that in the future, he hoped I could be a little more positive about what would happen. So it worked out well, and actually, I respected him a lot more for at least being understanding.

Was he angry at you?

Not really. . . . He puts himself in your position and knows that there are times when the press will play up certain statements, so he understood that. At the same time, I think he is, by nature, a positive person who believes that he can cut a deal with anybody, any time, anywhere, any place, and that he can get it done. And I think he, himself, did not believe that he was in as much trouble with the Hill as I did.

In that summer when you're putting together the first budget, what was Mrs. Clinton's role?

In the first meetings that we had beginning in Arkansas, Mrs. Clinton was there. She listened and was attentive and made comments, just like anybody else at that table. As time went on and we continued to meet on the specific line items of the budget, working through every piece, every agency and department, sometimes she'd be there, sometimes not, and more often not. So gradually her participation in those meetings became less and less. But you always knew that if it was something like health care, or an issue like children that she cared about, she would always make her views known.

How was her presence felt in the West Wing? This is the first time a First Lady has her own office. Her own chief of staff moves into the West Wing. How was her presence felt among senior people, such as yourself?

Clearly . . . she was a presence and it wasn't just obviously as the first lady attending events. She was very much involved on issues. She was very much involved in advising the president. She was very much a player on both political, as well as substantive issues. She was there, she was present. She's bright. She's able. She's capable. And so all of those factors were at play. As a matter of fact, when I became chief of staff, I made it a point once a week to brief her on what was going on, because she clearly was interested and involved in what the president was doing. You said that you included Mrs. Clinton in your regular briefings. That was unusual for a White House. What was that like? What was your relationship with Mrs. Clinton?

When she felt that the president, for whatever reason, was not being well served, she tried to fill that vacuum. She would try to then get involved with the staff, she would try to make sure that things were happening. . . .

So when I became chief of staff, I thought it was very important to brief her weekly as to what was going on, personnel-wise, and some of the issues that were being presented to the president. I did that on a regular basis for about six months, and interestingly enough, after that, I think largely because she trusted my relationship with the president, and that things were coming together and things were working better, that suddenly, for whatever reason, we didn't do it. . . . I would stay in touch with her. I'd continue to talk with her. If she had any questions, she'd call me. But it was interesting that after a period, when she felt that the president was comfortable with the relationship that we had with each other, she felt she could do other things.

Was foreign policy, to some extent in this administration, shunted aside? . . . Was the president not terribly interested in it?

Well, you have to understand that "It's the economy, stupid," was more than just a campaign statement. It reflected what the president wanted to focus on -- not only economic issues -- but domestic issues. He really cared about domestic issues. He was involved with domestic issues. As head of the Governors' Conference, he'd worked on education issues. That was where his energy and his compassion came from.

Foreign policy was not something he had done an awful lot with, and so foreign policy became almost a learning process for the president. It was a way to make sure we are doing the right things, but keeping it in place so that, in the end, it wouldn't blow up what he was trying to do domestically for this country. I think that, after a while, this president began to learn what foreign policy was all about. And he became much more effective in dealing with foreign policy issues as a result, but it took a while. In the interim, he relied a great deal on what the vice president said. He relied a great deal on the advisers that he had dealing with foreign policy. . . . I don't know that he ever properly defined what the role of the United States is in this post-Cold War era, where are our national interests, when should we intervene, when shouldn't we intervene, when should we use power, when shouldn't we use power? There's been no sense that that's ever come together. Yet, at the same time, even though it's been oftentimes responding to a crisis out there, you have to say that the president's done a pretty good job in responding to those crises. If peace is the determinative of whether or not your foreign policy has been successful, we have peace.

In that summer, when you're putting together the bill, was there a turning point? Was there some key moment that stands out in your mind? Or is there some particular story that you recall about where this administration is headed?

In putting together the elements of the economic plan, an awful lot of pieces were involved. And one of the things that the vice president was pushing for was to do some kind of fuel tax, some kind of tax on energy.

The BTU tax?

The BTU tax was obviously the one that everyone then focused on. There are a lot of different ways you can approach it. But he felt that the BTU tax was the best way to approach it, because it related to the use of energy and tried to reduce the amount of energy that people used.

There was a lot of debate about that, and what the politics of that was going to be like. I can remember Lloyd Bentsen, an old Texan, being very nervous about the BTU tax in terms of what it would impact. But at the same time, he also felt that when you're looking at the pieces, you need to try to reach a level of deficit reduction that will put you on a path towards balance; there are some big pieces you need. And the BTU was one of those pieces.

So we went through a long debate on that and looked at different versions of the BTU tax. Treasury was nervous about it. The vice president kept pushing for it. I think the president was clearly nervous about whether or not to put it in or not, but ultimately decided, with the vice president, that it ought to be a part of it.

So we proceed. We were pushing the House of Representatives to adopt this budget with the BTU tax. The votes that we're grabbing at that point are basically saying to us -- and these are some of the conservative votes -- "The last thing I want to vote for is that BTU tax. But if I vote for it, you damn well better stick with it in the Senate. Don't you dare sell out on that issue on the Senate side, because then you're going to screw us."

So we said, "No. No. If we're putting you to the wall, we're clearly going to fight this."

So we were able to do it. I think we passed it by a few votes. It goes over to the Senate. And it isn't very long before we find out that we just don't have the Democrats to support a BTU tax on the Senate side. And we're working just with Democrats. The Republicans have taken a walk on the issue a long time ago. So suddenly we're dealing with Democrats and they are saying, "We are not going to support a BTU tax." Before you know it, the president says, "I've got to take it out." And the vice president was angry about it, because he at least wanted to fight it until the end, but then agreed. And eventually, obviously, we took the BTU tax out. But the anger from that on the House was something that hung around for a long time.

InAugust of 1993, the stimulus bill was already lost. It was filibustered. You have a really critical vote on the rest of the economic budget. What did the president say to you?

We knew this was going to be the toughest vote of all. When you're voting, the budget process is broken into two pieces. One is that you vote on the budget, which is a set of targets. That's relatively easy to do because it's not specific legislation. Besides that, the president doesn't sign it. So we got the budget vote through. And now we're dealing with actually changing the law to implement that budget, which means you are actually raising taxes. You are actually making cuts. And, obviously, this is what counts. So we knew we were facing, obviously, a lot tougher vote, and again, without any Republican votes to support us. This had to all be done on the Democratic side. As usual -- and it's always been my experience in the Congress -- you have members who make votes based on the issue itself, about a legitimate concern about is this the right thing to do for the country. I didn't mind dealing with those members. But there are always a small group of members who see it basically as a buy-and-sell operation: "I'm thinking about this, but I really do need this particular project in my district."

