by Leon Panetta
The House and Senate each passed the budget on close votes in the early summer—the House by six votes and the Senate by an especially tight 50–49—but those were actually the easier round. As is usually the case, it was easier for members to support the resolution because they could still reserve the right to vote against the eventual legislative package implementing the budget. The next step was to enact a reconciliation bill that included both the spending cuts and the revenues. That vote, not the vote on the resolution as submitted, would decide the matter, and that’s the one that members would have to defend to their constituents. The trouble that summer was that any concession in one chamber could cost votes in the other, and we had none to spare. As Clinton later wrote, “For the next six and a half weeks, the economic future of the country, not to mention the future of my presidency, hung in the balance.”14
The most significant objections came from the Senate, especially Oklahoma senator David Boren, who voted for the resolution but told us he would vote against the eventual deal because he objected to our proposals for increasing revenue. He attempted to scrap any energy tax and he offered an alternative to lower the burden on high-income taxpayers; his counter to our bill also would have eliminated the expansions of the earned income tax credit, which was the budget’s biggest help to the poorest Americans. We fought back to tax the rich more and the poor less, but pressure grew against the BTU tax, with some members opposing it on substantive grounds—the difficulty of levying and collecting it—and others simply wary of creating a whole new federal tax. Gore was admirably unwavering, but we couldn’t win without either Republicans or conservative Democrats. Over his objections, we dropped the BTU in favor of a simpler gas tax.
Bob Kerrey of Nebraska also worried us. He had run for president in 1992, and his loss to Clinton meant there were still some bruised feelings. He would not come out and say he opposed the bill, but he waffled and seemed unwilling to commit for it either. Clinton felt he’d be there in the end; I was less sure. On the other hand, Dennis DeConcini of Arizona, who had voted against the resolution, now was indicating he might come back to the fold, in part because of our efforts to protect Social Security.
In the House, conservative Democrats continued to hold out, using their leverage to try to muscle us for more cuts in social programs. But anything we could give them would almost certainly have cost us just as many votes among liberals as it gained among conservatives. I pleaded with Tim Penny of Minnesota, who seemed to speak for a number of conservatives, to back the president on this round and trust us to return to his issues once the budget was behind us. He still wouldn’t budge, so I offered him the chance to propose more cuts that fall when the various committees debated appropriations. He agreed, and his half dozen followers went along.
Finally, it was time for the vote. I was in Speaker Foley’s office when they began to call the roll, and I followed along with our chart showing where we thought the votes were. As the members began to weigh in, I believed we could win, but my tally didn’t guarantee it. We were within a few votes of passage, but there were five to ten Democrats who still were uncommitted; if most broke against us, we would lose. Billy Tauzin of Louisiana voted against it, as did David Minge of Minnesota, and suddenly we were in trouble. That meant we desperately needed to hold on to another nervous freshman, Marjorie Margolies-Mezvinsky, from Pennsylvania. But as she hit her button, it registered a no. Stunned and genuinely concerned that we were about to go down, I turned to Gephardt and urged him to get to the floor and turn her around.
He rushed to the chamber, and as I watched on television, he and Foley came lumbering down the aisle and loomed over Mezvinsky, who had made the rookie mistake of sticking around after casting a vote against the leadership. They spoke with her, and then Gephardt broke off, practically running back to the office where I was waiting. He reported that Mezvinsky would switch to yes if Clinton would agree to come to her district to make a personal appearance and explain the importance of this vote to her constituents. I didn’t even call the White House to check. I cut the deal. She changed her vote. We won. By one vote.*
The next day, it was over to the Senate. There too we had cut our deals. Abandoning the BTU tax got us Boren and a few of those around him. Putting back the transportation projects had cleared Byrd’s potential opposition. But Sam Nunn of Georgia opposed any new taxes, and a few other Democrats also warned us not to count on them.
