A friend of Clinton since the two were Rhodes Scholars at Oxford, he served as Secretary of Labor in the president's first cabinet. He was earlier a professor of government at Harvard. He wrote a 1997 book on his experience in the Clinton presidency, Locked in the Cabinet. Interview conducted September, 2000 by Chris Bury You've been friends with Bill Clinton for a long time. How did you get to know him? We were both fortunate enough to be selected to be Rhodes scholars. On the trip to Oxford, England, we took a ship. I don't know why we took a ship in those days. There were jet airplanes, but we were on a ship. It was the tradition. And I had met him very briefly on the dock just before heading out to sea. After about three days in the ocean, I discovered, much to my chagrin, that I didn't have sea legs. I was a wreck. I was seasick. All I wanted to do was go down to my cabin and die, and I did go down to the cabin. I didn't die. But there was a knock on my door. There was this tall, gangly fellow with a southern accent. I had briefly met him before. He said, "Hi. Just want to remind you that I'm Bill Clinton. Heard you weren't feeling so well. Maybe this will help." In one hand he had chicken soup, and in another hand he had crackers. Now, he didn't say, "I feel your pain." That came later. But he did at least care, apparently, about whether I was going to make it. And that started a conversation, a friendship -- not my closest friendship by any stretch of the imagination -- but certainly a good relationship that lasted for the next 30 years, and still lasts. So you were considered an FOB; you were considered a friend of Bill. I guess I was considered a friend of Bill, although this is a man who has many, many friends. There must be at least 15,000 FOBs. It wasn't a particularly small and distinguished category. But it counted when he became elected president. You had given him some advice during the campaign, correct? Yes. I certainly was one among many people who provided him a lot of free advice. The poor man had read every one of my books. And then I recall, just a few days after the election, I came back from class. I had been teaching. Got a telephone call, and the operator said, "One minute for the president-elect." Well, I had never even heard of him called the president-elect before. That was kind of a startling emotional reality. And then he got on the phone and said, "Bob, I need you down here. I need you to put together the economic team. . . . Can you come down and just put everybody together, so there's at least a group that helps me plan my first budget, and helps me get started? And I'd like you right away." Well, I couldn't say no exactly, but I had two young boys and a wife, and I had my class, and it wasn't easy to just get up and leave. I said, "I'll call you back." And I talked to my wife, and talked to my little boys, and talked to even my class, because I had promised them I was going to teach them for the rest of the term. And everybody said, "You've got to go down. This is not a matter of committing yourself to any position of the government. This is just a matter of helping the guy out for the next two months, for the economic transition." So I called him back. I said, "Sure, absolutely, I'll come down." And we spent a lot of time. It was a very heady, very exciting time, trying to decide basically how bad the economy was, how large the deficit was. All those projections were subject to some interpretation, and then coming up with a little bit of a blueprint. A lot of people that we've talked to about the transition describe it much the way you do, that it was a heady time. But another word that people use is "chaotic." Sure, it was chaotic. The Democrats hadn't been in power for 12 years. Nobody knew what they were doing. But there was a great deal of excitement, not only among the people who were coming down to form the administration or to help the president in the transition, but also in the public at large. We tend to forget, I think, with our jaded selves at the start of the twenty-first century, how excited we can be at the start of a new administration where there's a recession, when there's a sense of a complete change. I remember things like driving up to the take-out part of a fast food restaurant with the kids, and I'd order something, and the person behind the glass would say, "Good luck to you. Good luck to you, and good luck to President Clinton," with a big grin. Wherever I went, people were going like this -- excited about America, at the point of what everybody considered to be a very fundamental change. You went down to Little Rock, and the president-elect and Mrs. Clinton invite you into the governor's mansion. What were they like? How had they changed? Did they seem different to you in this new position? They didn't seem all that different. I had visited the governor and Mrs. Clinton several times during the course of his governorship. . . .I was struck by how natural they seemed, joking around, and talking about possible cabinet choices, and I remember saying to myself, "Now, wait a minute. These are not just old friends. Indeed, these are not just the governor and the wife of the governor of Arkansas. This is the president-elect and the first lady or who will shortly be the First Lady of the United States, and here we are talking and joking, and acting as if very little or nothing had happened." Certainly there was an undercurrent there, though, that things had changed? Obviously, there's an undercurrent. They knew that their lives had changed profoundly. The whole governor's mansion was packed up in boxes. They were frantically trying to decide exactly on the logistics of the move, as any family would. But they were also, obviously, discussing and thinking about what this transition meant, both in terms of policy and in terms of their personal lives, and Chelsea's life. In your book you describe the transition as, quote, "Hell." Already the