I remember dealing with one congressman -- I'd rather not use the name. But I met and they said, "You know, Leon, I was thinking about my vote and God spoke to me." I said, "God spoke to you?" "God spoke to me. And God told me that if I could get this particular project in my district, that I should then vote for your budget." I said, "Well, I guess I have to become God for the moment and see what we can do." We delivered it and we got the vote. That was the House side. So there are a lot of those kinds of discussions. And as budget director, I was sitting in on every one of those things, trying to figure out what we could or could not do for members. But we were able to do that.

On the Senate side, the most interesting problem we had was going right to the last vote. Senator Bob Kerrey from Nebraska kept saying that he knew that it was important to get this done, but he just wasn't sure. He had some concerns about some of the pieces. So we said, "What are your concerns? We'll deal with those. We'll talk it through." We're getting close to the vote. We're trying to locate Kerrey. And somebody tells us that he's in a movie theater in downtown Washington someplace. And we're all going nuts, saying, "What the hell is he doing going to the show when we got this big vote coming up tomorrow?" And so we even went as far as to try to find out, well, what theater is he in? Where is he? Can we try to get him? We had no idea how he was going to vote until the very last moment, when his name was called. We had no idea. And for people that are careful vote counters, that scares the hell out of you, because you have no idea whether, ultimately, you are going to win or lose. You're rolling the dice at that point. And we were rolling the dice with Kerrey.

How did the president react?

The president was he was pacing and trying to figure out what's going to happen here. Everybody thought that when push comes to shove, the Democrats can't walk away from this issue. It's too important. But I think his whole experience in Arkansas was to have a much better sense about where our vote was going, because he had much more control over what the legislature would do. Congress is all these independent chiefdoms up there. It was the first time he had to deal with truly independent forces that could basically say, "Mr. President, to hell with you." He didn't like that.

In 1994, before you take office, there is a sense in Washington among many people that the White House is spiraling out of control in terms of its internal workings. What was it like at the White House? How were meetings held, how was access to the president handled? To what extent did it fail to resemble the White House that Washington veterans were familiar with?

As director of OMB and dealing with budget issues, I dealt directly with the president. And so, from my point of view -- working appropriations bills, working the budget, working the things that had to be done -- I would do a briefing paper, and then immediately go and talk to him and we would work out a strategy on it, and he was very supportive. In terms of my area, I felt that we had a good relationship and it was working well.

What I noticed, though, was that in some of the meetings that I was asked to attend as budget director, the meetings were often unstructured and would go on, literally, for an hour and a half, two hours, more than two hours. There'd be no presentation of "These are the issues, these are the options," kind of approach. Everybody had their say. And there were people from all over the White House that were in these meetings. There were kids sitting in on these meetings, who, frankly, had no business being there. You're dealing with the president of the United States. It's precious time, and he goes into these meetings and it becomes, frankly, almost a BS operation, in terms of everybody expressing different viewpoints. I think he kind of enjoyed the free discussion in those meetings. But it took an awful lot of time away from the president of the United States. So that was problem number one.

Problem number two was that, when you've got a president who's got to make a decision, there's got to be closure. In other words, the president makes a decision, and that's it, and you move on. . . . And there often wasn't a final firm decision, and no closure.

When you say "no closure," you're talking about indecision on the part of the president -- a decision that was never final?

Yes. He would say, "Gosh, did I make the right decision?" And he would start to really think about it and he would ponder it because his nature is not to bring closure. His nature is to constantly assess and reassess and assess again, depending on who's talking to him and depending on the thoughts that are presented. So he would sometimes go into a very torturous process, trying to come to closure on something. And the problem is that if you're trying to move legislation, you're trying to get something to the Hill, or if you're trying to tell a congressman or a senator what has to be done, or what the administration's position is, you could be floundering for awhile, trying to get a clear decision. So that was a problem.

Thirdly, the president was so anxious and so willing to different things, that oftentimes there was no focus as to what he was trying to do on that particular day. There would be a number of events scheduled and suddenly the whole power of the bully pulpit was lost because he was doing then things -- all of which he wanted to do, all of which were important -- but all of which, for some strange reason, were scheduled on the same day.

You have the sense that as a result, the president was not being clear to the American people what it was he was trying to get done. I think that later he understood that. But there were a number of months where the message to the American people was very confused.

In June of 1994, you become chief of staff. How did the president approach you, and what did he tell you it was that he wanted you to do?

Hints began to occur on various levels. . . . Then we were on a trip to Normandy for the fiftieth anniversary of the invasion of Normandy, and I had been asked to go along with the president on Air Force One. I was on Air Force One, and he called me out and he said, "Leon," he said, "if you were chief of staff, what would you do to improve the operation?"

. . . So I mentioned some of the things that I thought needed to be done, just based on my own experience, the kind of basic organization approach to getting things done.

And then it kind of faded away. There was no follow-up to that. Next thing I knew, the vice president approached me in the street, near the White House. "Leon," he said, "I think the president is going to ask you to become his chief of staff." I said to the vice president -- who I was elected with, and we had been friends for a long time -- "Look, I don't want the job. I'm very happy being director of OMB. I really feel that I serve the president better in that position. He needs to have somebody with my experience handling the budget issues."

The next thing I knew, I was being called up to Camp David with the vice president and Tipper. I go up to Camp David and it's the president, the first lady, the vice president and Tipper Gore. And they're all saying, "We need to have you become chief of staff." And I gave the same argument, which is, "Look, I'm much more valuable to you as director of OMB. I've got a good operation. We've passed the budget. You want to make the economic performance of this administration a centerpiece for the future. That's what I can do best."

And the president looked at me and I will never forget these words because it was typical of Bill Clinton. He said, "Leon, let me tell you something. You can be the greatest OMB director in history and nobody will ever remember you if the White House is falling apart." Pretty persuasive. So I said, "All right. I'll do this." And I told them that I wanted to make sure that there were conditions that he was willing to support -- basically, to support me on the decisions, reorganization, that type of thing -- that I would have his support, the first lady's support, and the vice president's support. And I said, "I'll do this. But I'll do it through the next election, and then I want to go home to California at that point." It was the smartest decision I ever made. I don't know if a guardian angel was watching over me at that point but it was the right thing to do.