It was clear that the result was going to be perilously close. On the day of the vote, I scanned the chamber, looking for Bob Kerrey and hoping he might be with us if we needed him. I didn’t see him anywhere, so I asked one of our people to check with his staff and find out where he was and how he planned to vote. My jaw dropped when I heard the response: He was at a movie. I don’t often lose my temper, but I did then. “Shit,” I bellowed, “a movie? For God’s sake, we’re coming down to the final vote. What the hell’s he doing at a movie?”
Nearly panicking now, I dispatched a couple of aides to scour nearby movie theaters and find him. Amazingly, one of them did—Kerrey had slipped out to see What’s Love Got to Do with It?—and dragged Kerrey back to the Senate. He voted for the budget, making it a 50–50 tie. Vice President Gore broke it, and we won again. By one vote.
The president signed the budget legislation on the South Lawn on the foggy morning of August 10. It did not ignite an instant economic recovery, but it marked the beginning of the turn from deficits to a balanced budget. The $290 billion budget deficit of 1992 dropped to $107 billion by 1996. Four years after that, in 2000, it was a surplus of $236 billion.
Those numbers eventually spoke for themselves, but in the meantime, sticking to fiscal discipline was an ongoing struggle in the White House. The political people never liked it, as it kept them from winning otherwise popular spending increases and investments. Through 1993 and 1994, before the fruits of deficit reduction had begun to present themselves, I would fight rearguard actions to protect what we’d done. I remember one particularly grueling meeting in the Solarium of the White House, where Begala, Carville, Stephanopoulos, and even Hillary Clinton all picked at our economic program, asking why there wasn’t more room for health care reform or other initiatives within our plan. For some reason, Rubin and my other usual allies were absent, so I was left to the defend the program by myself. “Look,” I said, “we’ve made this decision. We’ve taken this fight on. And it’s the right fight.”
Clinton silently nodded, but not everyone was convinced even then. Deficit reduction required short-term pain in return for long-term reward, and it demanded not just discipline but patience. “Pain,” Begala muttered at that meeting, “is not good.”
The pain slowly subsided, and we reaped the rewards for those decisions. When he left office, Clinton became the first president since Eisenhower to leave his successor with a surplus. Meantime, the American economy boomed. Unemployment was above 7 percent when Clinton became president; it was below 4 percent when he left. Poverty shrunk. Inflation barely budged, even though wages markedly increased. Even the rich, who paid higher income taxes as a result of that first budget, got richer in the 1990s, as investments and the markets skyrocketed. The Dow Jones Industrial Average closed at 3,242 on the day Clinton became president; when he left, it was above 10,000.
Clinton later wrote that the budget package of 1993 was the “most important domestic decision of my presidency.” Certainly no other work of those years had more profound effect on the well-being of more Americans. And it all came down to one vote in the House and one in the Senate. Leadership matters.
SEVEN
“If the White House Is Falling Apart . . .”
Clinton’s first year in office was a wild one. The White House was undisciplined, almost chaotic, and yet it would produce landmark victories. The same president who stumbled into a controversy over gays in the military and had to withdraw nominees for attorney general and assistant attorney general for civil
rights also secured passage of a historic budget and the North American Free Trade Agreement.
His year was marked by personal travail as well. Whitewater haunted the administration, even though the land deal at the center of it was soon forgotten as Clinton’s pursuers veered off in other directions; an investigation that began with a real estate deal in Arkansas concluded, six years later, with impeachment for lying about sex with an intern. There were many victims along the way, the first of whom was claimed in those early months. Vince Foster, the president’s boyhood friend, who had been staggered by the vitriolic politics of Washington, committed suicide on July 20; a shredded piece of paper found later in his briefcase lamented a culture in Washington where “ruining people is considered sport.”