incipient Clinton administration "has created a bureaucratic monster." Oh, it was a bureaucratic monster. You know, you get a lot of campaign workers, some of them very competent, most of them very competent people. But they all begin to dream about being in the White House, in the administration. Most of them have never been in government before, right? Most have never been in government, particularly when Democrats have been out of government. Whatever party it is, if you've been out of government for 12 years and you're suddenly in, there are an awful lot of people waiting in the queue. And if they've worked in the campaign, they expect that somehow they're going to be either in the White House or close to the White House. And the Presidential Transition Act -- a piece of legislation from years ago, right around the time of the Kennedy administration -- provides a big chunk of money to a president-elect to organize his administration or her administration. Unfortunately, all of those people who have worked on the campaign will have excitement in their eyes and the imaginings in their heads that they're going to be in the White House. They know that there's all that money, they know that there is going to be a big well-funded effort to move from being out of power to move to being in power. So the campaign headquarters are transformed into giant bureaucracies of everybody worrying and fretting and positioning themselves as to what they'll be doing in the administration. In December, you are assigned to find out what the real budget deficit projections might be. In the campaign the deficit had come up, but it had never been a central driving piece of the campaign. All of a sudden, in the fall, in the transition, this rises to the top. Why does it become such a critical point, when in the campaign there was, at best, passing reference to the deficit? . . . During the campaign, the president did talk about the importance of reducing the deficit, but it had been of second-order priority to investing in education, in job skills, in health care, and a lot of other things that the country needed to do. But, obviously, when the president is on the cusp of actually governing the country, he's got to know how bad things are, how bad that deficit projection really is, how much damage has been done, what he's inherited in terms of an economic mess. And so I headed over to the Treasury Department to talk to officials in the Bush administration, and try to get the best estimate I possibly could as to how bad the numbers really looked -- how bad that deficit was going to be the next year and likely to be in years to come. And you found out it was going to be worse than you had been told. On December 7, you go to tell the president the news. What's his reaction? The president was not happy when he heard that the projected deficit was much larger than we had assumed, larger than we had been told, and larger than the Bush administration had told the public. He knew that it meant that we couldn't do everything that he wanted to do, everything that he had promised the public. He was upset. But I remember this vividly -- I was surprised at the time, because he was also kind of excited. He said, "Gee, that's a great challenge. We're going to really, really have to work on that." And I remember sitting there thinking, "Now, wait a minute. This is going to set a lot of our plans back. Certainly this is going to put a major crimp in all of this public investment." Did you tell him that? . . . The numbers obviously spoke for themselves. You simply had to do something about that deficit. It did not necessitate balancing the budget. It did not necessitate cutting to ribbons all of the investment plans that he had shared with the public during the campaign, but it meant that obviously he could not do as much. Your whole academic career and your line of advice was investment. Others in the transition were arguing, "No, you've got to listen to what Wall Street is telling us." What kind of internal discussions did you have on where that emphasis ought to be? We had an ongoing debate inside the White House, both during the economic transition and then also once the president had been inaugurated, as to how much of the president's budget should go to deficit reduction and how much should go to his promised investments. He had promised to get the budget deficit down, and arguably, down by at least half. But the question was: what kind of sacrifice would this, as a practical matter, entail in the programs that he had also promised? The government was already undertaking programs that were really not necessary, where there wasn't very much of a public payoff. How much could be taken out of projected military increases, how much could be taken out of -- I call it now corporate welfare -- basically benefits and tax breaks going to business? It was a complicated discussion, and it wasn't simply a matter of people like me at one end of the table saying, "Invest," and people like the vice president or Bob Rubin at the other end of the table saying, "Cut." It was more nuanced, and we all knew that you had to do both. Ideally, the president wanted to do both. But when you did have Lloyd Bentsen and you did have Robert Rubin and Leon Panetta, did you know that you were going to be on the losing end of that debate? I knew that, when we discovered the size of the projected deficits, that it was going to be almost impossible to do what the president had called for in terms of public investments in education and job training and research and development and health. How great a sacrifice of his campaign commitments it would be, I didn't know. And of course there was some tension and some discussion, but we're all part of the same team. We know we basically all want what is good for the country, we want to help the president, and so it was all very good-natured. There was nothing rancorous about it. You know, you hear talk about previous