One of those problems would come back to harass the Clintons all through their terms in office and well beyond. The accusation was that when Bill Clinton was governor, the state had done favors for a businessman, Jim McDougal, their former partner in an ill-fated investment called Whitewater Estates.
The deal dated to 1978 before Clinton became attorney general, as a straightforward development project. The plan was to subdivide 230 acres on the south bank of the White River in the Ozark Mountains and sell the lots as vacation home sites for wealthy people in Chicago and Detroit. McDougal, widely seen as an eccentric who favored white suits and drove a baby-blue Bentley, had a solid reputation in Arkansas. He had helped former Senator J. William Fulbright make some profitable real-estate deals. He and his wife, Susan, would be equal partners with the Clintons, splitting the $202,611 price of the land. The McDougals were to supervise and manage the project with the Clintons as passive investors. The Clintons borrowed their half of the investment. Early on, the venture was turned into a corporation, the Whitewater Development Company Inc., with equal shares allocated to each couple.
The development foundered in the economic downturn of the late seventies and early eighties. Inflation was soaring. The Federal Reserve, under Paul Volcker, fought to subdue it by raising interest rates, deliberately creating a national recession. The combination of a sagging economy and interest rates nearing 20 percent decimated the vacation-home market. Whitewater built a model house. The Clintons and McDougals hoped for a recovery, but it was slow to materialize.
During the years that followed, McDougal asked the Clintons to write checks to cover interest payments and other expenses. The Clintons cut the checks, not knowing McDougal was getting involved in a series of questionable businesses and essentially leading a double life.
McDougal had bought a small savings and loan association (S&L) in 1982, renaming it Madison Guaranty. He used Madison to make loans and investments the Clintons’ lawyer was to describe as “overly optimistic.” At one point, McDougal proposed to raise money for Madison Guaranty through a public stock sale and hired the Rose Law Firm to handle the offering. Hillary was assigned to be the so-called billing partner on the account. She said she had only minimal involvement in the proposed offering. That was in 1985; the next year, McDougal’s troubles were a public scandal.
Arkansas regulators never approved the stock sale. McDougal began shifting money around his corporate empire to cover debt payments. At least once, without notifying his partners, he used Whitewater’s name to help fund another development, this one near a trailer park, calling it Castle Grande Estates. Madison Guaranty became just one of hundreds of S&Ls that failed in the late eighties, and federal regulators started an investigation into McDougal’s transactions. They discovered he had illegally financed the Castle Grande deal with funds from Madison Guaranty, disguising much of the money as legitimate loans from other businessmen. As part of that probe, the investigators looked into Whitewater history. They questioned whether McDougal had used Madison Guaranty to illegally funnel money into the governor’s campaigns and whether Clinton had performed special favors for McDougal.
That investigation briefly became an issue in Clinton’s 1992 presidential campaign. But he and Hillary quickly proved they had actually lost money on Whitewater - in the end, more than $46,000 - and that no favors had been done for McDougal.
But Whitewater kept bobbing up. In the fall of 1992, the Bush campaign tried to use it as an “October Surprise” just before Election Day, when the federal Resolution Trust Corporation attempted to file a criminal referral incriminating the Clintons in the Madison Guaranty case. The U.S. Attorney refused to issue subpoenas, and the October Surprise fizzled.
A year later, with the Clinton presidency well under way, Whitewater splashed into the news again when an Arkansas businessman named David Hale, McDougal’s partner in a series of transactions, claimed that Bill Clinton, while governor, had pressured him to make an illegal $300,000 loan to Susan McDougal. That accusation seemed trumped-up: Hale had been a target in several federal investigations into Madison Guaranty, but never mentioned Clinton’s name until he was indicted in the case.
Hale’s accusation prompted The Washington Post to send a long list of Whitewater questions to the White House. Put on the spot by a reporter, Clinton said of McDougal: “To the best of my knowledge, he was honest in his dealings with me, and that’s all I can comment on.”
