Yes. Well, we had a seminal moment in that in January of 1996. I had been completely incapable of understanding throughout '95 the signals Clinton was sending me. On the one hand, he would do a lot of my advice. He would take it, he would implement it, and he would go with it. But then, on the other hand, every time a vacancy came up on the staff, he would appoint somebody that hated me. And I just couldn't figure it. I just didn't understand it.

And I had a meeting with him in January. And my wife, Eileen McGann, actually is the one who gave me this insight. And I came in to him and I said, "You know, I think I've finally figured you out." And he smiled, and he leaned back in his chair, and he said, "Tell me about it."

And [I] said, "I don't understand why you take all my advice, and you appoint a staff that hates me. And I think it's because you want me to be like a little bird perched on your left shoulder, whispering into your ear so nobody else can hear it, just giving you advice." And he had a big grin on his face, and he said, "You got it. Leave it with me. Just tell me what you think I ought to be doing. Leave it with me. I'll take care of it. Don't deal with my staff. If you need information, get it from them. If you need facts, get it from them. But just give me the advice."

So during all of '95, I was trying to shoulder my way into staff meetings and be included in this and included in that. And then in '96, I realized that I didn't want to be included in anything. So I would refuse to go to any staff meetings. Panetta used to beg me to come, and I would say, "No, I'm not." Because in the last analysis, the channel that Clinton wanted me to pursue was the direct, private channel that we had with each other. And we would talk two or three times a day by phone. I would send him eight or ten notes every day. And it was a very close rapport.

And what would happen is that the staff would come up with a recommendation, submit it to Clinton, and they would try to lobby me to get me to tell Clinton that I supported it. And I would never respond. I would just tell Clinton what I thought and then--It was kind of an appeals court.

The irony of the way the White House worked in that period is that there were three outsiders in the White House: Bill, Hillary, and Gore. They were the outsiders. The insiders were Ickes, Stephanopoulos, Panetta, the White House staff which had its links with the party and with the Washington media establishment.

And they kind of saw--when Clinton would not follow their advice, they would sort of say, "He's loose. The president's loose. God knows what he's going to say." And they'd be scared to death of it. They felt very insecure about their relationship with Clinton.

They're kind of like the Moon: It has no light on its own. It's only when the Sun shines on it that you can even see it. And they were worried that the Sun was taking a vacation and wasn't going to shine on them again. And in fact, in '96 Clinton largely ignored his staff, and we just did most of this together.

1996, you find out you're going to be on the cover of Time magazine. And neither you nor the president is terribly thrilled about it.

Yes. I thought that that would be the end of me. You know, how with "The King and I," the play and the movie, you can never have your head be higher than the king's. And this was a good example of your head being higher--and it gets cut off.

So I was on the phone with Walter Isaacson, the editor of Time, trying to talk myself off the cover. In fact, afterwards, he sent me what the cover would have looked like, and he said, "This is, you know, everybody's dream. Here's your cover." And we had all sorts of ones. He wanted me standing in the president's mind. And we eventually compromised on my sitting on his shoulder, talking in his ear. And I was talking to Walter one minute, Walter Isaacson, and the president the next minute, and then back and forth and back and forth, till we ultimately negotiated a cover.

How did the president feel about you being on the cover the week of the Democratic convention?

I don't think he was thrilled about it. But I think he realized that I had done everything I could to minimize it.

Earlier that month, he and I had had a conversation where he said, "Look, I know that after this is over you're going to write about this. And I think you should. I think history has an interest in this. I think that there may not have been a closer relationship between a president and an advisor than we've had this year and a half or two years. And I think you should write about it. I just want you to be sure that you wait until after the election is over." And I said, "No problem."

1998, the Lewinsky scandal breaks. Where are you when you hear from the president?

I was on a subway in New York, on the way to visit a friend of mine. And my pager went off, and I glanced down, and I thought the pager was busted. You know, it was the old phone number, the president's personal line. And that hadn't gone off for a while, and I sort of thought maybe there was a mistake.