Over that first year, my principal concern was the budget, and there we hewed a careful course, reducing the deficit and working closely with the congressional committees to steer our programs and cuts through the appropriations process. The politics were always delicate: Liberals were worried we’d cut too much. Republicans lay in wait for our tax increases to hurt us with the public. So we treaded lightly but tried to build on the principles that undergirded our first budget—bringing down the deficit, protecting the poorest Americans, investing in technology and education and other programs that would prepare the country for the future. We were remarkably successful. As Clinton later noted, those first two budgets were adopted on time and produced three consecutive years of deficit reduction, the first time that had happened since Truman was president. And we still found money for investments.
The steadiness of our economic program was in glaring contrast to the overall atmosphere of the early Clinton administration, which could charitably be described as informal. Meetings were endless, with aides coming and going as the president mulled this policy or that. Many of those sessions tailed into the early morning hours and often broke up without a decision, only to resume again a day or two later and again wind on for hours. One of my colleagues from those years described a meeting in the Clinton White House as a grammar school soccer game, where everyone always ran to the ball. That captures the feeling just right.
Speeches, meanwhile, were written and rewritten, often to the very last minute, exhausting aides who raced to make changes. Paradoxically, Clinton’s schedule was exceptionally tight, booking him in fifteen-minute increments, a manifestly unwise way to try to corral him. Rather than keep to it, he would often go long on his first meeting of the day, and by evening would be so far behind that visitors would be kept waiting, their irritation growing and their tales of it reinforcing the image of the White House and the president as undisciplined. Those problems were made worse by a prevailing sense that staff could reach out to him directly; Clinton inadvertently encouraged that because he enjoyed the contact, so he rarely rebuffed a well-meaning overture. In early 1993, his scheduling staff sent out a brusque note telling aides to “cut it out,” but it didn’t have much effect.1 Clinton earned his reputation for lacking self-control—it was an undeniable part of the larger personality that made up this brilliant and complicated man—but his staff was partly to blame as well.
In fact, Clinton had not given great thought to his White House staff during the transition from candidate to president. He’d labored greatly, with Warren Christopher’s help, to build his cabinet, but the staff was put together more hastily and with less consultation. The result was that it had structural gaps and some obvious weak spots. The top job went to Mack McLarty, an accomplished businessman and childhood friend of Clinton’s, though one with limited political experience in Washington—he’d served one term in the Arkansas legislature in his twenties. In some ways, McLarty was perfect for the job: He was conscientious and serious—“born 40 years old,” as one friend described him.2 He also was intensely loyal to Clinton, and he was smart, insightful, and decent. That last quality, however, is not always the most valued in a chief of staff, whose job requires him to say no, especially in the service of a president who liked to say yes to everything and everybody. McLarty’s nickname, “Mack the Nice,” was not a compliment.
Still, with disorganization came flashes of brilliance. Right on the heels of Congress’s cliffhanger approval of our budget—without a single Republican vote on our side—Clinton turned to a more bipartisan undertaking. The North American Free Trade Agreement had been negotiated by President Bush, but Congress had not ratified it when he left office and Clinton became president. Clinton supported NAFTA, arguing that it would open up trade and create jobs, but the politics of the agreement were unusually complicated because NAFTA’s benefits were likely to be diffuse—jobs here and there in varying industries—while its costs were localized and readily apparent: When a factory closed in California and that company opened a new one in Mexico, it would be easy to blame NAFTA. Our allies in the NAFTA debate included President Bush, whom Clinton had just defeated, as well as Republicans in Congress, who had just shunned us on the budget. Our opponents included the unlikely combination of organized labor, Ross Perot, and Jesse Jackson. In Congress, Speaker Tom Foley and his nemesis, Newt Gingrich, both supported the deal; most of our labor friends opposed it, some of them ferociously. In September, the New York Times took stock of the votes and pronounced us “well shy” of what we needed to prevail.3
As a Californian and as a congressman, I had been a strong supporter of free trade—California agriculture needed those markets. The California border with Mexico also meant that opening up greater trade opportunities might benefit both economies by stimulating growth on both sides. Moreover, the politics of NAFTA were as appealing as they were treacherous. Yes, we risked antagonizing some old allies in labor, but Clinton was still out to prove himself as a “New Democrat,” and the bipartisan appeal of NAFTA reinforced that willingness to reconsider old politics.