Clinton advisers were unprepared and in conflict about how to handle the situation. Some urged releasing all the documents. Others pointed out that answers to many of the questions were incomplete since McDougal’s affairs were still in disarray. As long as that situation persisted, reporters would keep clamoring for more. “There were some of us who said, ‘Keep the walls up, keep it back, you know, it’s none of their business,” Deputy Chief of Staff Harold Ickes remembered. “Nothing happened. It’s a little deal down in Arkansas, it’s nothing to do with the presidency, and it’ll go away.” But the information leaked, much of it inconsequential, and the press accused the administration of stonewalling. Bob Kaiser, an editor at The Washington Post, called a Clinton adviser with an ultimatum: Turn over the documents, or the newspaper would assign a team of investigative reporters to the story. The president was convinced giving in to the Post was the best course to take. But, he said, “you’ve got to convince Hillary.” Two weeks later, the White House announced the president would turn over all the papers to federal investigators and would cooperate with a grand jury investigation, but would not give the documents to the media.
Republicans pounced on the story, and the fact that it took investigators years to piece together McDougal’s tangle of deals meant there were always at least a few unanswered questions. So the scandal dragged on. Whitewater had entered the political vocabulary as shorthand for Clinton shenanigans.
Cable television news thrived on any whiff of political corruption, the search for which often delved into the Clintons’ private lives. The negative press wore on Hillary. One report claimed that she had broken a lamp in a heated argument with her husband. She was humiliated. “I’ve always believed in a zone of privacy,” she said, “but I guess I’ve been rezoned.” She fought to refocus the media on the administration’s agenda, but only managed to draw more attention to herself.
The barrage also became increasingly bothersome for Vince Foster, Hillary’s former law-firm boss and the president’s childhood friend. Foster was now deputy White House Counsel. He felt powerless to stop what he saw as attacks on the presidency.
They danced the night away, making more than a token appearance at each of the eleven inaugural balls held in their honor in Washington on January 20, 1993. Then Bill and Hillary Clinton returned to their new home, the White House, to spend what remained of the night, falling into bed in the family quarters sometime after 2:00 in the morning.
At 5:30, someone knocked on the door. Groggily, the first couple sat up. Could this be their first presidential crisis? What could have gone wrong, in what part of the world?
The door opened, and in came a man in a tuxedo, carrying a silver breakfast tray. This was the way George H.W. Bush and his wife, Barbara, had started every day of his presidency, and no one had told the staff that the Clintons wanted anything different.
“Hey! What are you doing here?” demanded the forty-second President of the United States. The waiter backpedaled out of the bedroom.
There were many adjustments as the Clinton family began their life in the White House. First came choosing a school for Chelsea. On principle, the Clintons favored public schools, and Chelsea had gone to a public school in Little Rock. But protecting her privacy became a priority. Jimmy Carter’s daughter Amy had gone to public school and been followed by reporters and photographers. The Clintons chose a Quaker school, Sidwell Friends. Then, despite all the demands of the presidency, they insisted on attending all her school events and staying close while she did her homework. Even when he was trav
eling, the president could help Chelsea with her algebra assignments. She would fax them to him, and they would consult by phone on the solutions. The president and first lady continued to dote on their daughter. They were determined to give her as normal a childhood as possible. They made it clear to the press that Chelsea was off limits, and for the most part, reporters respected those boundaries.
As they settled in, the Clintons had to form relationships with the White House staff of some 100 people, who had seen presidents come and go and had their own ways and customs. Hillary inadvertently offended the cooks one day when Chelsea, feeling ill, craved a favorite childhood meal. Hillary went to the kitchen and asked for utensils to make her soft scrambled eggs and applesauce. The kitchen staff called Hillary’s aides, asking if the first lady was unhappy with their food.
