Leon Panetta told us that, when he was still at OMB, he'd come in to the White House, and he couldn't believe all that people in meetings. He said that there was every low-level person from OMB, there were interns, and he found it incredibly chaotic. What are your own memories of those early days and those meetings? Many of those meetings were very large. There were people sitting around the table and then in chairs behind the people sitting around the table, and then people standing next to the walls. It was like a little theater. And if you're working in any large organization, particularly if you're working in the United States government, if you're working in the White House, wherever you are, you want to be included. The big issue is: who's included, who's not included? And given Bill Clinton's predilection, and his chief of staff's predilection was to bring them all in. . . . It's good to have everybody know what's going on; it's good to have consensus. We need to have a broad team. This was almost a kind of 1960s mentality, you know? I don't want to be derogatory here. I don't think it's bad to be 1960s-ish about meetings. But it was kind of, everybody's here and everybody's part of this, and we're not going to have hierarchies, strictly speaking. Can that work in the White House, with the leader of the free world? It really can't work, and the president came to the decision ultimately, in fact, not that far into the administration, that these meetings were too big, they were unworkable. There were leaks. If you have that many people in a meeting, obviously, somebody's going to want to tell the press to boost up their own ego. "Gee, I have some interesting information I'm going to tell the press so the press will think I'm very important." But it's very hard to get any work done when you have so many people who can speak up or who have points of view. Shortly after the administration took office, you all got in these little buses and went up to Camp David for your first sort of Clinton seminar. What was that like? The Camp David original seminar was almost like a retreat, a kind of a pep rally. We were in very uncomfortable buses, very uncomfortable little lodgings. I remember looking at Lloyd Bentsen, who was kind of regal. He had been a senator. He was obviously used to being treated a little bit better, and the poor man is sitting among a lot of kids, essentially. We're in our 30s and 40s. We're riding this bus up this canyon. We're sitting around these big tables with easels and trying to brainstorm. We had facilitators, not unlike a corporate retreat I think corporations do this all the time. But there's a lot of role-playing, a lot of games, a lot of baring of one's soul. You were each asked to reveal something about yourselves that others might not know. What did the president say? He talked about himself being a fat little boy, and being very self-conscious about it. Others talked about other little vulnerabilities. It was a chance to share our vulnerabilities with one another, and to some extent it was very endearing. It was a very lovely time. We were all, to that extent, quite innocent. I looked recently at a photograph of that original cabinet, and I went around that cabinet table and saw that a majority of the people sitting around that original cabinet table had either been indicted or investigated, or they had left under pretty difficult circumstances or they had died. But at that time, at that retreat in those early weeks, we were enormously enthusiastic, and a bunch of joyful little kids. You write in your book about the retreat -- that ideas were bouncing off the walls. There was also this sense of forced intimacy. It felt a little bit artificial. We didn't know each other that well. In fact, most of us didn't really know each other. We knew that we faced some very, very large responsibilities, the largest responsibilities you can imagine, any of us could ever imagine. And yet we also were playing games. I mean, real games, facilitator-type games, the kind of games you play at a corporate retreat. Yes, it felt a little bit forced. You just mentioned before that you felt like it was almost a bunch of kids. That's been one of the criticisms of one of those early months in the administration -- that the kids were in charge -- and therefore you get Zoe Baird, the gays in the military, the appointment process that was so slow. Was it because there were too many kids in that early White House? I used to get calls from the White House. My assistant over in the Labor Department would say, "The White House wants you to do this," or "The White House wants you to go over here. The White House wants you to go to California." And I discovered that there was not a White House that wanted me to do anything. There were usually kids about 30 or 32 years old that wanted me to do something. So I began asking my assistant, "Find out how old the person is who wants me to go. If the person is under 40, I'm not going to go. Over 40, then we're going to find out if the president really wants me to do something." One day you got hacked off because they wanted you to go to Cleveland. You get a call from the White House, and your staff says "They want you to go to Cleveland," and you are concerned about the age of the person on the other end of that phone. Yes. My chief of staff came in and said, "The White House wants you to go to Cleveland." Well, I have nothing against Cleveland, but I have a lot of other things that I want to do and need to do, and I said, "Well, who exactly wants me to go to Cleveland?" And my chief of staff came back and said, "Well, so-and-so wants you to go to Cleveland. It's not the White House. It's a person." I said, "How old is this person?" It turned out the person was about 31 years old. I said, "I'm not going to Cleveland." I mean, there's no reason that somebody at a relatively low level in the White House should be telling a cabinet officer to go to Cleveland when I have a lot of other things to do. If the president wants me to go, if