And then I realized that he was calling about the Lewinsky matter, which had just surfaced in the press. And when I got off the subway, it paged again. And I went to the office of my friend, and I called from his office. And we had a conversation that I've related to the grand jury. I want to emphasize that I did not voluntarily share the contents of this conversation. It was only under subpoena that I did. But since I've told the grand jury, I might as well tell you.

I said, "You poor son-of-a-gun. I know just where you're coming from. I know just what you've been through. And every part of me just aches in empathy for you." And he said, "Yeah, this has been a--This is horrible. This is just terrible. You know, ever since I was elected president, ever since '92, I've sort of shut myself down, shut my body down, sexually I mean. But I just--I just screwed up with this girl. I didn't do what they said I did, but I did do something. And I think I may have done so much that I can't prove my innocence."

And I said, "Well, you know, there's a broad streak of forgiveness that runs through this country. And I think maybe if you tell them the facts, you'll be okay." And he said, "You think so?" And I said, "Yeah. I think that Nixon was impeached because he just never told the public the truth about Watergate. And I think that there may be something here where you just nip this in the bud, and you just let it all out."

Just a correction here: Nixon threatened with impeachment. He wasn't impeached....

Okay. I mean, I believe he was impeached, in effect. But okay. ...And he said, "You really think that I could do this?" And I said, "Look, I don't know. Let's poll it. Let's find out." And he said, "Well, how would you do that?" And I said, "Well, I'll read them the different scenarios, and I'll figure out what they say, and I'll get back to you."

And I said, "I assume this is something you wouldn't want to go through your regular pollsters with, so I'll do it for you." And he said, "Can you keep it secret?" And I said, "Sure." And I did, until the grand jury under subpoena forced me to reveal it.

And I did a poll that night, and I called him back late that night. And I said, "Well, they'll forgive the adultery, but they won't forgive the lying. They won't forgive that you didn't talk about it in the deposition." And I went through the numbers with him, and it was very clear at that point that the shock of the fact that the president was having a relationship with this young woman in the White House was so severe that that, combined with the idea that he had lied about it in the deposition, would just have blown up his administration.

So my hope at that point was that he would gradually let the truth out over the periods of weeks that were following; that he would gradually sensitize the public to the truth.

Now, I didn't know what the truth was at that point. All I knew was he had told me, "I did something, but not what they say I did." I in my wildest dreams never imagined that he was hanging that distinction on two different kinds of sex; but he was, apparently. But I didn't know what he had done, but I knew that there was something there.

So I was hoping that he would sort of let the public down gently. He interpreted the poll numbers as being that he had to stonewall. And he said, "Well, we just have to win; don't we?" And then we had two or three more conversations over the course of the next few days. And then he told me that it wasn't a good idea for us to talk, because the conversations weren't privileged, and he said, "If you're ever called before a grand jury, you'll have to reveal it. So my lawyers have cautioned me not to talk to you."

Are you convinced that your poll persuaded the president to stonewall at that point?

I wouldn't put it that way. I think that the president felt that he had no option but to stonewall. And I think my earlier conversation with him opened the possibility that he might be able to get by by telling the truth. And when the poll came back, it reaffirmed his notion that he couldn't.

I think the president made a big mistake when he then went out and said, "I did not have sex with that woman." What he should have done is just hedged it, let the public believe that maybe he did have sex, let them kind of get the point, and then after four or five weeks let the truth come out. And this would have been a scandal; he would have dropped five or ten points, and would have been right back on top a few months later.

It was his digging in his heels and stonewalling for an incredible period of time, and overtly lying to the country, that really got him in trouble. He could have dodged and weaved around this until the point more or less came out--leak it, get it out, get speculation out--and then have admitted to it.

In a situation like this, you need soft hands. You need to be able to be subtle about it and gradual, and not just do anything harsh like "No." And it was just a big mistake on his part. But it was really the reflection of a lifelong habit of not talking about his private life. For his entire life, it had been based on covering up his extramarital sex. And he just found it almost impossible to talk about it in public.

Have you spoken to the president since?

