A friend of Clinton since the two were Rhodes Scholars at Oxford, he served as Secretary of Labor in the president's first cabinet. He was earlier a professor of government at Harvard. He wrote a 1997 book on his experience in the Clinton presidency, Locked in the Cabinet. Interview conducted September, 2000 by Chris Bury

We were both fortunate enough to be selected to be Rhodes scholars. On the trip to Oxford, England, we took a ship. I don't know why we took a ship in those days. There were jet airplanes, but we were on a ship. It was the tradition. And I had met him very briefly on the dock just before heading out to sea. After about three days in the ocean, I discovered, much to my chagrin, that I didn't have sea legs. I was a wreck. I was seasick. All I wanted to do was go down to my cabin and die, and I did go down to the cabin. I didn't die. But there was a knock on my door. There was this tall, gangly fellow with a southern accent. I had briefly met him before. He said, "Hi. Just want to remind you that I'm Bill Clinton. Heard you weren't feeling so well. Maybe this will help." In one hand he had chicken soup, and in another hand he had crackers. Now, he didn't say, "I feel your pain." That came later. But he did at least care, apparently, about whether I was going to make it. And that started a conversation, a friendship -- not my closest friendship by any stretch of the imagination -- but certainly a good relationship that lasted for the next 30 years, and still lasts.

So you were considered an FOB; you were considered a friend of Bill.

I guess I was considered a friend of Bill, although this is a man who has many, many friends. There must be at least 15,000 FOBs. It wasn't a particularly small and distinguished category.

But it counted when he became elected president. You had given him some advice during the campaign, correct?

Yes. I certainly was one among many people who provided him a lot of free advice. The poor man had read every one of my books. And then I recall, just a few days after the election, I came back from class. I had been teaching. Got a telephone call, and the operator said, "One minute for the president-elect." Well, I had never even heard of him called the president-elect before. That was kind of a startling emotional reality. And then he got on the phone and said, "Bob, I need you down here. I need you to put together the economic team. . . . Can you come down and just put everybody together, so there's at least a group that helps me plan my first budget, and helps me get started? And I'd like you right away."

Well, I couldn't say no exactly, but I had two young boys and a wife, and I had my class, and it wasn't easy to just get up and leave. I said, "I'll call you back." And I talked to my wife, and talked to my little boys, and talked to even my class, because I had promised them I was going to teach them for the rest of the term. And everybody said, "You've got to go down. This is not a matter of committing yourself to any position of the government. This is just a matter of helping the guy out for the next two months, for the economic transition." So I called him back. I said, "Sure, absolutely, I'll come down."

And we spent a lot of time. It was a very heady, very exciting time, trying to decide basically how bad the economy was, how large the deficit was. All those projections were subject to some interpretation, and then coming up with a little bit of a blueprint.

A lot of people that we've talked to about the transition describe it much the way you do, that it was a heady time. But another word that people use is "chaotic."

Sure, it was chaotic. The Democrats hadn't been in power for 12 years. Nobody knew what they were doing. But there was a great deal of excitement, not only among the people who were coming down to form the administration or to help the president in the transition, but also in the public at large. We tend to forget, I think, with our jaded selves at the start of the twenty-first century, how excited we can be at the start of a new administration where there's a recession, when there's a sense of a complete change. I remember things like driving up to the take-out part of a fast food restaurant with the kids, and I'd order something, and the person behind the glass would say, "Good luck to you. Good luck to you, and good luck to President Clinton," with a big grin. Wherever I went, people were going like this -- excited about America, at the point of what everybody considered to be a very fundamental change.

You went down to Little Rock, and the president-elect and Mrs. Clinton invite you into the governor's mansion. What were they like? How had they changed? Did they seem different to you in this new position?

They didn't seem all that different. I had visited the governor and Mrs. Clinton several times during the course of his governorship. . . .I was struck by how natural they seemed, joking around, and talking about possible cabinet choices, and I remember saying to myself, "Now, wait a minute. These are not just old friends. Indeed, these are not just the governor and the wife of the governor of Arkansas. This is the president-elect and the first lady or who will shortly be the First Lady of the United States, and here we are talking and joking, and acting as if very little or nothing had happened."

Certainly there was an undercurrent there, though, that things had changed?

Obviously, there's an undercurrent. They knew that their lives had changed profoundly. The whole governor's mansion was packed up in boxes. They were frantically trying to decide exactly on the logistics of the move, as any family would. But they were also, obviously, discussing and thinking about what this transition meant, both in terms of policy and in terms of their personal lives, and Chelsea's life.

In your book you describe the transition as, quote, "Hell." Already the incipient Clinton administration "has created a bureaucratic monster."

Oh, it was a bureaucratic monster. You know, you get a lot of campaign workers, some of them very competent, most of them very competent people. But they all begin to dream about being in the White House, in the administration.

Most of them have never been in government before, right?

Most have never been in government, particularly when Democrats have been out of government. Whatever party it is, if you've been out of government for 12 years and you're suddenly in, there are an awful lot of people waiting in the queue. And if they've worked in the campaign, they expect that somehow they're going to be either in the White House or close to the White House. And the Presidential Transition Act -- a piece of legislation from years ago, right around the time of the Kennedy administration -- provides a big chunk of money to a president-elect to organize his administration or her administration.

Unfortunately, all of those people who have worked on the campaign will have excitement in their eyes and the imaginings in their heads that they're going to be in the White House. They know that there's all that money, they know that there is going to be a big well-funded effort to move from being out of power to move to being in power. So the campaign headquarters are transformed into giant bureaucracies of everybody worrying and fretting and positioning themselves as to what they'll be doing in the administration.

In December, you are assigned to find out what the real budget deficit projections might be. In the campaign the deficit had come up, but it had never been a central driving piece of the campaign. All of a sudden, in the fall, in the transition, this rises to the top. Why does it become such a critical point, when in the campaign there was, at best, passing reference to the deficit?

. . . During the campaign, the president did talk about the importance of reducing the deficit, but it had been of second-order priority to investing in education, in job skills, in health care, and a lot of other things that the country needed to do. But, obviously, when the president is on the cusp of actually governing the country, he's got to know how bad things are, how bad that deficit projection really is, how much damage has been done, what he's inherited in terms of an economic mess.

And so I headed over to the Treasury Department to talk to officials in the Bush administration, and try to get the best estimate I possibly could as to how bad the numbers really looked -- how bad that deficit was going to be the next year and likely to be in years to come.

And you found out it was going to be worse than you had been told. On December 7, you go to tell the president the news. What's his reaction?

The president was not happy when he heard that the projected deficit was much larger than we had assumed, larger than we had been told, and larger than the Bush administration had told the public. He knew that it meant that we couldn't do everything that he wanted to do, everything that he had promised the public. He was upset. But I remember this vividly -- I was surprised at the time, because he was also kind of excited. He said, "Gee, that's a great challenge. We're going to really, really have to work on that." And I remember sitting there thinking, "Now, wait a minute. This is going to set a lot of our plans back. Certainly this is going to put a major crimp in all of this public investment."

Did you tell him that?

. . . The numbers obviously spoke for themselves. You simply had to do something about that deficit. It did not necessitate balancing the budget. It did not necessitate cutting to ribbons all of the investment plans that he had shared with the public during the campaign, but it meant that obviously he could not do as much.

Your whole academic career and your line of advice was investment. Others in the transition were arguing, "No, you've got to listen to what Wall Street is telling us." What kind of internal discussions did you have on where that emphasis ought to be?

