by Leon Panetta
“I know there are people here who say there’s no health care crisis,” Clinton said. “Tell it to Richard and Judy Anderson. Tell it to the fifty-eight million Americans who have no coverage at all for some time each year. Tell it to the eighty-one million Americans with those preexisting conditions.” He went on for a bit, pressing and serious, then concluded, “So if any of you believe there is no crisis, you tell it to those people, because I can’t.”
Two other moments in the speech signaled that Clinton’s approach to health care would be a departure from his general tendency to look for middle ground. Those working for a plan to reform the system, he said, deserve “our thanks and our action.” As Democrats stood to applaud, he looked up at Hillary Clinton in the audience and mouthed the words, “I love you. I do.” And a few minutes later, he warned Congress not to send him any bill that did not “guarantee every American private health insurance that can never be taken away.” Should Congress offer up anything less, he vowed, reaching for a pen on the dais where he spoke, “you will force me to take this pen, veto the legislation, and we’ll come right back here and start all over again.” With that gesture, and by virtue of the decision to entrust this matter to the first lady, Clinton effectively wiped out any chance for a compromise that might have extended insurance to millions but not all. We were locked in.
Moreover, Hillary Clinton was growing understandably impatient. She had pushed for health care to be included in the president’s budget proposal, and I, frankly, had pushed back. I was worried that we were trying to do too much with the budget, and that adding health care, particularly when the plan was still half-baked at that point, would give our opponents reason to tank the whole budget. Given the razor-thin margin by which we prevailed on the budget, I still think that was the right call, but as 1994 opened, the next question was whether to shelve health care yet again, this time to put it behind either crime or welfare. I thought we should move welfare first and take advantage of a Democratic Congress to produce meaningful but humane reform to that system. Hillary demanded that we bring something to the Hill and that we not relegate health care to the back burner again; with this State of the Union speech, the president made clear that he too was ready to go now.
But health care, as we all know now, is a devilishly difficult matter to reform legislatively. Congress rarely handles complexity well, and no attempt to restructure a system as complicated as health care can be undertaken without it. Detailed descriptions of the employer mandate or managed competition bump up against simple slogans in opposition—“socialized medicine,” for example. The health care bill we ultimately sent to the Hill was more than thirteen hundred pages long. That gave opponents plenty to seize on.
The difficulty of selling complexity was further complicated by a health care team that was deeply knowledgeable about the health system but sometimes painfully naïve about politics. I thought of Ira Magaziner, who was Hillary Clinton’s deputy on health care, as a sort of nuclear physicist—very smart and truly an expert in his field. But he had little sense for what could be accomplished legislatively and little feel for public reaction to his ideas. During one 1993 meeting, he warned that there would be short-term costs of implementing a new health care system. Knowing of my aversion to programs that would add substantially to the deficit, he proposed addressing that by having the president impose caps on all health care spending for a period of up to five years. “The move will anger much of the medical sector,” he conceded. Talk about understatement. To assert such sweeping power over such a large segment of the economy would have invited charges that Clinton was a liberal dictator, and in my view severely weakened his presidency, perhaps cripplingly so.
And even with imposed controls, the estimates of the program’s potential cost were astronomical and wildly divergent. In one presentation to the president and the economic team, the health care group distributed charts that detailed cost options for the program. They ranged from $66 billion to $146 billion—this at a time when all program cuts combined in our budget came to about $240 billion. All the work we had done to cut those programs would be swamped by this single reform. It seemed to me that we were risking too much.
I don’t recall ever confronting Hillary Clinton directly with my concerns, but it was obvious that we were on opposite sides of the health care debate within the White House. And she vented her frustration about me and other members of the economic team who shared my views of the proposal. At one session, for instance, she complained to Chief of Staff Mack McLarty; Pat Griffin, the exceptionally able head of Legislative Affairs; and others that our economic program was too restrictive and was strangling the president’s other initiatives. “You’re screwing the president,” she said, incensed. I ran into Pat as he was straggling out of that session. He looked like he’d been beat up.
Nevertheless, we sent up a health care bill in early 1994 as promised, and initially thought we might have some takers. Democrats in both houses were generally supportive, and Senator Bob Dole of Kansas was a longtime advocate for health care reform; he indicated a willingness to help forge a compromise that would achieve Clinton’s goal of universal coverage. Dole’s support did not last long. He soon redirected his political sights on the presidency, determining to vie for the Republican nomination in 1996. To do that, he needed the support of his own party’s conservatives, including Gingrich’s feisty caucus in the House. Any support for the president on health care would throttle Dole’s presidential campaign, or at least he believed it would. Dole was a solid and admirable public servant who gave his country much, but his decision to walk away from health care reform was a disappointing capitulation to politics, and it sent a clear signal that the Republicans, as with the budget, would not give an inch on this issue.
Health care batted around for a few months, and opponents waged an expensive and deceptive campaign to frighten the American people over what the bill would do. Public support plummeted, dragging Clinton’s approval ratings with it, just as Truman’s attempt to reform health care had damaged him politically and as Barack Obama’s would in 2009.
