by Leon Panetta
Just as the budget standoff built to a crescendo, on November 4 Clinton was interrupted by a tragedy. Yitzhak Rabin, whose courageous willingness to enter peace talks with Yasser Arafat produced a foreign policy highlight of the Clinton presidency—as well as the memorable image of the two old enemies shaking hands—was shot at a peace rally in Tel Aviv by a young right-wing opponent of Rabin’s peace efforts. Rabin was struck by two bullets and died less than an hour later.
Clinton was staggered by the news. He had been with Rabin less than two weeks earlier, and he admired him as he did few other leaders. They had worked together, at considerable risk of failure, and come to trust each other. “By the time he was killed,” Clinton later wrote of Rabin, “I had come to love him as I had rarely loved another man.”8 Clinton traveled to Jerusalem for the funeral, leading an American delegation that included Presidents Carter and Bush, as well as Gingrich, Dole, and other congressional leaders. Clinton delivered a mournful eulogy for his friend on November 6, and left the following morning, arriving in Washington before dawn and returning, tired and brokenhearted, to the White House.
On November 13, Clinton vetoed H.R. 115, the continuing resolution that included the conditions he had vowed to reject, and dared Congress to take the next step. “I will continue to stand for my principles,” he said.
Would he? With Gingrich pushing him to the brink and Morris urging him to find a compromise, would Clinton risk his reelection on the gamble that he could back down his opponents? Not only was that a political risk, but it also cut against his natural tendency to search for a middle way. He liked the center, understood the value of cutting a deal. As I met with Alice Rivlin from OMB, Harold Ickes, and Erskine Bowles, my concern was that Clinton would give too much, and that it would backlash with Democrats. They shared my worry.
On the evening of November 13, with the budget veto still fresh, leaders of the House and Senate came to the White House to see if we could cut a deal that would prevent the government from shutting down at midnight, when the previous continuing resolution expired. Clinton asked me to open the meeting with a presentation of what we were prepared to offer. I outlined the specifics of our proposals, including an offer to cut Medicare more than we had previously proposed, though substantially less than Republicans were seeking. I spoke for a few minutes, and as soon as I finished, Gingrich chimed in to complain that the White House had poisoned our deliberations by airing television ads that made our case and accused Republicans of endangering Medicare. I couldn’t believe it. This was the same Gingrich who’d accused our staff of abusing drugs, who described the president as “the enemy of normal people,” and who liked to call the Clintons “McGoverniks.”
“Mr. Speaker,” I said, struggling to control my temper, “you don’t have clean hands.”
That gave the more reasonable Bob Dole a chance to interject, and for a moment I thought we might avert the crisis. Dole was receptive to the proposal I had just presented. So receptive, in fact, that he startled me. “That’s fine with me,” he said of my pitch. “Let’s take it.”
Not so fast. Gingrich jumped immediately back in and said it was unacceptable to him. He was joined by Dick Armey, who wanted to whine more about the television ads. They were, he said, alarmist, and they were frightening his mother-in-law. Clinton parried that, apologizing if she was upset but reminding Armey that the Republican cuts would hurt her worse than ours.
Armey then tried to threaten the president. Unless he backed down, the congressman blustered, the GOP would shut down the government and drive Clinton from office.
Clinton did not flinch. He fiercely told Armey that he didn’t care what the political consequences were, that he would veto and keep vetoing the Republican plan “even if I drop to 5 percent in the polls.” And, he added, “If you want your budget, you’ll have to get someone else to sit in this chair.”