We had an ongoing debate inside the White House, both during the economic transition and then also once the president had been inaugurated, as to how much of the president's budget should go to deficit reduction and how much should go to his promised investments. He had promised to get the budget deficit down, and arguably, down by at least half. But the question was: what kind of sacrifice would this, as a practical matter, entail in the programs that he had also promised? The government was already undertaking programs that were really not necessary, where there wasn't very much of a public payoff. How much could be taken out of projected military increases, how much could be taken out of -- I call it now corporate welfare -- basically benefits and tax breaks going to business? It was a complicated discussion, and it wasn't simply a matter of people like me at one end of the table saying, "Invest," and people like the vice president or Bob Rubin at the other end of the table saying, "Cut." It was more nuanced, and we all knew that you had to do both. Ideally, the president wanted to do both.

But when you did have Lloyd Bentsen and you did have Robert Rubin and Leon Panetta, did you know that you were going to be on the losing end of that debate?

I knew that, when we discovered the size of the projected deficits, that it was going to be almost impossible to do what the president had called for in terms of public investments in education and job training and research and development and health. How great a sacrifice of his campaign commitments it would be, I didn't know. And of course there was some tension and some discussion, but we're all part of the same team. We know we basically all want what is good for the country, we want to help the president, and so it was all very good-natured. There was nothing rancorous about it. You know, you hear talk about previous administrations in which everybody is stabbing each other in the back and everybody is whispering behind each other's ears and into somebody else's ears and trying to get to the president. Honestly, I don't remember any of that going on. It was a very clear, above-board, kind of policy "wonky" discussion. That surprised me.

This was not a raging passionate debate, you're saying. This is a nuanced, almost wonkish discussion?

It was remarkably wonkish. It was like a policy seminar. We'd be there in the Roosevelt Room for hours and hours and hours, day after day after day, with the president and the vice president, Lloyd Bentsen, Secretary of the Treasury Bob Rubin, Secretary of Commerce Ron Brown, myself, Laura Tyson from the Council of Economic Advisors. And we'd be there, and we'd be going over the numbers hour after hour, looking at every little minute program. "Can we cut that? What's the consequence of cutting that? Can we get a little bit more money to do this?" It seemed to be endless, and it also did seem remarkably academic in a way. I mean, here's the President of the United States, the head of the free world, wondering about whether if we cut the Coast Guard by this much, would we have a little bit more money to go into this training program, or would we have to put that into the deficit reduction, and how much deficit reduction would we get this year? And if we changed slightly the assumption about economic growth, would that mean a slightly larger deficit reduction?

On the one hand, I was impressed that the president was addressing these issues in such minute detail. On the other hand, I kept on asking myself, "Doesn't the head of the free world have more important things to do than discuss issues at this minute level of detail?"

It was an exhaustive process. You write that, at one point, you look over at the president, while you're speaking, and he can barely keep his eyes open.

He was exhausted. He was absolutely exhausted. He was trying to get his government going, up and running. There were countless issues he was dealing with -- everything from gays in the military, to upcoming North American Free Trade Act issues, the health care task force was getting off the ground, and he was trying to put together his first budget at the same time. And he wanted to fulfill his pledges, but we had this huge deficit. I don't think he ever slept. And I remember one time at that big table in the Roosevelt Room, I talked to him. He was sitting kitty-corner, and I made some point, and his eyes were completely shut. He nodded his head, but his eyes were shut. And I had the distinct impression that either my advice was extraordinarily unimportant -- which is possible -- or the man had gone to sleep, or both.

Did you believe that he was trying too hard to please too many constituents?

Bill Clinton wants to please as many people as he can. He operates by a kind of sonar or radar. He's constantly emitting ideas and possibilities, and slightly different versions of the same ideas, and he's waiting to get back responses from people -- not just special interests -- but as many people as he can possibly talk to, hundreds of people, thousands of people, people on the side of the road, people in cafes, people in restaurants. Whoever he can talk to about anything, he will talk, and he'll listen for those responses. Certainly he tries to satisfy everyone, but somehow he tries to come up with a position that will be acceptable to almost everybody.

Is that a fault in a president who's elected with 43 percent of the vote?

A president has a certain amount of political capital he brings to office. A president elected with 43 percent of the vote has a little bit less political capital than a president elected with 48 or 53 or 58 percent of the vote. What I mean by political capital is the ability to do things, to get legislation done, to act in the public's interest, to convince the public that what he wants is good for the nation. Bill Clinton didn't have a great deal of political capital. He was aware of that.

And he was trying to please a lot of people.

He needed to please people over and above his natural predilection to please everybody, and I think that comes from deep inside him, but also there was a practical issue. He needed to get as much support as he possibly could because he had some very ambitious ideas, and he needed to get enough support initially so that he could sell those ideas. For example, I remember going up to Capitol Hill to talk to some Democratic representatives about campaign finance reform. This was at the start of 1993. He had made campaign finance reform one of his many, many objectives. And I remember distinctly the Democratic leaders on the Hill saying, "Don't do it. Don't do it. If you do that, you're going to lose your political capital. You can't get health care done. You won't get a lot of things done that you want to."

The Democrats on the Hill said, "No, don't do it. If you want our support for health care, and for other things, we can't give you campaign finance reform. It's very unpopular up here, not only unpopular among Republicans, but unpopular among Democrats. We're here because of the old system. We're not here because of the campaign finance reform idea. If there were real campaign finance reform," they said, indirectly, "we might not be here, our positions might be jeopardized, so don't do it."

The president had to make some hard choices. Every president has to make some hard choices at the start of an administration as to what is going to take priority and what he's going to spend his political capital on.

In retrospect, I'm not sure he made such wise choices. He did not know that the executive order on gays in the military, for example, was going to be so controversial and cause such a tumult and cost him so much political capital. Maybe it would have been easier for him to immediately issue an order, "Don't ask, don't tell," which is ultimately the way that issue came out. Leon Panetta told us that, when he was still at OMB, he'd come in to the White House, and he couldn't believe all that people in meetings. He said that there was every low-level person from OMB, there were interns, and he found it incredibly chaotic. What are your own memories of those early days and those meetings?

Many of those meetings were very large. There were people sitting around the table and then in chairs behind the people sitting around the table, and then people standing next to the walls. It was like a little theater. And if you're working in any large organization, particularly if you're working in the United States government, if you're working in the White House, wherever you are, you want to be included. The big issue is: who's included, who's not included? And given Bill Clinton's predilection, and his chief of staff's predilection was to bring them all in.

. . . It's good to have everybody know what's going on; it's good to have consensus. We need to have a broad team. This was almost a kind of 1960s mentality, you know? I don't want to be derogatory here. I don't think it's bad to be 1960s-ish about meetings. But it was kind of, everybody's here and everybody's part of this, and we're not going to have hierarchies, strictly speaking.

Can that work in the White House, with the leader of the free world?

It really can't work, and the president came to the decision ultimately, in fact, not that far into the administration, that these meetings were too big, they were unworkable. There were leaks. If you have that many people in a meeting, obviously, somebody's going to want to tell the press to boost up their own ego. "Gee, I have some interesting information I'm going to tell the press so the press will think I'm very important." But it's very hard to get any work done when you have so many people who can speak up or who have points of view.

Shortly after the administration took office, you all got in these little buses and went up to Camp David for your first sort of Clinton seminar. What was that like?