Another problem was the constant presence of Secret Service agents. The Clintons had to negotiate compromises that would allow for more flexibility of schedule and spontaneous breaks from custom than previous administration allowed. Hillary knew she was making progress when one agent said, “Now I get it. It’s like one of us was president. We like to go places and do things and stay up late, too.” Before long, she was sneaking out of the White House in sunglasses and casual clothes to walk the Mall like a tourist or bike through Georgetown along the C&O Canal. Only one agent trailed behind (with a vanload of his colleagues in close proximity, in case of emergency). For all the amity, though, Hillary was upset when she returned from a weekend at Camp David to find that agents had been rifling through the family quarters in search of bugs or other spying devices. She protested and established that it wouldn’t happen again without advance notice and agreement.
Hillary traveled to New York to have lunch with Jacqueline Kennedy Onassis and get her advice on being first lady and raising a child in the White House. “Protect Chelsea at all costs,” Jackie told her. “Don’t let her think she’s someone special or entitled. Keep the press away from her if you can.” And don’t, she added, let Chelsea start bossing around the Secret Service agents assigned to her. Once, she said, an older boy had taken her son John’s bicycle, and John had told his agent to get it back. When Jackie heard about that, she told John he would have to stand up to bullies for himself. And it would be hard, Jackie said, but Hillary had to be her own woman, too: “Concentrate on what’s important to you.” Hillary took it all to heart. When NBC wanted Chelsea to be part of a feature showing her parents on a “typical” day at the White House, Hillary declined.
Bill Clinton had made some major decisions during the brief period between the November election and Inauguration Day. Most of his Cabinet was appointed, beginning with Senator Lloyd Bentsen of Texas as secretary of the Treasury and Robert Rubin of Goldman Sachs as head of a new National Economic Council. Clinton’s first priority was reversing the economic slump that had gotten him elected. Most of his top team of White House aides was also in place.
His staff was young and, for the most part, as inexperienced as he was on the national stage. But Clinton attacked his agenda with the same urgency that had marked his first term as governor of Arkansas. “The atmosphere in the White House in that first year was chaos. He wanted to do everything,” said Labor Secretary Robert Reich. “He wanted to deal with every problem. He was in the middle of every conflict.” And there was more conflict that he expected. Clinton’s powers of persuasion were ineffective against many Republicans, who refused to cooperate with him. The president seemed unprepared.
“His first address from the Oval Office, sitting behind the desk, it looked like a big mistake had happened,” Senate aide Lawrence O’Donnell remembered, “some little kid had been allowed in there with his twelve-dollar digital watch. Everything about him suggested he was not up to this.” Some compared Clinton’s West Wing to a fraternity house. Pizza boxes and soda cans littered meeting rooms, where the president presided over informal sessions that dragged late into the evening.
For Hillary, the prime issue was what sort of first lady she would be. She knew that was a politically prickly question. Many voters still expected the president’s wife to be a model for American women. As she had learned painfully during the campaign, that meant mostly sticking to traditional roles as wife, mother, and homemaker. Rosalynn Carter had tested the limits of the office, taking up such causes as mental health and the Equal Rights Amendment. But she was widely criticized for trying to be more than her husband’s helpmeet and hostess. Betty Ford earned praise for her courage and grace in fighting alcoholism and breast cancer, but circumstances had pushed her into that role. Nancy Reagan and Barbara Bush had been less venturesome and were seen as model first ladies.
Hillary knew many presidential wives had actually been women of considerable substance. Abigail Adams gave her husband John political advice (and was labeled “Mrs. President” by Adams’ foes). While British troops were marching on Washington in the War of 1812, Dolley Madison spent the day supervising preparations for a White House dinner party. She escaped at the last minute, taking with her important state documents and the Gilbert Stuart portrait of George Washington, cut from its frame and rolled up for the evacuation. The British soldiers ate the dinner before sacking and burning the White House. Eleanor Roosevelt, of course, had broken the first lady mold altogether, but some Americans resented her for it. In 1992, the Smithsonian’s National Museum of American History tried to reflect reality in its exhibit on first ladies. It told stories of how Martha Washington had complained, “I am more like a state prisoner than anything else” and Edith Wilson had taken over her husband’s duties when he had a stroke. The museum’s reward was to be criticized for rewriting history and undermining family values.