Over the next few weeks we lobbied hard for the bill and cut a few deals in exchange for votes. Clinton agreed, for instance, to limit imports of orange juice, sugar, and wheat, among a few other commodities.4 Each deal was enough to bring a few wobblers over to support NAFTA. The final House vote came on November 17, and NAFTA passed by 234 to 200. A majority of Democrats opposed it. The economics of NAFTA were debatable; the politics of it, by contrast, were dazzling. Less than six months after winning the most important domestic policy vote of his presidency without a single Republican supporter, Clinton had turned around and won a landmark victory with the GOP’s backing and over the objections of his own party.
Clinton spent many hours considering and preparing what would constitute his first real State of the Union address, since the 1993 speech had been almost exclusively about the budget. Beginning that year, he used the State of the Union as an opportunity to set broad themes and goals for himself and his staff, so preparing for the speech was about more than simply drafting—it was an attempt to organize priorities and to persuade Congress and the American people to join in those ambitions. It was, in other words, both a policy and a communications exercise.
As the deadline approached for the 1994 address, Clinton wanted to list the administration’s accomplishments, of course, but he also was searching for a bigger story, a narrative that would unify the efforts to date with the challenges ahead. We were trying to change a lot in those months—the budget had dramatically recalibrated spending and tax policy—and Clinton now was looking ahead to reforming health care and welfare and to passing a crime bill, which Congress so far had refused to do. He called it a “renewal agenda,” and it bore all the earmarks that were so distinctively Clintonian: It blended conservative notions of personal responsibility with liberal commitment to social justice, and it was politically calculated to reposition the president—and the Democratic Party—as the representatives of the American mainstream.
Like so much of the work of those months, the speech reflected a whirlwind of internal debate and conversation, and the drafting went on right up until the moment the president was about to spea
k. In fact, Clinton was fiddling with the text on his way up to the Capitol, and when he arrived there was briefly some confusion about whether the right draft had made it to the chamber in time. Before beginning, Clinton fiddled with his pages for a moment and confessed, “I’m not at all sure what speech is in the teleprompter tonight, but I hope we can talk about the state of the union.”
The achievements and ambitions of the Clinton presidency found near-perfect expression in that speech, with its quest for the political center, its deliberate populism, and its blend of threat and blandishment. He boasted of the gains we already were making on the budget and deficit reduction and shouted down Republicans who guffawed when he mentioned the tax increase. “Only the top 1.2 percent of Americans . . . will face higher income tax rates,” he said to sustained applause from Democrats. “Only the wealthiest 1.2 percent of Americans will face higher incomes tax rates, and no one else will, and that is the truth.”
That sounded a combative note, but, with one notable exception, the balance of the speech really was a call to common purpose on behalf of everyday people. Substantively, Clinton called for action in three areas—health care, welfare, and crime. The last two were naturals for bipartisan action. On crime, Clinton favored tough sentencing—he advocated a three-strikes policy for federal offenses similar to what California had recently enacted for state crimes—as well as a significantly expanded federal death penalty. And though his rhetoric on welfare reform emphasized the indignities of the present system, his solution was largely to limit recipients, another proposal tailored for Republican backing.
On health care, however, the alignment was different. There, opponents of reform were solidly Republican, and some GOP leaders already were questioning whether there was a crisis worth confronting. The president’s tone shifted palpably when he confronted those objections in his speech. He told the story of a Nevada man, Richard Anderson, who “lost his job, and with it his health insurance.” His wife then suffered a cerebral aneurysm and was hospitalized for twenty-one days. Anderson got another job, this one paying eight dollars an hour, but he and his wife faced more than $120,000 in medical bills.