The Camp David original seminar was almost like a retreat, a kind of a pep rally. We were in very uncomfortable buses, very uncomfortable little lodgings. I remember looking at Lloyd Bentsen, who was kind of regal. He had been a senator. He was obviously used to being treated a little bit better, and the poor man is sitting among a lot of kids, essentially. We're in our 30s and 40s. We're riding this bus up this canyon. We're sitting around these big tables with easels and trying to brainstorm. We had facilitators, not unlike a corporate retreat I think corporations do this all the time. But there's a lot of role-playing, a lot of games, a lot of baring of one's soul.

You were each asked to reveal something about yourselves that others might not know. What did the president say?

He talked about himself being a fat little boy, and being very self-conscious about it. Others talked about other little vulnerabilities. It was a chance to share our vulnerabilities with one another, and to some extent it was very endearing. It was a very lovely time. We were all, to that extent, quite innocent. I looked recently at a photograph of that original cabinet, and I went around that cabinet table and saw that a majority of the people sitting around that original cabinet table had either been indicted or investigated, or they had left under pretty difficult circumstances or they had died. But at that time, at that retreat in those early weeks, we were enormously enthusiastic, and a bunch of joyful little kids.

You write in your book about the retreat -- that ideas were bouncing off the walls. There was also this sense of forced intimacy.

It felt a little bit artificial. We didn't know each other that well. In fact, most of us didn't really know each other. We knew that we faced some very, very large responsibilities, the largest responsibilities you can imagine, any of us could ever imagine. And yet we also were playing games. I mean, real games, facilitator-type games, the kind of games you play at a corporate retreat. Yes, it felt a little bit forced.

You just mentioned before that you felt like it was almost a bunch of kids. That's been one of the criticisms of one of those early months in the administration -- that the kids were in charge -- and therefore you get Zoe Baird, the gays in the military, the appointment process that was so slow. Was it because there were too many kids in that early White House?

I used to get calls from the White House. My assistant over in the Labor Department would say, "The White House wants you to do this," or "The White House wants you to go over here. The White House wants you to go to California." And I discovered that there was not a White House that wanted me to do anything. There were usually kids about 30 or 32 years old that wanted me to do something. So I began asking my assistant, "Find out how old the person is who wants me to go. If the person is under 40, I'm not going to go. Over 40, then we're going to find out if the president really wants me to do something."

One day you got hacked off because they wanted you to go to Cleveland. You get a call from the White House, and your staff says "They want you to go to Cleveland," and you are concerned about the age of the person on the other end of that phone.

Yes. My chief of staff came in and said, "The White House wants you to go to Cleveland." Well, I have nothing against Cleveland, but I have a lot of other things that I want to do and need to do, and I said, "Well, who exactly wants me to go to Cleveland?" And my chief of staff came back and said, "Well, so-and-so wants you to go to Cleveland. It's not the White House. It's a person." I said, "How old is this person?" It turned out the person was about 31 years old. I said, "I'm not going to Cleveland." I mean, there's no reason that somebody at a relatively low level in the White House should be telling a cabinet officer to go to Cleveland when I have a lot of other things to do. If the president wants me to go, if the chief of staff wants me to go, if some senior advisor wants me to go, fine, but no 31-year-old junior staffer is going to tell me I have to go to Cleveland.

But you went?

I probably did go. I can't recall the exact details. Ultimately, I usually did the White House wanted me to do. Yes, a lot of people making a lot of decisions in the White House. Very early on during the transition, the president and I had the conversation, "What do you want to do in this administration?" And I wasn't sure, quite frankly, that I wanted to come into the administration. My wife was dead-set against moving to Washington. My young teenage boys were not happy about moving or leaving their friends.

And I said that I'd do it. But then the question became, "What are you going to do?" I only wanted to do it for four years. He wanted me initially to be in the White House, and I said, "No. Bill," -- I think I still called him Bill at that point -- "I really would rather not be in the White House. I'd rather be outside." He came up with the notion of the secretary of labor, because it touched on things that I was really very interested in, and had been for many years. But I was delighted not to be in the White House day by day. I had a lot of meetings there. I ended up spending half my time inside the White House. But I didn't want to have an office there. I didn't want to have to answer to somebody inside the White House like the chief of staff. I didn't want to be around the president all the time. It was a little chaotic.

For all his talents, Bill Clinton, at least at the start, was not a great manager. He was reluctant to say to somebody, "No," or "I'm not going to listen to you. I'm going to listen only to my chief of staff." He was reluctant to impose a hierarchical order. There was a kind of a "Let a thousand flowers bloom" atmosphere initially, and although that can be very creative, there are costs.

Early in the administration, the first piece of legislation comes out -- the Family and Medical Leave Act. Do you remember what the ambiance is when the president is signing that act?

The Family and Medical Leave Act was the first piece of legislation the president signed, and it seemed so easy. The Democrats controlled Congress. They wanted it. They had been fighting with Republicans for years. For seven years Bush had vetoed it. Now it was there. The president signed it, and we all had a sense, "Gee, this is easy. You know, passing legislation, there's nothing to it." We were going to learn a different lesson.

In February, 1993, the president gives a speech unveiling his economic plan. You're listening to this, and you really have extremely mixed feelings about it.

The economic plan that emerged did inevitably have to sacrifice some of the investments. . . The question is what the president wants, what's part of his agenda, what's good for the country. Naturally, I, like many other people, have certain personal investments in certain aspects of the president's overall agenda. Sure, I was somewhat disappointed, because it didn't have nearly as much for education and job training, job skills, and for child health and a few other things that seemed so important to do. But my hope and the hope of others like me, in and around the White House, was that if the economy could grow, maybe there would be an opportunity to do this later.

Were you disappointed in the president at this point?

"Disappointed" is not the right term. This was my second round in Washington. I had been there in the 1970s. I was not totally naive to the world of Washington. I was personally disappointed that we couldn't do more, but, no, I wasn't disappointed in the president. He was elected president. He's got to make hard choices. Politics is the art of the possible, and he obviously decided that we couldn't do nearly as much as he had wanted to do in the campaign.

In April, 1993, the stimulus package is up, and Republicans are filibustering it. You go into a meeting and the president is told what's going on, and he gets really angry. Can you describe that scene to us?

The president was told that the stimulus package was just not going to be passed. There was too much opposition. And he was upset. This was the first big blow to his presidency. I think he was upset, not so much because the stimulus package itself was not going to go through. There had been a lot of debate inside the administration as to whether it was a good idea, whether it would really help jumpstart the economy anyway. I think he was upset that, as president, given that the Congress was Democrat, he didn't have enough power, enough authority, to get what he wanted done. Already opposition was forming. Already his ability to change the direction of the country was being challenged, even in his own party.

You write, "His face turned beet red, and he starts hollering, "Now, why are we doing everything Wall Street wants?" What's the context there?

. . . He felt that the bond traders on Wall Street, the people on Wall Street who were most worried about interest rates and the deficit, were dictating to the administration -- to him -- what he, as president, could do. And I think deep inside Bill Clinton there is, or at least was in 1993, a populist -- somebody who thought of himself as working for the common man and woman, the working people of the country. And here he had something he thought was very important, to get the economy going, and Wall Street had put pressure on to say no. The Federal Reserve Board had said no. Indirectly, through Alan Greenspan, through Lloyd Bentsen, the word had come, "If you do this, it will make things worse."

Is there a implicit or explicit understanding at this point in the administration from the chairman of the Federal Reserve? Is there a sense that there is a bargain? "You folks concentrate on the deficit, and I will cooperate on interest rates."