George Stephanopolous writes in his book that right after you're named chief of staff, George comes in with a copy of Haldeman's book. And he reads a citation about a speech that Nixon gave to his cabinet, telling them the role that Haldeman would play is Lord High Executioner. Do you remember that story at all?

George and I had a relationship that went back to Capitol Hill. . . . I had a lot of respect for him and had worked pretty closely with him. He brought the Haldeman book in and read the quote. The message was, "You're going to have to be tough as hell to be able to handle this."

I said, "Look, my interest is just to make sure that this place is operating well for the president. That's what I'm after." But it was clear in George's message that, to some extent, that knives would be out, and that any time you come in as chief of staff in a staff that's already operating, everybody is pretty nervous about what the hell is going to happen. And yet, I think he thought it was in the interest of the president to be tough as hell to try to get it done.

So were you tough as hell? What did you do to clean up what sounded to you like a pretty loose shop?

The best thing I did was to really try to focus on three problems that I thought needed to be addressed. One was the problem of organization within the White House. There really was no organization chart, which is basic to any a staff operation, or a corporation, or business. You've got to have at least a chart that describes the basic stuff I learned in the army -- here is the boss, here's the second in command, and under them are certain people.

So I had to establish an organization chart that . . . that there was a chain of command in the White House, that it wasn't just a case of anybody wanting to wander in and talk to the president, but that they'd have to go through a chain of command. So that was number one.

Number two was better discipline within the place, because there was a tendency for people just to wander and walk into meetings. You'd suddenly wind up on Air Force One with a lot of people that had no business being on Air Force One going to different events. So we clearly limited that. I said, "I will approve who goes on Air Force One with the president. I will determine who sits in those meetings in the Oval Office, so that we don't have people coming out of the wall sitting there, and those meetings are tight and organized. If there is a briefing to be presented to the president, I want to go over that briefing first, to make sure that it's structured when it's presented to the president."

And then, thirdly, it was focus, because there were so many things happening that it was pretty clear that the president really needed to have clear focus. If there is an event, say, an education event, you don't combine it with an event on crime, or an event on research and development, or an event on something else on the same day. So we set up a scheduling operation with the help of my deputies, to set up a scheduling operation that looked at the next three months. I could not have done it alone. I had a lot of cooperation, obviously, from the president, as well as from my deputies and other members of the staff.

And the other thing that I had to look at was the staff itself. The president kind of said to me, "Look, you've got to just clean house with some of these people." I said, "Whoa. I'm just walking in. Let me get a few months to see what they're like and what they can do." And, frankly, I found that a lot of them were actually pretty good people with a lot of experience and a lot of commitment. But what they didn't have was the structure to work within. They just did not know what the process was like.

And so that helped a great deal. There were some personnel changes that we made as well to try to improve the operation, to bring a little more people of experience into the White House with a so-called "grownup factor," to make sure that we had more people that could basically provide the kind of experience that was needed in those jobs.

In August 1994, Kenneth Starr is appointed independent counsel. What did you tell the president about Starr?

I remember the legislation that continued the Independent Counsel Law. I had been on Capitol Hill when it was first developed and had voted for it.

Congress then enacted the legislation to continue it. And I remember going in and saying that the bill had been passed by the House and the Senate, and that the decision now was with the president and the White House as to whether or not to sign it. The president looked at me and he said, "You think I should sign this?"

"Well, Mr. President," I said, "Clearly there was overwhelming support in the House and the Senate. If you wind up vetoing this, you're going to be overridden by both the House and the Senate." And he said, "I know. I know. But why do I have this feeling I'm making a mistake?" or words to that effect. So we always had some qualms about establishing that kind of power and what it could possibly mean. And he always recollected that during the next few months.

Obviously, when Ken Starr was appointed, he was angry, because he really felt that the independent counsel prior to Ken Starr, Bob Fiske, had really been objective and tried to really seek the truth out. I think, ultimately, he had developed a lot of respect for Fiske. His feeling was that essentially a deal had been made to get rid of Fiske and put Starr in, and that that spelled trouble for him. There was no question in his mind that a political decision had been made. He wasn't sure who was involved, but there was no question in his mind that this was not just the court acting out of a sense of justice. He felt this was basically part of a political effort to go after him.

When James Carville hears about Starr, he is upset, because he shares the president's sentiments on that. At first Carville refrains from politicizing the issue and taking on Starr. But shortly thereafter, he does. There is some debate in the White House about whether Carville should do this. Do you remember where you came down and what your advice was?

I remember very clearly. My view was that you've got an independent counsel that's been appointed, and the last thing you ought to do is take on that counsel in a political way. You're asking for real trouble if you do that politically. But in terms of the view of the country, it will reflect that you really have something to hide if, in fact, you're trying to attack the independent counsel. I shared some of the suspicions, but at the same time I guess my tradition was one of respect for the institutions that are established.

And Ab Mikva, who was White House counsel, and others who knew Ken Starr, kept saying, " I have a lot of respect for him and I think he'll do a good job." . . . So at that point, it was clear that the last thing that the president should do is to attack the independent counsel in a political manner -- that it would be far better to let that person operate and do his job, the same way Fiske had done his job, with the hope that if there's nothing to be found out, ultimately that's what an independent counsel will find.

Yet Carville went out and started attacking Starr. Did you bring this to the president's attention or did you encourage the president to call off the dogs here?

Well, there were those of us who were concerned about that when he was doing that. Clearly, even though Jim Carville was acting out of his own concern for Starr, the relationship between the president and Carville was such that people immediately put their two and two together and figured that the president is clearly behind this. So even though he was speaking on his own, there was no question that the impression was that he was getting signals from the president to do this. And, again, when you're president of the United States, it was my view that the president has to be above that and that he can't just suddenly grovel and look like he's engaging in political warfare with somebody who, frankly, carries his fate in his hands.

In September of 1994, there is a growing problem with Haiti and there are atrocities committed under the Cedras regime. There is a threat of more refugees, and there is a decision made to send former President Carter and Colin Powell. What was the concern within the White House about that pretty risky delegation --"risky" not in terms of who they were, but in terms of what they had to do?