administrations in which everybody is stabbing each other in the back and everybody is whispering behind each other's ears and into somebody else's ears and trying to get to the president. Honestly, I don't remember any of that going on. It was a very clear, above-board, kind of policy "wonky" discussion. That surprised me. This was not a raging passionate debate, you're saying. This is a nuanced, almost wonkish discussion? It was remarkably wonkish. It was like a policy seminar. We'd be there in the Roosevelt Room for hours and hours and hours, day after day after day, with the president and the vice president, Lloyd Bentsen, Secretary of the Treasury Bob Rubin, Secretary of Commerce Ron Brown, myself, Laura Tyson from the Council of Economic Advisors. And we'd be there, and we'd be going over the numbers hour after hour, looking at every little minute program. "Can we cut that? What's the consequence of cutting that? Can we get a little bit more money to do this?" It seemed to be endless, and it also did seem remarkably academic in a way. I mean, here's the President of the United States, the head of the free world, wondering about whether if we cut the Coast Guard by this much, would we have a little bit more money to go into this training program, or would we have to put that into the deficit reduction, and how much deficit reduction would we get this year? And if we changed slightly the assumption about economic growth, would that mean a slightly larger deficit reduction? On the one hand, I was impressed that the president was addressing these issues in such minute detail. On the other hand, I kept on asking myself, "Doesn't the head of the free world have more important things to do than discuss issues at this minute level of detail?" It was an exhaustive process. You write that, at one point, you look over at the president, while you're speaking, and he can barely keep his eyes open. He was exhausted. He was absolutely exhausted. He was trying to get his government going, up and running. There were countless issues he was dealing with -- everything from gays in the military, to upcoming North American Free Trade Act issues, the health care task force was getting off the ground, and he was trying to put together his first budget at the same time. And he wanted to fulfill his pledges, but we had this huge deficit. I don't think he ever slept. And I remember one time at that big table in the Roosevelt Room, I talked to him. He was sitting kitty-corner, and I made some point, and his eyes were completely shut. He nodded his head, but his eyes were shut. And I had the distinct impression that either my advice was extraordinarily unimportant -- which is possible -- or the man had gone to sleep, or both. Did you believe that he was trying too hard to please too many constituents? Bill Clinton wants to please as many people as he can. He operates by a kind of sonar or radar. He's constantly emitting ideas and possibilities, and slightly different versions of the same ideas, and he's waiting to get back responses from people -- not just special interests -- but as many people as he can possibly talk to, hundreds of people, thousands of people, people on the side of the road, people in cafes, people in restaurants. Whoever he can talk to about anything, he will talk, and he'll listen for those responses. Certainly he tries to satisfy everyone, but somehow he tries to come up with a position that will be acceptable to almost everybody. Is that a fault in a president who's elected with 43 percent of the vote? A president has a certain amount of political capital he brings to office. A president elected with 43 percent of the vote has a little bit less political capital than a president elected with 48 or 53 or 58 percent of the vote. What I mean by political capital is the ability to do things, to get legislation done, to act in the public's interest, to convince the public that what he wants is good for the nation. Bill Clinton didn't have a great deal of political capital. He was aware of that. And he was trying to please a lot of people. He needed to please people over and above his natural predilection to please everybody, and I think that comes from deep inside him, but also there was a practical issue. He needed to get as much support as he possibly could because he had some very ambitious ideas, and he needed to get enough support initially so that he could sell those ideas. For example, I remember going up to Capitol Hill to talk to some Democratic representatives about campaign finance reform. This was at the start of 1993. He had made campaign finance reform one of his many, many objectives. And I remember distinctly the Democratic leaders on the Hill saying, "Don't do it. Don't do it. If you do that, you're going to lose your political capital. You can't get health care done. You won't get a lot of things done that you want to." The Democrats on the Hill said, "No, don't do it. If you want our support for health care, and for other things, we can't give you campaign finance reform. It's very unpopular up here, not only unpopular among Republicans, but unpopular among Democrats. We're here because of the old system. We're not here because of the campaign finance reform idea. If there were real campaign finance reform," they said, indirectly, "we might not be here, our positions might be jeopardized, so don't do it." The president had to make some hard choices. Every president has to make some hard choices at the start of an administration as to what is going to take priority and what he's going to spend his political capital on. In retrospect, I'm not sure he made such wise choices. He did not know that the executive order on gays in the military, for example, was going to be so controversial and cause such a tumult and cost him so much political capital. Maybe it would have been easier for him to immediately issue an order, "Don't ask, don't tell," which is ultimately the way that issue came out.