We began to sense that there was a signal coming from Alan Greenspan, and from his Federal Reserve Board Open Market Committee, and maybe that signal was coming directly. I suspect it was. I think that Alan Greenspan was talking directly to Lloyd Bentsen, and Lloyd Bentsen was talking directly to the president about it. Alan Greenspan was saying essentially this: "Unless you dramatically cut the budget deficit, we are not going to reduce short-term interest rates. And if we do not cut short-term interest rates, this economy is going nowhere. It's never going to take off. The price that you must pay for us cutting short-term interest rates and getting this economy moving, is you've got to sacrifice your beloved investment agenda."

So at this point, Alan Greenspan, the chairman of the Federal Reserve, essentially has Bill Clinton in a vise grip?

Yes, Alan Greenspan and the Fed had Bill Clinton in a vise. There was nothing that he could do. He had to begin to fairly dramatically cut the deficit to regain so-called confidence on the part of Wall Street. Of course, the intermediary there is the Federal Reserve Board. Setting short-term interest rates sends a very powerful signal to Wall Street as to how confident Wall Street should be about the willingness of the president to avoid inflation.

Here's the dynamic at this point in time. The economy is almost flat on its back. It's slowly coming out of recession. We didn't even know it was coming out of recession. It still looked pretty bad, with unemployment very, very high, way up above seven percent, and in parts of the country it's nine or ten percent. Unemployment, slow growth -- the president knew he had to do something to get the economy going. Was it going to be a stimulus package? Well, many of his economic advisors worried that the effect of a stimulus package would be too slow. The government couldn't spend fast enough to get the economy going, and the stimulus package would have to be too big to really have any market effect on the economy, and we were already deep in debt and deep in deficit. If you had a big stimulus package, you'd go even deeper into debt and deficit.

So what you really had to do was count on the Federal Reserve Board to reduce short-term interest rates. That would get the economy going, because then people could borrow more easily, companies could borrow more easily, people could borrow for homes and for cars. That would be kind of an indirect way, but ultimately a much more effective way of getting the economy going. But in order to get the Federal Reserve Board to play ball, the Fed and Wall Street had to believe that Bill Clinton was serious about cutting the deficit. The irony, of course, was that the Republicans had built up that deficit. George Bush didn't have to worry about dramatically cutting the deficit. But a Democratic administration comes to power with the burden of proof against it in the eyes of Wall Street. "You guys, you Democrats, you are taxers and spenders, and spenders first. You are likely to aggravate inflation. The deficit under you guys is going to get worse, and we want proof that you are serious about cutting it before we are willing to play ball with you."

Later in the summer, NAFTA takes the fore. You are passionate about this. AFL-CIO President Lane Kirkland is in your ear all the time. Elsewhere in the administration, there is enormous pressure in support of NAFTA. How did the president deal with that? He had you and labor in one ear, and Rubin and Panetta in the other.

Well, personally, I was and still am a free trader. I think that free trade is inevitable and overall it helps everyone. But labor was very against NAFTA. And I remember appearing on so many stages in front of various labor groups and being booed off the stage because I was representing the president, and the president was committed to NAFTA. He was committed to NAFTA in the campaign. He said, during the 1992 campaign, "I am going to sign the North American Free Trade Act."

What was your advice to him during the debate though?

My advice to him during the campaign was to sign it.

And then later, once, Kirkland was telling you guys that it was going to be a "f-ing disaster," and you were going to come to regret it. You passed that on to the president. What was his reaction?

He shrugged. He was willing to take on organized labor over the North American Free Trade Act. I think the real issue there was what kind of priority NAFTA should get. Should it be one of the highest priorities of the administration in those first years? Should he spend a lot of political capital on it? Should he delay health care in order to get NAFTA done first? And the first lady wanted health care first. She didn't want him to expend political capital on NAFTA. She was concerned, and in retrospect she was absolutely right, that if health care came after NAFTA, then health care might never get done. Already the momentum was building for some sort of universal health care. He had the political capital to get that done, but the business community was telling him NAFTA was more important. And Lloyd Bentsen, the most senior member of the cabinet, and a man of great insight and wisdom and experience to whom the president deferred quite a bit, Lloyd Bentsen was adamant. NAFTA must come first. In fact, I remember Lloyd banging his finger on the table, "We must get this done right away." And so the president decided that that was going to get the priority. My job was to deliver the news to organized labor. And that was not pleasant, but they knew it was coming.

Beginning the next year, the Whitewater scandal comes roaring back. What impact did that have on Bill and Hillary personally? How did you see it affect them?

I think that they were very hurt by that Whitewater investigation. The first lady was bewildered by it. She had already taken a great deal of heat during the campaign of 1992 for who she was, for how she acted. And she felt hurt by that. The Whitewater investigation, she felt, was unjustified. There was nothing wrong. They did nothing. It seemed to be some sort of a political vendetta. And in the midst of everything else that Bill Clinton wanted to do and the first lady wanted to do, it seemed just a huge burden.

You sat next to her at dinner following her one and only press conference in eight years at the White House, the so-called "pink press conference." Do you remember her conversation with you about the way she was being perceived because of Whitewater?

I remember that she felt good about the press conference. She had been very effective. That was the word we heard from everyone, all of the pollsters, all the political people, my little free-floating focus group, my wife and sons and friends. Everybody thought she had done very well. She was obviously relieved that that particular press conference was over, but she was also hurt and bewildered, and I think quite pained by Whitewater. It was worse than a distraction. It really it seemed to her to be some sort of almost retribution, political retribution. She didn't understand why, but there was anger directed at her. She was hurt by the anger.

How powerful was she in that first term?

The first lady was the first advisor, the most important advisor. Al Gore was the second most important advisor. But Hillary Rodham Clinton's influence was on every domestic policy that was important. She was quite interested in labor issues, in education, in job skills, job training. She was most interested in health care, and she just dove into that issue.

Was that a mistake, ultimately, when you look back, to have the first lady in charge of revamping one-seventh of the economy?

In retrospect, it's easy to be a Monday-morning quarterback. She would probably say it was a mistake. Sure, it's hard for a first lady to be in charge of such a major undertaking, the largest most ambitious undertaking, or at least attempted undertaking of the first term, or perhaps the whole eight years of the Clinton administration. It's difficult under the best of circumstances for anybody to be in charge of something of that magnitude, but for the first lady to be in charge was particularly difficult. She had not been elected to anything. She had not been directly appointed in terms of a formal appointment, to anything. And because she is the wife of the president, it's difficult for people to criticize her, to say, "No, you mustn't do this, that's wrong," because, after all, you're talking to the wife of the president. And so that there was a subtle intimidation that also went on among the people who were working on that project.

Did you or any other cabinet officer have the political wherewithal or the personal relationship to get on the phone and say, "Mr. President, this is a bad idea, it's not working?"

The economic group, of which I was a member, didn't really know what was going on. The health care task force was meeting in secret, and we only heard rumors. . . . Even though I was the secretary of labor, it didn't matter. We were still not in the loop with regard to health care. Finally, we all got together. Ron Brown and Lloyd Bentsen, Bob Rubin, Laura Tyson and I, and a few others, and said to the president and the chief of staff, "Look, we have to know what's happening here. We've got to be able to evaluate this in economic terms. What we've heard sounds a little scary. It may be right. It may be a good plan, but we want to subject it to some sort of economic analysis, some sort of evaluation." And at that point we did begin to get involved.