Hillary had faced similar problems as a governor’s wife. Now she could only hope that Washington, and the country at large, would not be more conservative than Arkansas. She miscalculated.
Bill Clinton had already decided to make use of Hillary’s talents, much as he had done as governor. He would ask her to chair a task force to forge a sweeping reform of the U.S. healthcare system – and to produce the legislation within his first 100 days in office. That would give her a larger platform than any first lady had officially occupied. Hillary knew it would be controversial and politically risky, but it also promised enormous potential rewards.
Leading health reform would require a larger and more visible staff than former presidential wives had hired. As a symbol of her importance, her offices expanded out of the East Wing of the White House to occupy space in the Old Executive Office Building, next door to the White House. Hillary herself got an office on the second floor of the West Wing. Her chief of staff, Maggie Williams, was given the unprecedented title of assistant to the president.
Collectively, the first lady’s territory soon became known as Hillaryland. She boasted that the staff was loyal and discreet and that there were no media leaks from her corner of the White House. Staffers – mostly but not all women – shared offices with their assistants and kept a stash of toys, crayons, and cookies for visiting children. Hillary overworked her people, demanded total loyalty, and had a reputation for flashes of anger when mistakes were made. But she gave honorary memberships in Hillaryland to their spouses and children, welcoming them to the frequent parties she organized to ease the inevitable pressure they all faced.
As the president’s wife, of course, Hillary was also under the celebrity spotlight. Every new hairdo was relentlessly scrutinized, but people also tried to anticipate her wishes and gratify her tastes. After she casually asked an aide for a diet Dr. Pepper, she found the soft drink in the refrigerator of every hotel room she visited. And she was offered Dr. Pepper in offices and embassies around the world. “I felt like the sorcerer’s apprentice,” she wrote in Living History. “I couldn’t turn off the Dr. Pepper machine.”
For all her focus on policy and substance, Hillary was determined not to neglect the traditional first lady role, which included official entertainment, decoration of the White
House, and (thanks to Jackie Kennedy and Betty Ford) a hand in cultural affairs and broader women’s issues. She gave her first interview to Marian Burros of The New York Times. She talked about her first White House dinner party (for the National Governors Association, just ten days after her husband’s inauguration) that reintroduced American cuisine to the menu.
That interview turned out to satisfy neither the first lady traditionalists nor Hillary’s more ardent fans. “If I was serious about substantive policy issues, they reasoned, why was I talking to a reporter about food and entertainment?” Hillary wrote. “Conversely, if I was really worrying about floral centerpieces and the color of table linens, how could I be substantive enough to head a major policy effort?” Hillary decided that her first-lady dilemma actually symbolized the predicament of all American women navigating the complexities of trying to fill many different and paradoxical roles. That, of course, didn’t stop the critics from both sides.
The first six months of the Clinton administration were tumultuous and demanding. The sagging economy had to be addressed and in a way that would not fatten federal deficits. Pursuing that goal led to a long, bitter battle in Congress before the president’s first budget bill was passed. In Waco, Texas, a fifty-one-day federal standoff with a splinter sect called the Branch Davidians ended with four dead federal agents and eighty-two Branch Davidians killed when some of the group set their compound on fire. In Europe, slaughter and ethnic cleansing in the former Yugoslavia climaxed with the massacre of more than 8,000 Bosnian Muslims, mainly men and boys, by Serbian troops at a town called Srebrenica. When their Black Hawk helicopter was shot down, American marines were killed and their bodies dragged through the streets of Mogadishu by Somali insurgents. The controversial North American Free Trade Agreement had to be passed. President Clinton’s earnest diplomacy produced a historic handshake in the White House Rose Garden between Israeli Prime Minister Yitzhak Rabin and Palestinian leader Yasser Arafat.
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