This was a moment when I think I really understood what it meant for the President of the United States to have to make a decision about whether to put our military at risk, and the tremendous burden and responsibility that that represents on one individual. The president had clearly decided early on that if they required military action, he was prepared to take that military action. And working with the chiefs of staff and the Defense Department, a very coordinated effort went into place to deploy the forces that had to be deployed if, in fact, we were going to go in.

The president, to his credit, always felt, "Have I exhausted every possible diplomatic course here to try to see if this can be resolved peacefully?" which I think is the responsibility of the president. Before you take that last step, you better be damn sure that you've tried to exercise and exhaust every possible effort to try to find a peaceful solution. So he viewed this as the last best effort to try to do it. He put former President Carter together with Sam Nunn and Colin Powell. There was interesting politics involved with that, because I think everybody was concerned about whether or not, ultimately, President Carter would bend over backwards to pacify the leaders in the effort to try to find peace, because of his relationship with some of those leaders there. And so there was concern about whether or not he would be tough in those negotiations. So the purpose of having both Nunn and Colin Powell as part of that delegation was to basically make sure that the United States would take a tough position here.

So they went down and the negotiations began. At the beginning, it was clearly the impression they were getting nowhere. We're getting nowhere. And pretty soon it's getting close to the point where a decision has to be made. We had set a time when, in fact, the invasion would take place and we would go in. But you have a time clock that basically goes from the invasion and back to when do you have to deploy the Navy Seals, when do you have to deploy other forces that would prepare the area for the invasion itself.

We were getting very close to those time deadlines. I can remember General Shalikashvili basically saying, "Mr. President, we're within ten minutes of having the Seals go in." At the same time, the phone connection wasn't that good. We're talking with the three. They're saying that there's a willingness for them to resign within a period of time, that they would resign as of a certain date. . . .

So in the Oval Office, the deadline is approaching fast. What's going on?

I'll never forget it, because in the Oval Office is every major player dealing with defense and foreign policy in the administration. It's Secretary of State Warren Christopher; it's Secretary of Defense Bill Perry; it's the Chairman of the Joint Chiefs of Staff; [National Security Advisor] Tony Lake; the Vice President of the United States; and other key players, all in the Oval Office, all around the president, who's sitting at the desk. People are just crowding in around the president, trying to see what ultimately happens here.

Finally the players in the office -- I think it was Colin Powell -- said, "If we're going to take their word for it, we want to get our troops on the ground." The message that was sent to the team was, "We'll accept their resignations, but we've got to be able to put our troops on the ground and make sure we control it." And there were still some in that room who said, "Why don't we go ahead and invade? If we're going to do this, the clearest way to do it is to invade, because if we just put our troops there, who knows what the hell is going to happen."

So there was still a lot of pressure to go ahead. The clock is ticking; the troops are in place; the ships are there; the helicopters are in place; the troops are ready to go. So there is almost a momentum that's building to do this. Everybody is gathered around the president . . . and so the question was now, "So what we do, Mr. President?" And he is sitting at the desk and there's a pause. My first thought was, "What's going on? What's going on in his mind?" And he looked up and he said, "Let's go with the deal. Let's go with what they've got. I think that's the best course to take right now."

And when he did that, the Seals were called off and we had to reorganize the effort, because now it is hopefully going to be a peaceful landing. But it changed the dynamics. Suddenly, instead of a shooting war that would involve a lot of lives, now the question was how do we deploy our force and make sure that they stick to the deal, and make sure that they're out of there? So it suddenly went from being a military problem to being a diplomatic problem as to how we get this done. But I will never forget that moment, because it was the kind of moment that you know a lot of presidents have gone through -- where they've got to make this fundamental decision: "Do I engage, do I go to war, do I put these boys at risk, or do I try to find peace?" and it's never an easy decision. During this time, the congressional elections are starting to heat up and there's clearly a problem with the president's profile. He campaigned as a centrist, but because of a number of things, from gays in the military to the health care reform, his political profile is different. You see these ads where you have candidates who are morphing into Clinton and clearly the president, himself, is the subject of this election. What's the president saying to you at the White House at this moment?

There is a sense that clearly there is political trouble out there, for a lot of reasons. One is the whole health care debate and what happened with that, and $380 million that went into a campaign to basically tear it down. That had an impact, no question. Losing that was a hit. Combine that with some very tough votes by members on the budget, raising taxes, combined with some very tough votes on a crime bill that involved gun control, combined with the Republicans and Newt Gingrich putting together some very effective campaign attacks on each of those pieces, depending on whether they could target a member.

. . . They had a number of different targets. Some issues made these Democratic members very vulnerable, and the president could sense that. And at the same time, he also sensed that what he failed to do was to encapsulate a message as to what he was trying to do for the country, and what he wanted done, what his goals were. So he always felt a little frustrated that he was not being effective at getting that done. So he was nervous about it. We thought clearly that we would lose some seats. But I don't think anybody anticipated that we would lose control of both the House and the Senate. That degree of loss was really a shock.

The crime bill eventually passed, but first there was a huge problem.

It was obvious that you could get a kind of broad range of support for a lot that was in the crime bill, except for gun control. Gun control is like abortion, in the sense that it's a red flag issue for a lot of members, and you're either for it or against it. It's not that you can refine it. You're either for it or against it. That's the way the constituencies play it out in members' districts. So there were members who said, "We've got the crime bill going. This is the perfect vehicle to pass gun control legislation, like the waiting period and the other pieces."

Some of the old-time members said, "Do not do this. Do not do this." Jack Brooks from Texas and John Dingell from Michigan, who were both supportive of the president, said, "Don't do this. It's going to cost you votes in the House. And you may lose the crime bill." At the same time there were forces on the other side saying, "This is the one chance to get some of this stuff passed." And so the president's instincts were, "I'd like to get some gun control legislation as part of this. Why not?"

When that happened, you really split the forces because what was originally a bill in which you might be able to hold Democrats and some Republicans together, suddenly became a bill that really split those forces pretty much. As a matter of fact, Speaker Gingrich basically said, "I'd like to help you on the crime bill, but you've got this other problem. What I'm willing to do is to have some of my members work with you who are supportive of gun control and the crime bill." So I was sent up to the Hill to sit down with some of the Republican members and we worked out a compromise that they were willing to accept. They had some pieces that they wanted included in the crime bill. We worked it out.