In fact, one interesting side note from those months would reveal itself when the issue of health care reform returned to the American agenda under President Obama. In 1993 and 1994, one of the leading opponents of Clinton’s employer-based model was the Heritage Foundation. The foundation, a leading conservative think tank, argued against Clinton’s approach, which it said would place undue burdens on employers, hiding costs, discouraging hiring, and “eliminating economic opportunity for many lower paid Americans without significantly increasing the health care services available to them.”5 The foundation’s rejection of Clinton’s program helped galvanize conservatives, including Gingrich, who predictably took to deriding the administration’s package as “Hillarycare.”
The Heritage Foundation’s alternative to employer-based mandates was to advocate for a requirement that all individuals or households be required to purchase health insurance in the same way that many states already required automobile drivers to purchase car insurance. “Under the Heritage plan, there would be such a requirement,” the foundation concluded. “Health care protection is a responsibility of individuals, not businesses. Thus to the extent that anybody should be required to provide coverage to a family, the household mandate assumes that it is the family that carries the first responsibility.” And yet when President Obama introduced his health care proposal, based precisely on that reasoning, Heritage and other leading conservative groups, again including Gingrich, opposed it. The only consistency across those two debates was that unprincipled ideologues will go to great lengths to rationalize their intransigence, even if it means rejecting their own ideas.6
Health care reform sputtered along in the spring and summer of 1994, but the momentum was palpably slipping away. At the same time, the administration’s efforts to revive it made us seem weak and flailing. The president’s approval rating, which had reached
nearly 60 percent shortly after his well-received State of the Union speech, tumbled during those months, cratering to 39 percent by August. With the midterm congressional elections approaching and the rest of the president’s legislative agenda in peril, Clinton was looking to make changes. Specifically, he wanted to reorganize his staff.
In June 1994, President Clinton made his second trip to Europe, this time with two main objectives: meeting Pope John Paul II and commemorating the fiftieth anniversary of D-Day. His first stop was Rome, and he kindly invited Sylvia and me to join him as part of the delegation. We were seated on Air Force One en route to Italy when the president asked me to come forward and join him for a private conversation. It was my first visit to the working quarters of the plane, and I made my way forward with a tinge of nervous curiosity.
Clinton gestured for me to take a spot on a small couch in a seating area near the front of the plane, and he sat down next to me.
“Leon,” he began, “what do you think needs to be done to improve the operations of the White House?”
I took a deep breath. I liked Mack McLarty, and didn’t want to undercut him with his friend and president. On the other hand, I did think the operation was struggling and doing a disservice to Clinton, whom I was there after all to serve. So I answered candidly. I told the president that the staff needed to be more focused and disciplined, that meetings needed to be structured in order to produce a clear decision, and that once decisions were made they needed to be acted upon, and the office then needed to turn quickly to the next issue. Dawdling and endless debates, I emphasized, were a hindrance to an effective White House. Clinton listened carefully, asked a few more questions, and thanked me for my thoughts. I returned to the back of the plane not knowing whether I had helped or offended him.
Making my way back to my seat, I ran into George Stephanopoulos and told him of the conversation I’d just had with the president. George, who was on the outs with Clinton at that moment—the president and first lady both believed he was responsible for leaking inside information to reporters, notably Bob Woodward of the Washington Post—was heartened to hear that Clinton was raising questions about the effectiveness of his staff leadership. George happened to be reading a book about the Nixon White House, and he shared a passage with me in which Nixon made clear that H. R. Haldeman, his chief of staff, needed broad power to be effective. I took note.
In Rome, Sylvia and I joined the president and first lady for a memorable event, one of the highlights of my time with Clinton. The occasion was largely ceremonial, as the mayor of Rome had arranged to welcome the president to the city by presenting him with an emblem of it. The setting was what made it so special. Rome’s city hall, formally known as the Palazzo Senatorio, sits within sight of the Forum and atop the chambers that once housed the archives of ancient Rome, so Clinton would be receiving this honor in one of the founding sites of Western civilization. The steps from which he would address the crowd were designed by Michelangelo. It is one of the world’s most majestic and historic locations.
The event was to be held in Italian, of course, and Clinton asked me if I would translate his remarks to the mayor and the expected crowd. He thought it would be fun, and though I worried at first that my Italian might not be up to it, I warmed to the idea. With some justification, the U.S. ambassador to Italy didn’t like the idea. He was nervous that I’d screw it up, and he argued for a professional interpreter. We compromised, agreeing that I’d translate the president’s opening remarks and welcome, and the interpreter would take over from there.
On that bright summer morning, with thousands of people spread before him, Clinton accepted the emblem graciously, slowly delivering his remarks in English and pausing every few moments to let me translate. The crowd cheered both of us. After a few sentences, I moved to step aside, but the crowd wouldn’t have it. They began chanting, “Panetta, Panetta,” until I resumed my translation. For an Italian to be cheered by Italians made this a special moment for me. Clinton was delighted too.