No.

In terms of how history regards this man, what's your short view?

History will be very good to Bill Clinton. At first, people talk about the scandals, but after ten years nobody's going to mention that. It'll be like Harry Truman. Nobody remembers there were scandals. We remember him for NATO and the Marshall Plan and the Korean War.

Bill Clinton will be seen as the president that solved every major problem America had at the end of the 20th century: Before he took office, we had a deficit; after, we had a surplus. Before he took office, we had soaring crime; after, crime was cut in half. Before he took office, welfare was going crazy; afterwards, the number of poor people in this country has dropped significantly, and will continue to drop. Before, the gap between the rich and the poor was widening; after, it was narrowing. Before, education was not a federal issue; after, it is a federal issue, and education standards are higher. Before, America was protectionist; after, it was free trade. Before, America was isolationist in terms of many of the global conflicts; after, we accept the idea that the president has a diplomatic role in resolving all of that.

And I think that this man--If I had told you in 1992 that he would accomplish the things he accomplished by 2000, you would fall off that chair.

You don't think history is going to reflect on a character flaw?

I think history will see that as a character flaw, obviously, Lewinsky. But you know, Thomas Jefferson had illegitimate children with Sally Hemmings. And Dwight Eisenhower had an affair with his chief of staff when he was World War II commander. And John Kennedy had an affair with Marilyn Monroe. And Lyndon Johnson had an affair with dozens of women. And I don't think that history will see Bill Clinton as anything ultimately different from that.

I think they'll be very harsh in condemning the Republican Party for using that as the basis for trying to remove a president.

I also think that history will look askance, not at the sex, but at the tactics of intimidation that Clinton has used to defend himself against these scandals. But I think that ultimately history will be very positive in its view of him. Perhaps, it'll be like George Bernard Shaw said in "The Devil's Disciple": History will tell lies, as usual.

What are your thoughts on the role of Hillary over the years, their relationship?

The relationship between the Clintons is a very complicated one. And there is real love there. It's a real marriage. It's not a sham marriage. But on the other hand, the extent to which Hillary is Bill's campaign manager varies over time, depending on whether he feels that she knows what she's doing or not.

In the 1992 campaign, at the beginning, Hillary had relatively little power, because Bill had more or less been running his governorship on his own. She had much less of a role in the late '80s than she did in the early '80s. But when the Gennifer Flowers controversy hit, and Hillary really led him in how to handle that, and was cool under fire and handled it beautifully, she really again became his campaign manager and his chief advisor.

And that role lasted through '93 and '94. And in the course of it, she had jurisdiction over health care reform, and Clinton was impressed in the early going in the way in which she handled it. But as health care reform began to fall apart, and as the sort of liberal core she had been counseling began to come apart at the seams, Bill began to lose faith in Hillary as a political advisor. He loved her as a wife. They were still close to each other. But as a political advisor, he began to see limitations to her advice.

And after the '94 defeat, he began to listen to Hillary much less. And Hillary began to feel that she was undermining herself by this role of being the power behind the scenes; that she should be more of a public advocate and less of a private advisor.

And during the period of '95 and '96, the president really did not have a lot of confidence in Hillary's political judgment. I think that came to an abrupt end with the start of the Lewinsky scandal, because I think at that point he realized again that he needed her to protect him and that she was the only one that could.

And she, in return, wanted more of a role in the White House and more power to coordinate the defense. And I think during '98 and '99, Hillary was the dominant force in his presidency, because he needed her, and because she had to play that role.

What was the battle over welfare reform like, when you had such prestigious figures as the secretary of the treasury at that point arguing against signing this legislation?

Well, Bill Clinton always wanted welfare reform. It was always his number-one priority. It was something he ran on in the campaign. And the welfare bill that was passed twice--which he vetoed twice--had very significant cutbacks in areas like day care and nutrition and food stamps and child welfare, things that he was not prepared to approve of.

So when the Republicans gave him a clean welfare reform bill embodying his basic principles that he'd always supported--time limits and work requirements--he was inclined to sign it. But then they loaded up the bill with all kinds of other provisions, to cut aid to legal immigrants, and Clinton did not want to sign those provisions.