We're now approaching the moment when the bill has to be wrapped up and it has to go to the floor. I'm sitting in Dick Gephardt's office and I can't find Jack Brooks, who is the chairman of the Judiciary Committee. . . . We found out was that Jack Brooks and John Dingell were meeting together to try to see if they could just stall this thing and not bring it forward.

The president called up and said, "What's going on? We've got to get this done. We've got to get it happen." It was the first time I really heard him as angry as he was. I said, "Mr. President, we happen to have two chairmen here of committees who are a problem and they don't want to move it." We finally locate these chairmen in Jack Brooks' office. I said "Mr. Chairmen, I know the political problems that are here. I dealt with them when I was on Capitol Hill. I know this is politically tough, but we think we have the votes to pass this, and the president really respectfully asks they you release this bill so that we can get it voted on." And finally Jack Brooks, to his credit, was willing to do that. We got it out and it passed, but it created an awful lot of political problems that then took their toll in the November election.

A number of people have talked to us about the president's anger. Is there a particular moment where you can remember a manifestation of how Bill Clinton gets angry, his temper?

I think it's almost a form of therapy that he engages in, which is that he becomes very angry about something. Sometimes I'd be briefing him on something had happened that, obviously, just really got him angry. And he would pound the desk, and say, "This is outrageous. This can't happen." And what I found was the best thing to do was to let him go ahead and blow. And then once he got it out of his system, it was like nothing had happened, and he would go on and do what he had to do...

During those first couple of years, why do you think that relations with the press were so poor?

It's really odd, because I always felt that here's a young president getting elected. There was an awful lot of support out there for him when he first won. There was a sense that he was going to bring a kind of new feeling and new strength, new ideas to the White House. And all of those things, I think, are the ingredients of having a very good relationship with the press. If you look at the Kennedy presidency, it was a model for what I thought ultimately would happen.

There were several problems that they ran into. It might have been partly what they went through during the campaign, like the Gennifer thing and the draft thing. There was always the sense that the press was going to go after you on one of these issues. And a lot of that carried into the White House with the same suspicions that the press, to a large extent, could not be trusted and that they would go after their own stories. . . . And so, as a result, it developed into a feeling of distrust in the way they handled the press.

Secondly, that the president was always confident of his ability . . . to turn a bad story into a good story -- that he would always be able to get the press to really understand him for who he was and what he was trying to do. He seemed to feel that he was able to do that in Arkansas, and surely he could do it in Washington. What he didn't understand was that the press is a lot more cynical in Washington, just by the very nature of having to go through this process. And you've got to work a lot harder at it. It kind of offended him that they didn't kind of take him at first appearance, that they were always going after and coming back with other questions, and going after him in different ways. And I think he resented that, and it showed after a while. It became a concern that you just couldn't get a break, couldn't get a good story.

Thirdly, he is an individual who . . . is full of ideas and thoughts. He doesn't, oftentimes, listen to the person that he's engaged with. Even though there are moments when he's a good listener, when he's engaged in conversation about a particular issue, it's very one-sided. And I think the press, to some extent, are like members of Congress. They like to be heard as well on issues.

So when I became chief of staff, we set up meetings where he would sit down with the press and have some one-on-one exchanges, just to try to see if we could improve those relations. But he tends to be a person who wants to almost consume the conversation. And I think you pay a price for that, if you're not willing to listen sometimes to what others are saying.

After November, 1994, the Republicans take over Congress. How does the president react to this when you see him?

By that point, I think the president had seen the writing on the wall. He was out campaigning. He knew that a few seats would be lost, but he did not ever believe that the Democrats would lose control. When the results started coming in, it was pretty early in the evening when the handwriting was on the wall. And I guess it was George Stephanopolous came in and said, "This is a landslide." And I kept saying, "No. No. It can't be that bad." He says, "I think we're going to lose the Senate and we may lose the House." My own thought was that we've lost the Senate before. I never thought we would lose the House. And then when that happened, and we knew we now had Republican House Speaker Gingrich and a Republican Senate, we knew we were going to face some real problems.

Who did the president blame for that?

The president, by that point, accepted the fact that it had happened. And it was almost as if he said that it was a wake-up call for what went wrong. What did we do wrong? I think he looked back to his own experience in Arkansas, when he lost the governorship, and when he faced some other losses. This again represented an opportunity to get his act together, to look at what the problems were, where did he go wrong, and what did he have to do to confront them. So while it clearly was depressing, and you know he hated the fact that he had lost the Congress, I think he also understood why it happened, and what he had to do now to try to confront what he viewed as a real big challenge.

One of the things he did was reach back to the same man who had helped him in Arkansas, and that's Dick Morris. But this is a secret. Morris is secretly communicating with the president. What did you feel like when you found out about that?

I thought it was weird. It was a strange kind of a relationship, almost a love/hate relationship that had gone on back in Arkansas. . . . Suddenly, we're getting poll results from Morris, operating by the code word "Charlie," because they didn't want the world to know that Morris was involved. But it was clear that the president had turned to him in the past when he was in political trouble and felt that he needed to have that kind of help again. He felt like the world had crumbled on him. . . . He was intent on making sure that whatever had to be done would be done to ensure that not only would he get re-elected, but that every effort would be made to try to get the Congress back.

Here you are the chief of staff, and there is some guy using a code name "Charlie" to do an end run around the structure that you've imposed.

I viewed it as the president basically talking with a political consultant to try to help him try to figure out what the best course was, and so he talked with a lot of people in the effort to try to determine what the strategy ought to be. It was later, when Morris took on a more formal role in the operation, that he then began to not only suggest ideas, but he would walk into staff offices and say, "What I'd like you to do is to do this and to do that." And they would come to me and say, "Wait a minute. Morris is telling me he would like this kind of information." And I said, "That has to stop. That just can't happen."

I went directly to the president and said, "Mr. President, this cannot happen. We've spent too long trying to put this organization together. We've got a good team effort. Everybody is working. They know what the lines are and you'll undermine that if we allow that to happen." And to his credit, he said, "You're right. Bring Morris in and I'll tell him." And so we did, and then Morris clearly got the signal from the president himself that that was not to happen.