What was the reaction from the president when he hears his economic team is getting worrisome about his wife's pet project?

The president was not pleased that there was potential discord in the ranks. He wasn't pleased about a lot of discord with regard to things that he wanted to do anyway, even if his wife had not been in charge of that task force. But he had already sunk a lot political capital into this issue. He had already been making speeches, he had devoted a great deal of attention to this. He had been involved with the first lady and Ira Magaziner in discussing the details of this plan. At this late stage, for the economic team to nose its way in and start asking hard questions and express doubts, well, that didn't meet with a great deal of joy on his part.

During your conversations with Mrs. Clinton at this time, you talked to her about being captive in the White House, and she tells you that she is able, or has on occasion, been able to escape.

The White House is a prison. It's impossible for a president and a first lady to get out without being recognized, without being noticed. You have Secret Service people around. Even in my humble outpost at the Labor Department, I was in a bubble. It was hard for me to escape. And you can imagine how difficult it was for them.

She said that she occasionally escaped by putting her hair up in a baseball cap and putting sunglasses on, and getting on a bicycle and bicycling on a towpath that still runs next to the Potomac River. She'd have Secret Service people on bicycles behind her, and nobody would recognize her. After all, if her hair's up in a baseball cap and she's got sunglasses on and she's on a bicycle, you're not exactly going to think it's the First Lady of the United States.

At one point some Japanese tourists flagged her down, stopped her. They had cameras, and she thought, "Oh, they recognize me." And then she said that she got off her bicycle reluctantly, and one of the members of this little group of Japanese tourists handed her the camera and said, "Would you mind, please, taking our picture?"

You say that Hillary Clinton had enormous power. You take advantage of that at some points. You write where you are feeling frozen out, that you are not in the loop, and you use Hillary as a way to get back in. Tell us about it.

I could, as a cabinet member, call the president whenever I wanted, but if you want to actually write a memo, it's more complicated. The first few memos I wrote to the president, I discovered, showed up on a lot of people's desks. In fact, that memo was leaked to the press. And I thought to myself there has to be a way of getting to him directly and not going through the bureaucracy, because if I say anything slightly controversial, I'm going to be on the front page of the Washington Post, and I'm going to be in trouble and he's going to be in trouble. I wanted to be able to be free to talk to him, but in memo form. How could I do this? Well, I explained to the first lady my problem, and she said, "Don't worry about it. Just drop your memos off at my office, and I'll give them directly to him." So we had a little back door. And that worked very well.

The economic plan finally passes in August of 1993, by one vote. Were you over at the White House when that vote comes in?

The economic plan was in danger of going down to defeat. It was very controversial. A lot of Democrats didn't want to vote for even a slight tax increase. The Republicans, certainly, were uniformly against it. The cuts in the budget were tough for a lot of people to take on the Hill. It was unclear that that thing was going to pass. And the White House had set up a war room. Now, remember, there had been a precedent for a war room. That war room had come directly out of the campaign. What is a war room? It's everything that that name signifies and symbolizes. You're in a war. There's an opposition. You want to plot exactly where the opposing armies are, who's in your camp, who's against your camp, who you have to telephone, what you have to do, what ammunition you need to use. And there was a war room for the purpose of getting that budget through Congress and getting those votes.

Right up to the last minute, we didn't know that we had the votes. There was a lot of arm-twisting, a lot of holding hands, a lot of reassuring. Some members of Congress, some Democrats who voted for it, subsequently were punished by the electorate. They did not get back in. They were worried, justifiably, about their jobs. And right up until the last moment, in the White House, there was a sense of drama, and foreboding, and hope, and we watched the tally come in, and we saw that we had enough votes. Al Gore went up, broke the tie, and there was then jubilation. We had won. This was a big one. This was a hard one we had won.

Do you remember the president's reaction?

The president was relieved, deeply relieved. Had he lost, he would not just have lost the budget battle -- he would have lost enormous political face. The message would have been, "This guy cannot deliver." And if a president puts so much behind something and cannot get it done, the president, by definition, becomes weak.

This fight and the narrow win by one vote reinforces an idea in Washington that has been with Bill Clinton since the campaign -- that he lurches from crisis to crisis, only to pull it off at the last second. Is there something in Bill Clinton's personal makeup or character that leads to this lurching from disaster to disaster? It's a pattern that we saw over and over again.

It is a pattern. Look, everybody wants to be an armchair psychologist with regard to Bill Clinton. It's the greatest national sport there is. And I think even when he leaves office, for years to come there will be analyses upon analyses of this complicated personality. Is he the kind of person that works best under pressure when there's a crisis? Yes. Many people are like that. I have every reason to believe, from what I have seen and from the person I've known for 30-odd years, yes, he works better, indeed best, when his back is against the wall and he's really in trouble in a way. I remember at Yale Law School he didn't study very much until an exam was looming, and boy, when that exam was breathing down his neck, he worked. Those all-nighters, that pressure -- he focused.

In July 1994 . . . what does Congressman Newt Gingrich tell you about health care in the House dining room?

This is one night that the House is late in session. I'm running around up there trying to lobby to save a little piece of the Labor Department's budget, and I ran into Newt Gingrich and his colleagues at a dining room table, and they were in a great festive mood. Newt Gingrich was starting to feel very confident. . . . Newt Gingrich sees vulnerability, smells vulnerability, smells defeat in the air for health care, and I think he sees himself as the House speaker, sees the Republicans taking over Congress. That's what he said to me. . . . "Page 187: 'Mr. Secretary, your boss is a nice man, but his wife shouldn't be making policy. Health care is dead.'" Cheers and laughter from Newt's table.

And he said to me, "Mr. Secretary, health care is going down to defeat. The first lady should never have been in charge. You're in trouble." And all his Republican colleagues cheered him on and applauded. It was almost as if we were in a sporting arena. You know, I remember thinking at the time, "Here we are in the dining room of the House of Representatives talking about something that's extraordinarily serious, affecting 40 million people that don't have health care, and he's quite boisterous about that fact that this thing is doomed."

In the brinkmanship leading up to the shutdown, the president was reluctant to push this to the brink, but he was being encouraged to do it. What were the stakes for him here?

The stakes were enormous -- not only were the stakes very high in terms of the government of the United States stopping and not functioning, but in terms of all of the people who could have been hurt as a result. Some people were hurt as a result, but the stakes in terms of who would be blamed for such cavalier carelessness, with regard to the institutions of government, were much, much greater. Would he be blamed because he drove the Republicans ultimately to this point, or would the Republicans be blamed because they didn't deliver to the president the appropriations that the president wanted? It wasn't at all clear who would lose that blame game. And the party that lost the blame game would probably lose in the 1996 elections, or at least suffer major setbacks. So the stakes were huge.

Newt Gingrich had come to town at the start of 1995 as, in effect, the next president. He was called Speaker of the House, but he almost was inaugurated. He felt at that time just an enormous sense of victory. His Contract with America seems to have been, at least in his mind, endorsed by a majority of the electorate. Bill Clinton had so badly lost ground in 1994. It was a terrible repudiation. And so where is power in Washington? That's the big game. That's the big question. It was with Newt Gingrich. Could he hold onto power? If he held onto power, this presidency would have imploded. Bill Clinton would have been irrelevant. And ultimately, that was the question that was at stake.