Later, Clinton recalled that at one point during the ceremony he turned to the mayor and asked what the people nearest to us were saying in Italian.
“Do you really want to know?” the mayor asked.
“Yes,” Clinton answered.
“They’re saying, ‘Who’s that guy up there with Leon Panetta?’”7
Sylvia and I broke off from the trip a couple days later and returned to Washington. Back at work the following week, I was walking across the street that separated the White House from the Old Executive Office Building when Al Gore spotted me and asked me to stop for a moment. “Look,” Al said, “the president’s seriously thinking of asking you to be chief of staff.”
That took me by surprise, and my first response was to push back. It was my feeling that Clinton should have a chief of staff whom he’d known very well for a very long time, someone in whom he had long-standing trust. We’d worked together in my sixteen months as his budget director, and I was proud of that work, but we didn’t have the kind of relationship I thought would be valuable for a president and his chief of staff to share. Gore and I talked it over for a few more minutes that afternoon, and he ended with some advice. “I’ll tell you,” he said, “the president is thinking about it, so you’d better give it some thought.”
I had shared with Sylvia my conversation with the president on Air Force One. When I now told her of this exchange with the vice president, she saw better than I did what was coming. Any reservations she might have had, however, were buried beneath the advice she always offered in situations such as this: Above all else, do what’s important to help the president.
A week or so later, on a Saturday morning, Al approached me again, this time to tell me the president wanted me to join him at Camp David. When? I asked. Now, he answered. This time, I knew what was coming.
I went to the vice president’s residence, where a helicopter was waiting. Tipper Gore was already on board, and as the doors closed and we took off, the two of them let me know I was about to be offered the job. I told them how much I appreciated that, but that I’d been thinking it over and my intention was to turn it down and ask to remain where I was. They did not respond.
It’s a short flight from Washington to Camp David, near Gettysburg, by helicopter, so we were there before I knew it. On the ground, we proceeded directly to the president’s cabin. Al and Tipper Gore took seats on one of the sofas, and Hillary Clinton sat down on another. Bill Clinton took an armchair. All four faced me.
The president spoke first and got right to the point: “All of us really feel that we would like you to be chief of staff.”
“Mr. President,” I responded, “we just did your economic plan. We were able to get that put in place. We got reconciliation passed. We’ve been doing the appropriations bills. We’ve gotten all your programs funded. I really think this is a major centerpiece of your administration.”
But, I continued, the fights over budgets were annual affairs, and we needed to continue to work for our priorities or risk losing ground on them. Budgets were my specialty, and I felt I was the best person in the administration to continue leading that phase of our work. I told Clinton I thought I could best serve him and his administration by staying where I was.
Clinton thought it over for a moment while the others stayed silent. When he spoke, it was clear I hadn’t budged him in the slightest. “Leon, you can be the greatest OMB director in the history of the country,” he said, “but if the White House is falling apart, nobody is going to remember you.”
I knew I was done at that point. “Look, I have deep respect for you as president,” I told Clinton. “If you ask me to do this, I’m willing to do it.”
With that, the conversation moved from whether I would take the job to how I would be allowed to operate it. I told the Gores and Clintons that I’d want to review the staff and perhaps move some people around. I’d feel the need
to impose stronger discipline and assign some staff members clearer roles—George Stephanopoulos and David Gergen were just two of a number of senior staff whose positions were ill defined. I said that I would insist on controlling access to the president more closely. To do that, I needed the support of the president and vice president, I told them.
Clinton answered first. “I will support you,” he said. “Whatever you want to get done, you can be assured of my support and Hillary’s support.” The Gores agreed, and we had a deal.
It did not take long for me to realize how much work there was to do. McLarty had done some good things. There were capable people in most positions, and I was immediately grateful to inherit Deputy Chief of Staff Harold Ickes, a tough and shrewd operator who oversaw issues and politics in the chief of staff’s office and who agreed to stay on and work for me. The offices bustled with young people too, many of them talented and utterly devoted to the work of the White House.
But Mack’s instinctive gentleness had come at a cost. He hadn’t built strong organizational systems—it wasn’t always clear who reported to whom—and he’d allowed Clinton to indulge his freewheeling style rather than imposing some structure around it. As he prepared to go, and was graciously helping me to settle in, I asked Mack for a copy of the organization chart for the White House staff. He looked puzzled. “I don’t believe I have one of those,” he conceded. Man, I thought to myself, I really am in deep shit now!
When I had moved from Congress to OMB, a number of my top staff had come with me. John Angell, Jennifer Palmieri, Barry Toiv, Jodie Torkelson, and Martha Foley all had become indispensable to me, some over many years, and now I asked them to move again. They agreed, and thankfully my core team continued to surround me. I warned them that we had some tough challenges. On our first day, I put my hands on John Angell’s shoulders and looked him in the eye. “John,” I said, “this is going to be tough.” He laughed but never hesitated. None of them did. So quickly did they scatter around the White House and plunge into their new duties that other staff members called them “the mice.”