In the 1995 State of the Union speech, people on the White House staff were surprised by some of the lines that were used. They had no idea where they were coming from. Were you among those? Stephanopolous calls this "the daytime president and the nighttime president," because during the daytime he's listening to George and you and others, and at night the president is listening to Dick Morris, and things change overnight.

I always had the feeling that the president wanted to listen to the dark side, even though he clearly knew in his guts where the issues were and what he wanted to do. He always wanted to listen to the Morris voice saying the thoughts of the most manipulative operation that could go on in politics. . . . Because we knew that Morris wasn't just giving advice to the President of the United States, but he was also still worked for Republicans as well. He's working for Trent Lott on Capitol Hill. As far as a lot of us were concerned, he was a double spy. And we were always concerned that, on the one hand, he's talking to the President of the United States, and on the other hand, he's talking to the minority leader on Capitol Hill. We thought that was a strange damn operation that was going on. And so we were always a little bit cautious about it. But then it was clear that Morris was doing a lot of polling on a lot of different ideas. And he would basically decide, what are those few issues that can really touch a lot of nerves out there?

We had political meetings every week in which we would talk about a lot of this. So, ultimately, when it came to that State of the Union, it was not a surprise that a lot of those same issues, a lot of those same words, were beginning to pop up in the State of the Union address, because a lot of groundwork had been laid for a lot of that through polling that had been done by Morris.

Elizabeth Drew and Morris himself, in each of their books, state that you were pretty furious about this.

I guess I was angry about the fact that so much of it was being judged on the polling and on the political interpretation behind every issue. My view was, you're the President of the United States. You've got to make some very important decisions on some very difficult issues. What frustrated me most of all was I thought the president really does have a pretty good gut sense about what's right and wrong, what needs to be done, what do people really need, in terms of issues. I remember at one point basically saying, "Look, Abraham Lincoln did not have to have a pollster in this office to decide what's right and wrong. And you don't need a pollster either. You're doing things on education, on health care, on the budget, and these are the right things to do."

My view is a more traditional view, which is that as leader, as president, sure, it's okay to get a feel for where the public is in terms of what are they thinking, how are they reacting. But as leader of the country, there are often times decisions you have to make that require you to take the lead and not simply be reactive to whatever a poll tells you, but for you to take the lead and do what's right and what you believe is right. And, yes, it may hurt you politically and yes, it may not be popular, but in the end people will respect it for the leadership that you've shown. That was my belief, admittedly, that's a more traditional belief. But in a world of fast-moving politics, that traditional view can sometimes be in conflict with what consultants think need to be done.

In April, 1995, the president has a prime time press conference. And the most memorable quote from that press conference is, "The president is still relevant here." What did you think about that?

It reflected the president's concern from the November election, which was that so much attention was being focused on the Republican Congress, so much attention was being focused on Speaker Gingrich, the "Contract With America," the efforts that were going on up there. It concerned him because for two years it was his agenda that he was pushing, that he felt was important to the country. And now suddenly he's confronting a situation where there's another agenda that's being pushed by the Republicans that is consuming most of the attention. And so the real question was where is the relevance of the president in this process.

There were those of us that kept saying to him, "Look, Mr. President, to some extent this is a great opportunity to contrast what you're trying to do with what the Republicans are trying to do. This is really an opportunity, through the use of vetoes, through the use of your own pulpit, to really distinguish yourself from what the Republicans are doing."

His tendency, inherently, is to say, "I can cut a deal with anybody. I should be able to work, even with Newt Gingrich, in the end and try to resolve these issues." And I think his feeling was that he still represented a relevant factor in trying to at least bridge those differences. I think what he learned later was that there was no way to bridge those differences. It was probably the best thing that happened to him, in terms of the re-election...

In April of 1995, the Oklahoma City bombing occurs. And for a lot of the country, it's a way to see Bill Clinton in a light most people hadn't seen him before. Did you think that was a critical moment for him and, if so, in what way?

Yes. I thought it was a real turning point. And I felt it even at that point, because up to then it was a political give and take. There was a lot of mudslinging going on. You just had no sense that the president was able to establish any traction with the American people about who he was.

When the Oklahoma bombing came, he showed his capacity to get out there and first of all, to speak to the American people in a calm way and reassure them, and ask them not to kind of prejudge what had happened here. And then what he did following up on that, in terms of dealing with the victims and what took place there -- I think that, more than anything, brought out the human side of Bill Clinton. People really, for the first time in a long time, connected with the president and what he was trying to be and who he was.

If there has been any strength to this presidency, it is the fact that the American people know who this president is and what he's about. They understand him. And I think one of the first times his human and compassionate side as president came across was following the Oklahoma bombing.

In May of 1995, the debate is over the balanced budget. Morris is advocating certain things that are in the polls. You're advocating other things. And here you have a Democratic president, really, putting in a very Republican proposal.

The debate by those of us who had worked on the economic plan, gotten that passed, worked on the budget and got that put in place, was that the president had clearly indicated that in his economic plan we would be able to follow a certain path towards deficit reduction, that ultimately would lead to a balanced budget. And our view was to stick to what we put in place. We got the economic plan passed. It's having an impact in terms of deficit reduction. Our economic program is working. The economy was beginning to really become stronger and stronger. And so, the feeling was, rather than not to jump to a political cliche of balancing the budget -- that's what everybody says. Ronald Reagan said it at the time we were going to $300 billion deficits. It had become almost meaningless in terms of the American people. Why run after that just because the Republicans were touting it again? The reality was that to do it would involve some pretty significant cuts in the Republican plan, and it did.

So how do you counter that? The president felt that, politically, he could not confront the Republicans without some kind of balanced budget plan to respond to what they were proposing. When he made that decision, the economic team was willing to sit down and go through it, and try to propose something that at least made better sense than some of the things some of the political people were talking about. And we went through that process and ultimately we were able to have the president do it.

I was cynical about doing it because, again, it just seemed to me that all we were doing is being pulled by the nose to somehow engage on an issue that ultimately we had taken charge of in a responsible way. Politically, I think the president probably made the right decision because, in the very least, it put the Republicans on the defensive by having them do that.

At this time there is this theory that Morris has advocated called triangulation, where the president is pitted against his own Democrats in Congress and against the Gingrich Republicans. For you, who had to deal with members of Congress, how did that go over?