From that moment on, I knew that we might lose the debate, but we would not sacrifice principle. We were going to fight it out. At midnight, much of the U.S. government shut down, with far-reaching consequences: The Centers for Disease Control halted disease surveillance; more than three hundred national parks closed; passport services were halted; federal courts cut back hours and services. Payments to government contractors were delayed, with those effects rippling outward. Hundreds of thousands of workers went without pay.9
Despite the brinkmanship that had brought us to that point, both sides continued to talk even as the government went into hibernation. Day after day, Gingrich and company arrived at the White House, and we looked for ways to cut a deal. Dole was acutely conscious of the toll a protracted shutdown could take on his presidential campaign, and he was looking for a way out from the beginning. The stakes were different for Gingrich, who had a safe seat in Georgia and was looking to elbow his way into history by knocking down the president. And having sized up Clinton over the two years of his presidency, Gingrich clearly thought that Clinton would cave if he just kept up the pressure. So we would talk, seem to make headway, and then, just before we broke up, Gingrich would offer some new idea or proposal, setting us back again.
Almost from the first day, however, public opinion sided with Clinton, who was seen as waging a principled campaign to defend Medicare against congressional Republicans perceived as angling for political advantage.10 Gingrich helped our side immeasurably with a childish remark on the second day of the closure. The Speaker was meeting that morning with reporters, and was discussing the personalities surrounding the shutdown. He noted that he was insulted that Clinton had not bothered to invite him and other Republican leaders to join him in the front of the plane to discuss the budget during their recent trip to Rabin’s funeral. He also said he was angered to be asked to exit the plane from the rear when it returned to the United States the next day.
“I think that’s part of why you ended up with us sending down a tougher continuing resolution,” he said, adding, “This is petty, and I’m going to say up front it’s petty . . . but I think it’s human.”11 He didn’t even stop there, but continued complaining about his treatment, suggesting that the White House had deliberately sent him and Dole out the back door so that television crews at the airport wouldn’t get images of the Republicans and Clinton together. All of that was ridiculous and borderline paranoid—the plane had landed before dawn, and no crews were there to greet it; Clinton actually had wandered to the back of the plane to pay his respects to Dole and Gingrich, and Gingrich had even been allowed to bring his wife on the plane, a courtesy not extended to other members of the delegation. But the big point was so obvious that I barely had to make it: Gingrich was suggesting that he was willing to shut down the U.S. government because his feelings were hurt. I couldn’t resist making a comment, so when CNN called and asked for my response to Gingrich’s claim to have been slighted by Clinton, I gave one: “This is bizarre. Even if that were the case, which it isn’t, why would you want to shut down the government because you feel somehow as if you’ve been snubbed?”
The front of the next day’s New York Daily News featured a full-page cartoon of Gingrich in diapers, holding a baby bottle, crying, and stomping his feet. The headline read, CRY BABY: NEWT’S TANTRUM: HE CLOSED DOWN THE GOVERNMENT BECAUSE CLINTON MADE HIM SIT AT BACK OF PLANE.12 The shutdown now had a human narrative: Beleaguered president forced to endure spoiled brat Speaker. As Lars-Erik Nelson of the Daily News wrote, it was “junior high school cafeteria intrigue,” handed to us, unbidden, by the Speaker. In politics, sometimes it’s better to be lucky than good, and we were in many ways lucky to have Gingrich as an adversary.
The Speaker’s snafu and the polling numbers made Republicans receptive to finding a way out, and we offered them one on November 19. In the weeks leading up to the shutdown, I’d been working with Rivlin to look at various economic models and their effect on the deficit. For months we had been saying our proposals would balance the federal budget in ten years, but as th
e economy continued to improve, we concluded that we might actually be able to get there more quickly. In fact, without having to make the cuts demanded by Republicans, we believed now that we might be able to balance the budget in the seven years they were advocating. In other words, we could meet their target without their cuts. At our regular budget confab that day, I suggested to our Republican counterparts that the president could submit a proposal to that effect if they would vote to reopen the government. We cut the deal right there, and the government reopened immediately, though temporarily, because the resolution carried us only to December 15. The idea was that we would use those weeks to hammer out a deal and leave the government in operation. It did not work out quite that way.