What was the turning point? Was it the fit of pique that the speaker had on Air Force One coming back from the Rabin funeral, or was it the "spinmeisters" at the White House who were able to tell that story with such great relish to those of us in the Washington press corps? What was the turning point in framing that debate so the president won and Gingrich lost?

Gingrich began to look like a power-hungry, power-crazed politician. He began to lose public respect. The incident on Air Force One about him complaining that he wasn't treated well, that he didn't get the right seat, was just one of a number of incidents. I think the press began buying into the story partly because it was spun very cleverly by the White House -- partly because, in fairness, I think that was a true story -- that Gingrich was carried away with himself, was trying to behave as if he was president, and was acting deeply irresponsibly. On top of that, yes, the White House was very clever in how it positioned the president and how it portrayed Newt Gingrich. How did the defeat of health care affect Hillary Clinton?

One cannot understate that extraordinary impact that that health care defeat had, not only on the first lady, but on the president, on the White House overall. It shook the confidence of everyone. We saw the defeat coming. It wasn't a close call. This was a ship that was sinking and had been sinking for a while. But I think she took it very personally. You have to be philosophical about these things. You have to say, "Look, the public has spoken in a way. The other side did a better job. They may have been demagogic about it, but they won." But at a slightly deeper level, I think there really is a lot of pain, a lot of hurt, and all of us felt that we had lost a very, very important battle.

In the November elections, Democrats lose both houses for the first time in four decades. What did that do to the confidence of the White House?

No one expected the complete rout that the election of 1994 became. We knew, because pollsters told us, that things were not going to go particularly well in the House, and that it was possible we would lose the House. But to lose the House, and to lose the Senate, and to lose so many state governorships, to lose so many state legislators, for there to be such a big shift was an overwhelming defeat. There was no way to interpret it as anything but a repudiation of the Clinton administration, and that's how we saw it.

It was a dismal day. I went over to the White House just to see how the president was doing, how other people were doing, and he tried to put the best face possible on it, but he was devastated. Everybody was devastated. We had worked so hard. We had worked and come into office the beginning of 1993, with so many ideals, so many visions, so many projects -- too many -- too much ambition, probably, for what could be accomplished. Undoubtedly, our expectations were too high.

First there was the necessity to get the deficit down. And then there was the defeat of health care. There were some victories along the way, like NAFTA, but there was a sense that we were not getting what we had set out to do done. And now this defeat seemed to be saying, in effect, "You guys don't know what you're doing."

Did you feel that you had been defined by stumbles on gays in the military, on the failure in health care, on the Attorney General nominations going up in smoke? Were those the things that caused it?

There had been a lot of stumbles, but I think the health care defeat was perhaps the biggest stumble of all. That repudiation and the way the Republicans had successfully framed it -- as a battle between big government taking away your option to choose your doctor and to get the health care you wanted versus the little person. It was devastating, and it set the Republicans up for a major victory in November. The 1994 election and that defeat can't be separated, really, from health care. They are part and parcel of the same process. The Republicans had made it very clear during the health care debate that they did not want that bill to pass. They made a very clear and conscious and very specific decision. It was a strategic decision -- there would be no health care bill, there would be no health care legislation. The president would not get this win. And the Republicans told the business community, much of which had been very supportive of health care, not to cooperate.

You say the president, after that election, was devastated. There are a lot of changes. Dee Dee is out, George is out, Panetta is in, Stan Greenberg is out, Begala is in. What was the message to the White House, and indeed to the cabinet, when you saw this wholesale housecleaning after that defeat in 1994?

The message was: we've got to change our ways; we've got to reinvent ourselves; we've got to do something fundamentally different. But we didn't know what we had to do differently. Some of us felt that the president had to be more forceful on behalf of working people, and had to come out fighting. Some people thought he had to move to the right, and there was a big internal debate about whether you fight or move right.

Did you sense that your influence waned as a result of that election?

It's awfully difficult to tell whether your influence is rising or falling where it is in a very tumultuous and fast-moving environment, which is the Clinton White House, and Bill Clinton himself is moving on so many different levels. It almost doesn't mean much to have one's influence rising or falling, because it can rise one day and fall the next. There was a short interval of time in which I felt, after the election, some of the ideas I had been pushing did get a much more receptive audience in the White House. The president went on television advocating a GI Bill of Rights for American workers -- tough stuff. He sounded a little bit more like a fighter, and I thought that was the direction he had decided to go in. But, no, that was short-lived.

You were alarmed by the spring of 1995 about the number and the kind of budget cuts that were coming down the pike. Did you know what the influence was at this time behind them?

. . . Early in the spring of 1995, I noticed the president's behavior had changed. For example, he was scheduled to do a major tour to fight for some substantial increases in education, and that suddenly got canceled. There were a few other things that he was going to do, and then he seemed to change direction. You know how if you're an astronomer, you can tell something about the movement of stars. You can tell if there's a black hole. That's what astronomers call it, when there's a gravitational field that really doesn't show up, but you can tell it's there because the stars are moving toward that black hole. It's a very powerful gravitational field. Even though you don't see it, you know it's there. I began to sense that there was a black hole in and around the White House.

Another gravitational pull?

There was a powerful gravitational pull. I didn't know where it was or who it was. It was strange, it was new. But the president was gravitating in a different direction, so there must be somebody, there must be something there. It proved to be Dick Morris, who went by the code name "Charlie." This was a very surreptitious operation. In a White House famous for leaks, famous for everybody knowing everything that was going on, Dick Morris came in without anybody really knowing. People had suspicions. I saw the movement of the constellation showing that there was something going on, but we didn't know what or who. We'd have meetings with the president, many of the cabinet members; the economic group would have meetings. We'd offer suggestions, and they'd get nowhere, they'd get no place at all. It was unusual to have absolutely no response.

Was the fight over the balanced budget . . . something that the president himself believed in, or is it something that Dick Morris pushed him into?

The president did not start his administration as a fiscal conservative. He understood that he had to do some deficit reduction, certainly. The country demanded it. Wall Street demanded it. Alan Greenspan demanded it. But his deepest instincts were not with the fiscal austerity crowd. Fiscal austerity meant as a president you can't do very much; in fact, you make a mark by doing nothing or little, or doing less than anticipated. And the president very reluctantly, bought on to a balanced budget. But gradually -- and certainly this was the case during the second term -- the president began to tout his fiscal conservatism. Now, whether he actually went through a kind of religious conversion in terms of fiscal austerity, I don't know.

In 1996, the other hallmark of the election campaign was a series of what some called or derided as "pint-sized initiatives," such as school uniforms, and very small policy initiatives. What did you think of what the president was doing with those things?

I felt that the president was not building a mandate for the second term. He was not educating the public about what he wanted to do in the second term of his administration, and therefore, assuming he got reelected, he wouldn't have the public behind him in terms of doing anything large and significant with his second term. That was my fear.

Now, Dick Morris's argument was all these policy miniatures, you know, the school uniforms and the V-chips, and all of these little things that the president and the federal government have little to do with anyway, but they responded to what the public was concerned about. They polled very well, and therefore, they would help get this man reelected. It was a debate that Dick Morris and I had continuously. Do you try to use a campaign to build a mandate for what you want to do so that you have the public behind you when you're reelected? Or do you play it very safe, and tell the public exactly what they want to hear so you can be reelected -- but then reelected to do what?

So your feeling is that they just played it safe in 1996?

Dick Morris's advice was to play it safe, to stick to little, tiny policy miniatures, to be very, very unambitious in terms of what you told the public you wanted to do. You get reelected that way: the smaller, the better.