And there was a real push-pull for his mind on that, where his liberal advisors were saying, "Look at that somebody comes into this country, and works hard, and pays taxes, isn't a citizen yet, but is injured in an industrial accident, and can't collect disability? That's terrible." And he would give those arguments back to me.

And the argument I made back to him is that, "The Democratic Congress will never pass welfare reform, but they will get rid of these extraneous amendments. And if you win by enough, you're going to elect a Democratic Congress with you, and you can fix the bill after you've signed it." And when he signed the bill, he signed it criticizing those provisions and saying he wanted to fix them.

Now, we miscalculated. He had a Republican Congress. But oddly enough, the Republican governors insisted that the Republican Congress fix the bill in exactly the way Bill Clinton wanted. And the welfare system that exists now is exactly and precisely what Bill Clinton would have designed if there were no Congress.

And I might add, that this has worked incredibly. I think that you have to put this in a historical context. When Franklin Roosevelt was president, he said, "I see one-third of America ill-fed, ill-clothed, ill-housed." When Johnson left with the "Great Society," it was one-sixth. After Bill Clinton leaves as president, it'll be one-tenth. And that's an enormous, enormous achievement, largely attributable to welfare reform.

Was it the single highest risk legislative gamble of the Clinton presidency when you were there?

I think vetoing it would have been the single highest risk. I think if he'd vetoed that bill, he probably would not have been reelected president. He ran on the basis of welfare reform. His most important spot in 1992 was, "I will end welfare as we know it." And if he then got a welfare reform bill that, as far as American citizens are concerned, was precisely what he wanted, and was only bad insofar as immigrants are concerned, the public would never have understood a veto of that legislation.

A lot of people have remarked on the sort of different Clinton in this last phase. He's given some funny speeches. He's made the video. He seems more relaxed. What's your assessment of how this president looks post-impeachment?

Well, as I've said earlier, I have a very positive view of how history will see him. And I think he's accomplished a huge amount as president. But I'm harshly critical of his whole second term as president. I think he's completely wasted his second term in office.

What basically happened was that he went to the Democrats in Congress and he said, "Defend me against impeachment. And in return, I will never again triangulate. I will never again go to the Republicans and cut a deal with them to get stuff passed. I'll work only within the Democratic Caucus." And the translation of that is that, "I agree that nothing will pass in my second term." Because until the Democrats get control of Congress, they are not prepared to let any legislation emerge, because they want there to be a do-nothing Congress they can run against to take control.

And Clinton in effect handed the franchise for his second term over to the congressional Democrats. And as a result, he hasn't done anything. Nothing has passed, nothing of significance.

Bill Clinton could have had a deal with the Republican Party easily for Medicare reform, for a tax cut, for Social Security reform, for reducing the national debt. There was enough of a surplus on the table so he could have had that deal any time he wanted. The only reason he didn't make the deal is that congressional Democrats didn't want him to do it, and he'd promised to them that he would respect their opinions, in return for their saving him from impeachment.

And I think that he's completely wasted his second term as president. So maybe he's a comedian now, and maybe he's relaxed, and maybe he's loose; but he's squandered the four years the American people elected him to.

In personal terms, how do you think Clinton will handle not being president?

Clinton is like a solar battery: He's only alive when the sun is shining on him. When the sun goes behind the clouds, or it's the middle of the night, he's a cold lump of metal, like a solar battery in darkness.

Clinton needs public adulation, he needs controversy, he needs stimulus, he needs danger, he needs adventure. He needs all that stuff, just to get him going. That creates the electricity that permits him to function as a human being.

Now, he's chosen an occupation that gives him a huge amount of that. And he's chosen to live a personal life within that occupation that gives him even more of it. When he leaves as president, he's going to find a definite absence of stimulus. He's going to become cranky, irritable, depressed, withdrawn, introverted, upset. I do not wish anybody to be around him in the year after he leaves office. He's going to be impossible.