We met almost daily, refusing to give in to our exasperation with one another. Meanwhile, we turned up the outside pressure, creating a White House Budget Plan with events every day to highlight the differences between our budget and theirs, as well as op-ed submissions, meetings with constituency groups, and consultations with our allies in Congress. When Clinton left on a long-planned trip overseas, we had Gore standing by in case the Republicans chose that moment to pass another set of offensive appropriations bills. Even holiday receptions were laced with references to the budget and a possible shutdown.13 The news drumbeat increasingly took the line that we were trying to keep the government open, while Gingrich was willing to close it down.
All of which was merely the symptom of the larger contest: Gingrich had decided to use this moment to break Clinton, and Clinton refused to break. Republicans mocked our new economic projections, insinuating that we’d merely tweaked the numbers to make it appear that we could balance the budget in seven years without their pain. So on December 15, when the stopgap funding bill expired, much of the government shut down again.
We were buoyed by the public’s reaction. The president was gaining strength, and the Republicans were losing. Moreover, Dole needed this over to get on with his campaign. So Christmas came and went without a deal. Snow fell on Washington, and we still didn’t have a deal. Then, on January 6, Gingrich threw in the towel. “We made a mistake,” he told Clinton with me and others present. “We thought you would cave.”
The Republicans removed the offensive cuts from the remaining appropriations bills, and Clinton signed them. The president agreed to some additional savings and cuts in Medicare and elsewhere, and submitted to Congress a proposal to balance the budget by 2002. Clinton wrote an open letter welcoming all federal government employees back to work, and the government returned to full operation.
Less than three weeks later, Clinton delivered his annual State of the Union address, and it bore the marks of the shutdown and its aftermath. It was that year that Clinton memorably declared that “the era of big government is over,” a line that Republicans cheered lustily that night and have long since pointed to as evidence that the shutdown forced Clinton to rethink the place of government in American life. Less often quoted, however, is the balance of that sentence. “But,” Clinton added, “we cannot go back to the time when our citizens were just left to fend for themselves.”
Later in that same speech, Clinton pulled off one of the great head fakes in the history of the address. It came near the end of the address, as he told a story of heroism during the Oklahoma City bombing.
“His name is Richard Dean,” the president began. “He’s a forty-nine-year-old Vietnam veteran who’s worked for the Social Security Administration for twenty-two years now. Last year he was hard at work in the Federal Building in Oklahoma City when the blast killed 169 people and brought the rubble down all around him. He reentered that building four times. He saved the lives of three women. He’s here with us this evening, and I want to recognize Richard and applaud both his public service and his extraordinary personal heroism.”
The audience jumped to its feet and gave Dean a sustained standing ovation. Behind the president, Speaker Gingrich was among those who applauded long and hard.
“But Richard Dean’s story doesn’t end there,” Clinton continued. “This last November, he was forced out of his office when the government shut down. And the second time the government shut down he continued helping Social Security recipients, but he was working without pay. On behalf of Richard Dean and his family, and all the other people who are out there working every day doing a good job for the American people, I challenge all of you in this chamber: Let’s never, ever shut the federal government down again.”
The chamber again erupted in applause, accompanied this time by hoots of derision as Democrats lambasted Republicans for the shutdown. Gingrich sat grumpily, not flinching as Clinton received the applause, the traces of a smile on his face. I was sitting in the gallery that night, just two seats to Dean’s right. I stood and applauded along with the rest of the Democrats in the chamber and realized then that we had won.
Looking back on the shutdown over those weeks, there are several things worth recalling. The shutdown did not need to happen; and those who forced it, Gingrich and his allies, were badly hurt by it. The public decisively blamed them and not Clinton, whose political fortunes and reelection were strongly enhanced by facing down Gingrich. The administration did not ask for the confrontation, but we were ready for it when it came to us, and we outmaneuvered our opposition.