And it worked.

You can't argue with success, I suppose. But on the other hand, I suppose one could make the argument that it might have been easier for the president in the second term to get some very large things done that he wanted to get done, if he had prepared the public in the election of 1996, If he had laid that groundwork, if he had educated them, if he had laid the mandate out so that the public could have been behind him. Whether it's a major reform of the national educational system or it's a major inroad in health care, or it's a fundamental rewrite of Social Security, or a fundamental redo of Medicare, or it's child care for everybody, or whatever it is -- you've got to have the public really behind you if you're going to do it.

One day in March you run into George, and George doesn't look so well in your opinion. What does he tell you? What does he look like? What's his response to the news he's about to tell you?

Poor George. He had a little office right near the Oval Office. He had been slightly demoted, I guess you could say. He put the best face on it, in fairness to him, after the 1994 election, and he looked particularly bad this day I stopped by. I would often stop by to say hello, to find out what was going on that day. And he just said, "Something terrible is going on, really bad, really, really bad." Now, I had no idea what he was referring to, but soon thereafter, I met Mr. Dick Morris.

What was your impression of Dick Morris?

Dick was a whirling dervish of egocentric obnoxion [sic]. He knew he thought exactly what the president ought to be doing. He was cynical about politics. Now, we all, by that time, are pretty cynical about politics. Nobody is completely naive. We've been through a lot of battles. I was in Washington in the 1970s as well as the 1990s. But this guy carries cynicism to a new level. There is no principle at all. It's only about winning. The ends seem to justify whatever means are necessary.

Dick Morris came whirling into my office one day, put his hand out, says, "Hi, I'm Dick Morris. Glad to meet you. I've heard good things about you." Sat himself down, took out his notebook and said, "Tell me what we ought to do. I'm going to have them tested. Every one of your ideas I'm going to have tested in polls, and the ones that test very well, I may even offer the president."

Well, there was a certain presumptuousness about this presentation. I, after all, was a cabinet officer. I had been appointed by the president with the advice and consent of the Senate. I had a lot of responsibilities. Up to that point, I could talk to the president directly, and here was somebody telling me to give him ideas that he would test by polls, and if they were good enough according to the polls that he designed and tested, he might then send them on to the president. The assumption that everything had to be poll-tested, that you couldn't have a good idea for what the president ought to do or where this country ought to go unless some poll indicated that it would be particularly popular with the public -- that alone I thought a little bit galling.

But was it very different from the way the president operated? Obviously, he had known Dick Morris for many, many years, and he brought him back for a reason.

Polls are important to any leader, to any president. You've got to know where the public is. But if you govern according to polls, then you can't lead. The essence of leadership is leading people from where they are. If you just listen to polls, all you are doing is pandering to where they are. You are not, by definition, leading them anywhere.

You have an argument with Morris when he comes in and he tells you that President Clinton will sign the welfare bill because the polls show he should.

I said to Dick Morris, "Look, if this president doesn't stand for anything that is more or greater than where people are right this minute, if he doesn't lead the people anywhere, if this election that's coming up in 1996 is not about where the country ought to go, if he doesn't establish a mandate for where he wants to take this country, what's the point of being reelected?" And Dick Morris said back to me, "If he's not reelected, what's the point of talking about a mandate? My job is to reelect him. Your job, besides running the Labor Department, is to come up with ideas he might want to use, but I'm going to get him reelected."

There is a cabinet meeting to which only cabinet officers are invited. Welfare is the topic. Do you remember that day?

Yes. . . . It was a small meeting, not the entire cabinet, just a few cabinet officers who were particularly interested in welfare, whose mandates involved welfare, and a few of the political advisors. The president walked in, and I knew something was up. The first lady was not at the meeting and Al Gore was not at the meeting. Now, if those two are not at the meeting, you know a decision has already been made, that the meeting has no significance other than that the president wants people to feel that they've been consulted with. That's nice. I appreciated it. But I knew the decision was in the bag.

He went around the table, asking each of us what we felt he should do. Remember, the Republicans had already given him two welfare bills. This was the third one. He had vetoed the first two. The third was slightly less draconian than the first two, but it was still awful, awful. It was punitive. It treated immigrants very badly. It cut food stamps. It did a lot of things that were just outrageous. He went around the table, and many of us, myself included, said, "Mr. President, this is not right. This is not what we came here to do. This is not what you came here to do. Even if the economy stays better than we could possibly imagine, even if it's a wonderful economy, at some point this economy is going to turn downward. We hadn't repealed the business cycle. And at that point there's no safety net for millions of people." He heard us.

. . . Was this a passionate, intense, argumentative debate?

No. This is a very somber occasion. I think other people in the room also sensed that the decision had already been made. It was quite tense. The president seemed a little bit defensive, I think because he had already decided to sign the bill, and he knew that most of us were against him signing the bill.

The political advisors -- who have a very legitimately important job of making sure that this guy is reelected, and helping him maintain or enhance his political capital -- the political people, by and large, wanted him to sign. They felt that it was very dangerous not to sign. Even though he was leading Bob Dole in the polls by 20 percent, they felt that if he did not sign the bill, if he vetoed . . . Dole would hit him over the head with a third veto during the campaign. Dole would call him a hypocrite. After all, Bill Clinton had promised to reform welfare, to end welfare as we know it. The Republicans had given him three bills, and he had rejected them all, and Bob Dole would have a field day, and that 20-point lead that the president had might evaporate. That was the fear. Others of us could only say that it was not the right thing to do. . . .

I didn't lose faith in the president. I was deeply disappointed. I knew that after he heard all of us and then retired into his office, that he would sign it. And I left the meeting worried and upset. Sure, if the economy continued to do well, as long as unemployment stayed down 4 percent, people could probably get jobs, and move from welfare to work. But I had no confidence -- and to tell you the truth, I still have no confidence -- that we are always going to be in a positive economic state. We have not repealed the business cycle.

I felt pretty awful. I felt pretty sick. A combination of the day and the Washington humidity. I knew that the president was going to sign the bill, and it seemed to me the worst decision of the administration. It seemed to me an immoral decision. We would not know how immoral it was for years to come. The economy would probably stay good. He might even take credit for signing the bill. A majority of the public might even come to think it was the right thing to do, but over the long term, it would be a very dangerous move. It would cause a great deal of grief for a lot of people.

Did you sense at this time that Dick Morris was at the height of his influence and power in the White House?

I knew that everything the president did during this campaign season was being almost being dictated . . . by Dick Morris, and that Dick Morris was clearly counseling the president to sign this welfare bill and get the welfare issue behind him.

Did this tell you that Hillary's influence had subsided? After all, she had been associated with the Children's Defense Fund. The former director was her chief of staff. Certainly her people were passionate about this, and she defers. Is this when her power and her influence ebbs?

I never knew exactly how much power Hillary had at any given time. I always assumed that she was the president's chief counselor, but when Dick Morris was there, clearly, she began to take a back seat to Morris for the purpose of that campaign. Her health care bill had gone down to defeat, and therefore, perhaps -- and I'm only guessing -- the president lost some confidence in her political abilities. But she had been the one to bring Dick Morris in. She had brought in Dick Morris in 1980 when Bill Clinton was in a similar circumstance as governor of Arkansas, when he had lost the election. 1994 was analogous, and she was the one who wanted Dick Morris to be there.

In May of 1995, the balanced budget fight is raging. You're opposed to it. But you write that, once again, Morris is dominating the discussion.