There was always a nervousness about the president among Democrats that went back to things like the BTU tax and other things, as to whether or not they would be hung out there. And I think it was almost a confirmation when they heard Morris expound on triangulation. It confirmed some of their worst suspicions that the president was prepared to sacrifice them in the name of going for some kind of a position with the Republicans. The other thing that made it suspicious, again, is that Morris was at the same time, working and advising Trent Lott. There was a sense that what the president is doing is playing into Republican hands, as opposed to working with those on the Democratic side who had always been there to deliver the president's water when he asked for it. They were the ones that basically were the votes he could rely on, not the votes of Newt Gingrich.

And so was not an easy time. There were a number of times I had to go up to the Hill and meet with the leadership, meet with the members, to let them know that, ultimately, whatever the political debate was all about, and the political terms that were being used, that still fundamentally the president was supportive of the issues the Democrats cared about and that's what we would fight for.

In the fall of 1995, there is the showdown with Republicans on the government.

I think it was very significant, as far as its impact on the president and on the country. When I heard the Republicans continue to say, "We've got to fight for this budget, even to the point where we'll just shut down the government and be prepared to keep it shut," and when I heard them say that, I thought . . . that it's rhetoric and it's not real. I remember Bob Dole saying once, "You could shut the government down maybe for a day or over a weekend, but you shut it down for more than that, people come looking for you." He said that in the Oval Office to Gingrich and the other Republican leaders that were there, because he knew. We had been through a shutdown, a very short shutdown, and a lot of hell went on as a result of that.

So I thought, "Well, they're saying this but it's kind of a threat, and they know can't stand by it." The president, on the other hand, always said, "Wait a minute. I know we can cut a deal with Gingrich." And we were saying, "Mr. President, I don't think you can cut a deal because he doesn't have the room to cut a deal. His members want to make certain cuts. They want it their way. They've been kind of brainwashed into thinking that the Contract for America is fundamentally what they want in place."

It sounds like you were worried the president was going to cave in.

Yes. There were those of us on the staff who thought that the president would be willing to do whatever was necessary to cut a deal. And we kept saying, "No. This is fundamental to everything that you have fought for. You have set priorities for this country. You've said what you want for education. You've said what you want for health care. You've said what you want to do for the environment. And everything they're putting into their plan is against everything you're for."

But, nevertheless, inside of him, he always has this sense that rational people ultimately can come together and cut this deal. So we had made several offers, as the discussions went on, and the Republicans had rejected them. They came back with some offers. We had rejected them. And there was a moment in which we made another offer. And Gingrich said, "I'm sorry. No. We can't accept it." The president looked at him and it was one of those moments when you know that the president really got it. The president said to Gingrich, "I simply can't do what you want me to do. I don't believe in it and I don't believe it's right for the country. And even if it costs me the election, I am not going to do this."

And I sighed at that point and I thought, "He gets it. He gets it." Because there's always a point in politics when you do have to draw a line, and it tells you a lot about who you are. And at that moment, I knew he would win the election because, suddenly, what he was about was clear to him, but it also became clear to the country as to what Bill Clinton represented.

So I think it was not only a terrible mistake on the part of the Republicans, in terms of their own politics, but it sure as hell helped us to find what the president was all about for the election.

And Gingrich helped you with his comments about shutting down the government because he . . . felt he had been snubbed on Air Force One.

Sure. When he did the thing about where he was seated on Air Force One, that just came out of the blue. It again confirmed for the American people that these people are not only willing to shut the government down and hurt people in that process, but they care more about where the hell they're sitting on Air Force One than whether or not somebody is going to get their Social Security check or their veterans' benefit. That was the impression and it played, frankly, into our hands.

. . . When the president confronts Gingrich, makes his decision, and you say he got it . . . you almost imply that you don't think there were enough of those moments.

He was always trying to find the solution, to try to find the area of agreement. And, look, to some extent all of us in politics, you want to get things done. But there are also moments when you have to recognize that sometimes the best way to get things done is to engage in the battle and have the conflict, because otherwise you don't have any leverage because you're not viewed as somebody who is going to hold their ground. You're viewed as somebody who will continue to give in. I honestly think that, at that moment, the president understood that there was no way he was going to be able to cut a deal with these people because they wanted too much.

In 1996, a lot of different scandals are still plaguing the administration. Whitewater has gotten a new life. We've had "Troopergate." And as chief of staff, there is sort of this "drip, drip" effect. How do you run a government when so much of the White House is consumed with dealing with scandal?

I've often said that being chief of staff is not so much an administrative position as a battlefield position, because you essentially have a mission. You're trying to accomplish it. You're trying to make sure everybody on the staff understands what the mission that day is. And suddenly, before you know it, you're taking incoming fire. There are mortar shells landing and there's all kinds of artillery pointed at you, and there's all kinds of other things going on. Suddenly the staff can go running in different directions. They're panicked. They don't know. So you've got to always maintain your focus, and that was not always easy to do. One of the ways to do it that we developed early on was you wanted to isolate these issues. You wanted to compartmentalize what was going on there, so that it didn't consume the other things that the president was doing.

. . . We wanted to make sure that what was happening over here in some of these investigations, et cetera, was not suddenly consuming what the president was trying to do as president.

Did the president find it consuming anyway?

The president is a human being. As good as he is in trying to put these things aside -- and the public sometimes gets the impression that it doesn't bother him -- it does bother him. He's a human being. He doesn't like that stuff. . . . I'm sure that, in his mind, he thought that this was a continuing erosion that was taking place while he was trying to do all these good things for the country, all of these issues areas that he was involved with, everything that was going on with the economy, everything that was going on with foreign affairs. This was the business that he wanted to focus on and, suddenly, this other stuff kept eating away and eating away, and I think it did bother him.

In July of 1996, welfare reform comes up. Although the president had promised in his campaign to end welfare, this is still, for the Democrats, a fundamental core issue. Within the White House there is a big debate about whether the president should really sign this bill. What do you remember?

It was an issue that the president had long called for in terms of welfare reform. And the administration had developed, working an awful lot with good people at the various departments and agencies, a welfare reform proposal that all of us felt would change welfare, but at the same time provide the safety net that was important for those that needed that help. It was in line with what Democrats had always believed in, as far as dealing with people who are most vulnerable in our society.