There were also unexpected results of the shutdown. After all our struggling between balancing the budget in ten years or seven, and after the GOP’s dismissal of my prediction that we could balance the budget in seven without their cuts, it turned out that we were both wrong, though they were much more wrong than I. In fact, we balanced the budget not in 2002, as I had proposed we attempt, but in 1998, when the government, for the first time since the 1950s, ran a surplus. From that point forward, Clinton would never log another deficit.
There was another consequence of those weeks. When we sent federal workers home during the shutdown, it meant that the White House was uncharacteristically quiet at night. On November 15, when the government was shut down for the first time, most of the secretaries and other White House staff went home. My staff stayed, because we were embroiled in the negotiations. What that meant was that my interns were working late, and had relatively easy access to the president. At about 9:20 p.m., a young intern in my office named Monica Lewinsky was working alone in the outer office that led to mine. I would learn only years later, in the context of the impeachment hearings, what happened that night.
Publicly, the shutdown illustrated Clinton’s potential for political resolve and arguably secured his reelection; privately, it revealed his lack of personal discipline and planted the seeds of his impeachment.
• • •
Clinton’s decisive victory in the shutdown meant that he entered 1996 in an entirely different political position from the one he’d been in a year earlier. His approval ratings were on the rise—after spending 1995 mostly in the 40s, Clinton hit 50 during the first shutdown, and after delivering his State of the Union address never fell below that mark again in 1996. The economy was healthy, and Republicans were badly divided between the Gingrich insurgents, now tainted by their failure in the shutdown, and the more moderate elements led by Bob Dole. Dole would go on to win the Republican nomination, but his age and the party’s divisions alone probably were enough to keep him from being a serious challenge.
That hardly meant that 1996 was a coast for Clinton, however. We all recalled well Bush’s tumble from the heights of post–Gulf war popularity to the lows of recession president, and Clinton was taking no chances; certainly Morris wasn’t, and he continued to push Clinton to take away issues that Republicans once owned in order to secure his hold on the center. In 1996, that meant welfare reform.
Clinton’s support for revamping welfare was not entirely political. He had argued for it throughout his campaign and sent bills up to the Hill earlier in his first term. Indeed, I believed then—and still believe today—that if we had pressed welfare
reform in 1993 or 1994, we might have gotten a serious and compassionate bill out of the Democratic Congress. Now the calculation would be far different, but we still had a chance with welfare, because it was an area where many Republicans shared many of Clinton’s misgivings. Ending “welfare as we know it” was an idea that Clinton embraced sincerely, not cynically.
Welfare was not the only item on Morris’s to-do list that year, but most of his other suggestions were fairly inconsequential tidbits intended to appeal to one constituency or another—support for school uniforms, midnight basketball, the v-chip to let parents control their children’s television viewing habits (a favorite of Al and Tipper Gore), abstinence education, programs to wean children from tobacco and drugs. None of those amounted to much, but they served their purpose politically, and were generally positive programs and ideas.
Welfare reform was far more controversial, and Democrats were deeply divided over it. For Republicans, welfare was offensive because it encouraged dependency and discouraged work—condemning the “welfare state” was a staple of Republican dogma. Those were valid criticisms in many ways, but also easy ones for the GOP, since few poor people affiliated themselves with the party anyway (notably, many of the same conservatives who attacked welfare were much less critical of farm subsidies, government aid whose recipients were far more likely to be Republicans).
Clinton shared some of the conservative critique of welfare, but he resisted withdrawing the safety net altogether, and also was bothered by some of the illogic that had become built up in the system over the years. It troubled him, for instance, that a welfare recipient who left welfare for a minimum-wage job would as a consequence often lose his or her health care, since Medicaid was available to those on welfare but often not for the working poor. It was perverse to think that the cost of health insurance would push people out of work and onto welfare—and that it would keep them there. Beyond that, Clinton’s extraordinary capacity for empathy led him to deplore some of the personal ramifications of welfare—the shame that many felt for having to receive it. He would often argue that those most offended by welfare were those forced to rely on it.