Dick Morris knew from his polling -- whether his polling is accurate is another issue all together -- but he thought he knew from his polling that trying to buck the tide of a balanced budget was a losing proposition. It sounded right to the public. People had to balance their own checkbooks, their own pocketbooks, so the federal government should balance its budget. And he warned the president that he shouldn't get in the way of that tide.

And you felt just the opposite. You were arguing that this was not a necessary thing to do.

I did not think it necessary for the president to come out in front of the balanced budget tidal wave. I feared, honestly, that for him to do so would mean that, since we couldn't raise taxes, the biggest cuts in programs would be in cuts of programs like low-income housing that favored people who are particularly vulnerable in our society, and who had very little political power to protect themselves. I feared that the corporate welfare would stay intact. The big companies, big businesses, they would see to it that their special subsidies and special tax breaks were protected. But it would be the little guys who would take it on the chin. They would be the ones on whose backs the budget would be balanced.

In April, 1995, Oklahoma City is bombed, and you see the president for the first time in a role that most of us hadn't seen before.

In terms of giving comfort to people, yes.

You call him the "preacher in chief."

The president has an extraordinary capacity to empathize and also to preach. I don't mean preach in terms of telling people what to do, or in a self-righteous way. I mean in terms of making people aware that the cosmos sometimes works in strange ways, in almost a religious aspect. Now, that may seem strange in the wake of Monica Lewinsky and all of that, and the moral turpitude that the president has displayed. But he comes from a Southern Baptist tradition, and he is extraordinarily able to feel the emotions in a situation, and to express those emotions in a very articulate way. The time of that bombing was among one of his most eloquent times. He really did express the feelings of the nation.

At the Democratic convention, the day that the president is accepting the nomination, you run into Jesse Jackson.

I had been giving a speech to one of the delegations, and I just ended my speech. You know, conventions are big pep rallies. Everybody's fired up. And I had just ended my speech, and people were clapping, and I was walking down the ramp, and Jesse Jackson passed me. He was the next speaker. And I said, "Hello, Jesse." And he leaned over and he said, "Dick Morris, big, big problem, big trouble, prostitutes." And that's all he said. He went on to give the speech. I was dumbfounded. Here was the climax of the entire political convention. Everything had been designed around the last day. This is when the president was to come to town and to electrify the crowd and electrify America. Dick Morris had designed the convention so that this last day would be the dramatic culmination of everyone's fever, the convention itself. And yet, right in the middle of this, comes this news report that Morris had been found with a prostitute, sucking her toes. I don't even know what it is and I don't care.

But it was almost as if the media who were there exploded in relief. You have 15,000 members of the press covering a convention and nothing happens. It's an infomercial. And they all need to create stories, and they're all under great pressure from their bosses, from their editors, from their producers, to come up with some news, and there is no news. It's kind of a pressure cooker, and they're getting angrier and angrier, and surlier and surlier, and I think Ted Koppel even left because it was such an infomercial. It had no meaning at all. And now, finally, there is this uproarious, absurd, ironic event, given that Dick Morris is the mastermind behind this entire convention and this entire campaign. In retrospect, I suppose you could find some humor in it. At the time, it was not funny.

You thought it was betrayal on any number of levels?

A lot of criticisms have been leveled at Dick in many respects. His personal life is his own business. But certainly there was some betrayal in terms of it being the president's day.

Did you have a "couldn't happen to a nicer guy" kind of reaction?

I'm afraid, being human, I did have a sense of some sort of appropriate retribution, but I tried to suppress that sense of satisfaction. No, it was not something I wished upon anybody, and I certainly did not wish it upon the president on that day at that time.

When the president wins in November, what did he say and feel?

The win was a vindication. It was a reversal of the tribulations of 1994, the rejection that 1994 represented. You see, when a president wins a second term, the president's place in history is assured. Unless the president does something absolutely awful, there's an entire chapter of a history book devoted to that presidency. It becomes an era, the Reagan era, the era of Kennedy-Johnson -- that's sort of one presidency in a way -- the Roosevelt era. Having won a second term is what every president in a first term dreams of. If you don't win a second term, you are relegated in the history books to being something of a failure. And I think the president felt wonderful. He felt that he had not only been vindicated, but all of the pettiness, all of the negativism, all of the Whitewater mess, all of the enemies that he had generated, the negative feelings that he had generated in ways that he didn't fully understand -- and he probably still doesn't understand; I certainly don't pretend to . . . Notwithstanding all of that, the people had been with him, and he would have four more years, and maybe finish the agenda that we couldn't get done in that first four years. We got done quite a lot, but we couldn't get the big things done. Maybe now there'd be an opportunity.

You had already indicated that you were going to leave after the election. What was your last meeting with him like, when you tell him goodbye officially?

It was kind of a wistful event, really. I went into the Oval Office, and I said goodbye. I had told him long before that I was only going to put in four years. In fact, I had told him right at the beginning of the administration, and then immediately after his reelection, that I was going home. But we had been through a lot, I said, "We really tried, and we got a lot done." And he said, "Yes, we did, and there's still a lot more to do. This is about pulling the country together." He understood why I was leaving. There was no sense on my part that I had failed or that he had failed me. I was leaving because I had made a commitment to my family, and I was seeing nothing of my teenage boys and my wife. For me, given my values, given the way I wanted to balance work and the rest of my life, four years was exactly enough. And I wanted him to understand that I was not leaving in any way out of a sense of disappointment.

You talk about eras -- the Nixon era and the Kennedy-Johnson era. If you can encapsulate the Clinton era, good and bad, how would you do that?

It's very difficult. I think historians, looking back on the Clinton era, will first of all talk about the extraordinary prosperity. This president did preside over an economy that performed better than almost any economy in American history has performed. Regardless of how much credit he deserves, he presided over it, and that was the big news, at a time of peace. And he made some very hard and good decisions.

But it was also a very tumultuous time. Monica Lewinsky and all of the ugliness of that, his recklessness, the outrageous behavior to my mind of Ken Starr and the Republicans and the impeachment -- nobody came out of that looking good, and I think that will be a scar on this presidency forever. The defeat of health care during the first term was another huge disappointment for this administration.

And so you have a kind of a roller coaster. You have some great achievements and some great accomplishments, but you also have some real disappointments and some major failures of the most intimate kind, most personal kind.

You know, I think about this administration a lot. I'm very proud to have been a part of it. On Mondays and Wednesdays and Fridays I say, "Thank God Bill Clinton was there," to hold back the right-wing Republican tide, to preserve things that we believed in, to make the right decisions on a lot of very important issues. And then on Tuesdays and Thursdays and Saturdays, I say to myself, "What a waste. All that talent and all that ability, and he did not do what he intended to do and get accomplished. Maybe if he had been more disciplined, both in terms of his agenda, and also his personal life, more could have been done." And then on Sundays I don't think about it.

When you say he didn't get it done, do you mean that the administration in some ways was a waste because of the recklessness and the scandals?

I think this administration accomplished a great deal, and I'm very proud to have been a part of it - the Family and Medical Leave, raising the minimum wage, a good strong foreign policy, Kosovo, major inroads on child care and some important steps on health care and education, and more. But relative to the country's needs and relative to our capacity as a nation, given how rich we are, to do so much more. I think we didn't do what could have been done.

Does that mark this administration as a failure? No, not at all. Could the president have done more had he been more disciplined and focused in his agenda, his political agenda, and perhaps more disciplined in his personal life? I think the answer has to be yes.