Obviously, when we sent the bill up there and the Republicans came back with their own proposal, then the real question was, could this be negotiated, could it be worked out. And the Republicans passed their own version. The president vetoed it. We were in a second set of negotiations and the Republicans had given on a few key issues. And the president thought, we're making progress here. He began to think, maybe I can get a bill. And there were some very heavy discussions about that last moment when we had Republicans had made their last offer and the Democrats had indicated their concerns. The principal concerns were about the treatment of immigrants, particularly legal immigrants, on welfare.

. . . I remember a final discussion that took place in the Oval Office, in which I think present were the vice president, George Stephanopolous, myself, maybe one other, and the president. And the president said, "What do you think?" And I said, "Mr. President, I can't be objective about this. I'm the son of immigrants to this country. And this really hurts immigrants and it takes away their health care. It takes away their food stamps, their nutrition. If you push, I think you can get a little more. But you don't want to take the position where you're hurting people with this bill." George felt the same way. The vice president said, "I think in the end, you're probably better off supporting this and getting it done because we can always try to correct this later on, but at least you'll get the main bill done." And ultimately the president said, "I think that's what I'm going to do." And we said, "Okay. Fine. If that's what you want to do, we'll move ahead." We came together as a team. I called Dick Gephardt and had to tell him that the president was going to support the bill. And while I think he was disappointed, he also understood why the president had done that.

In the campaign -- and again this goes back to Morris' influence --there are a lot of little mini-issues. There are school uniforms and curfews, deadbeat dads. This had never really been done before. And a lot of people in the White House were wondering whether they were working in a Republican administration.

One of the battles was to make sure that all of these myriad of ideas that would pop into Morris' head and that he would test with his polls, that none of them were translated into policy for the President of the United States without being thought out. I can remember one example where Morris suddenly came out with the idea that everybody ought to get a free education at least through community college, and he was talking about everybody ought to get a free education for 14 years, or something like that.

It polled very well, as you can imagine. And then we said, "But wait a minute. What does that mean? How do we put that in place?" So we took it. We worked it. In the end what happened was that we developed tax incentives, as opposed to just saying we're going to provide free education, and we had to set some limits because, at the same time, we have just put a budget in place. We've got to be able to get the deficit down. We've got to pay for everything that comes out of these ideas. You can't just throw them up here. The president has got to basically say to the American people, "Yes. This is my idea. This is how much it's going to cost. By the way, this is how we are going to pay for it." So we had to go through that process and make sure that any of these ideas had that kind of focus. . . .

You leave right after the elections, basically. So you missed the scandal part, although you have now said, on a number of occasions, that you would have given the president some advice when it broke. What was that advice that you would have given?

What is so obvious today, looking back on all of it, is a lesson that's very hard to learn in Washington. I don't know why, but it doesn't matter how many times you've been through it, the fundamental lesson is that when you make a mistake, it's much, much better to acknowledge the mistake that's been made. While it involves some temporary embarrassment, in the long run people do forgive you and that you can move on.

And in this instance, it just seems to me that the president would clearly have been better off, and I think that he, himself, acknowledges that he would have been better off had he said to the American people, "Yes, I made a mistake here. It's a terrible mistake. This is what's happened."

And I honestly believe that if he had done that, that he would not have faced the impeachment, because there would have been nothing to impeach him on. He would have been telling the truth not only to the American people, but to the investigations that then followed.

You say the lesson is the president should have told the truth from the get-go. But again here he calls in Dick Morris, and Morris conducts a poll, and tells the president, "You can't say that you've lied about this."

Again, I think, in the business of leading this country, there are moments when you have to do things that to you may not be very popular or be very kind to yourself, but they're the right thing for the country. And I think that was the moment when the most important thing for the president and for the country, instead of pointing his finger at the American people and saying what simply was not true, to tell the truth.

. . . In the end, you are elected to exercise your conscience as to what you think is right, and I think that was a moment when that didn't happen.

During the Clinton presidency, there have been a series of crises, going back even to the campaign. . . . Is there something in Bill Clinton's character that led to an administration which did often seem to lurch from crisis to crisis?

When you're President of the United States and you're dealing with the vast cross-section of issues that you have to confront for the country, you are going to be fighting a lot of battles and you're going to be fighting a lot of different issues, and you're going to be dealing with crises in a lot of different areas. That's just the nature of the office and the nature of the modern presidency. Having said that, I think that this president, who is extremely bright and extremely capable, sometimes doesn't draw his focus until the last moment. It was true, for example, when, he'd do State of the Union addresses. I mean, in any other world, you would think the president ought to wrap up that State of the Union address -- get it ready to go -- at least 24 hours before he's going to go up there. I can remember those moments when he was still writing the State of the Union address driving up to Capitol Hill, and staying in the car to finish off that address before giving it.

So it's almost as if he needed that final moment of pressure and crisis in order for him then to really shine. And so I think there's a little bit of that -- in crises, he finds the energy to shine and to do better, and he's been somebody who always comes out on top. That's not to say that it isn't one way to do business, but I can tell you from the staff's point of view, it can raise a lot of hell.

In April, 1993, there's a lot of pressure to get health out, and they're talking about NAFTA, and taking about GATT. According to Woodward, there's this meeting in the Oval Office, and Clinton bellows, "Where are all the Democrats? I hope you're all aware we're all Eisenhower Republicans," with voice dripping with sarcasm. "We're Eisenhower Republicans here. Here we are, and we're standing for lower deficits and free trade and the bond market. Isn't that great?" Do you remember that?

When he was making the decisions about the economic plan, his concern was: "How much of a price are Democrats going to pay in this process?" And, "Here I am, a Democratic president with the opportunity to really make a difference in people's lives, and that's what Democrats are all about." . . . He would share that frustration, and I think that's one of the reasons he fought so hard for health care, he fought so hard for the education issues. He fought so hard for issues related to the environment, because in the end, he did balance out. . . He doesn't have to worry about going down in history as just a Democrat turned Republican. I think he can probably go down in history as a Democrat.

How do you think this president will be remembered in history? What do you think Bill Clinton's legacy is?

I think history will look at this presidency as probably a tale of two presidents: one president, extremely bright, capable, compassionate, wanting to do the right thing for the country, wanting to do the right thing for the world, and I think in fact, providing the strongest economy that not only this nation but the world has ever seen. I think that will be a central legacy of that presidency.

The other presidency will be a tale of someone who made a terrible personal mistake, and the bottom line will be, that to some extent, that created a disappointment for what this presidency could have been for the country and for the world.