the chief of staff wants me to go, if some senior advisor wants me to go, fine, but no 31-year-old junior staffer is going to tell me I have to go to Cleveland. But you went? I probably did go. I can't recall the exact details. Ultimately, I usually did the White House wanted me to do. Yes, a lot of people making a lot of decisions in the White House. Very early on during the transition, the president and I had the conversation, "What do you want to do in this administration?" And I wasn't sure, quite frankly, that I wanted to come into the administration. My wife was dead-set against moving to Washington. My young teenage boys were not happy about moving or leaving their friends. And I said that I'd do it. But then the question became, "What are you going to do?" I only wanted to do it for four years. He wanted me initially to be in the White House, and I said, "No. Bill," -- I think I still called him Bill at that point -- "I really would rather not be in the White House. I'd rather be outside." He came up with the notion of the secretary of labor, because it touched on things that I was really very interested in, and had been for many years. But I was delighted not to be in the White House day by day. I had a lot of meetings there. I ended up spending half my time inside the White House. But I didn't want to have an office there. I didn't want to have to answer to somebody inside the White House like the chief of staff. I didn't want to be around the president all the time. It was a little chaotic. For all his talents, Bill Clinton, at least at the start, was not a great manager. He was reluctant to say to somebody, "No," or "I'm not going to listen to you. I'm going to listen only to my chief of staff." He was reluctant to impose a hierarchical order. There was a kind of a "Let a thousand flowers bloom" atmosphere initially, and although that can be very creative, there are costs. Early in the administration, the first piece of legislation comes out -- the Family and Medical Leave Act. Do you remember what the ambiance is when the president is signing that act? The Family and Medical Leave Act was the first piece of legislation the president signed, and it seemed so easy. The Democrats controlled Congress. They wanted it. They had been fighting with Republicans for years. For seven years Bush had vetoed it. Now it was there. The president signed it, and we all had a sense, "Gee, this is easy. You know, passing legislation, there's nothing to it." We were going to learn a different lesson. In February, 1993, the president gives a speech unveiling his economic plan. You're listening to this, and you really have extremely mixed feelings about it. The economic plan that emerged did inevitably have to sacrifice some of the investments. . . The question is what the president wants, what's part of his agenda, what's good for the country. Naturally, I, like many other people, have certain personal investments in certain aspects of the president's overall agenda. Sure, I was somewhat disappointed, because it didn't have nearly as much for education and job training, job skills, and for child health and a few other things that seemed so important to do. But my hope and the hope of others like me, in and around the White House, was that if the economy could grow, maybe there would be an opportunity to do this later. Were you disappointed in the president at this point? "Disappointed" is not the right term. This was my second round in Washington. I had been there in the 1970s. I was not totally naive to the world of Washington. I was personally disappointed that we couldn't do more, but, no, I wasn't disappointed in the president. He was elected president. He's got to make hard choices. Politics is the art of the possible, and he obviously decided that we couldn't do nearly as much as he had wanted to do in the campaign. In April, 1993, the stimulus package is up, and Republicans are filibustering it. You go into a meeting and the president is told what's going on, and he gets really angry. Can you describe that scene to us? The president was told that the stimulus package was just not going to be passed. There was too much opposition. And he was upset. This was the first big blow to his presidency. I think he was upset, not so much because the stimulus package itself was not going to go through. There had been a lot of debate inside the administration as to whether it was a good idea, whether it would really help jumpstart the economy anyway. I think he was upset that, as president, given that the Congress was Democrat, he didn't have enough power, enough authority, to get what he wanted done. Already opposition was forming. Already his ability to change the direction of the country was being challenged, even in his own party. You write, "His face turned beet red, and he starts hollering, "Now, why are we doing everything Wall Street wants?" What's the context there? . . . He felt that the bond traders on Wall Street, the people on Wall Street who were most worried about interest rates and the deficit, were dictating to the administration -- to him -- what he, as president, could do. And I think deep inside Bill Clinton there is, or at least was in 1993, a populist -- somebody who thought of himself as working for the common man and woman, the working people of the country. And here he had something he thought was very important, to get the economy going, and Wall Street had put pressure on to say no. The Federal Reserve Board had said no. Indirectly, through Alan Greenspan, through Lloyd Bentsen, the word had come, "If you do this, it will make things worse." Is there a implicit or explicit understanding at this point in the administration from the chairman of the Federal Reserve? Is there a sense that there is a bargain? "You folks concentrate on the deficit, and I will cooperate on interest rates." We began to sense that there was a signal coming from Alan Greenspan, and from his Federal Reserve Board Open Market Committee, and maybe that signal was coming directly. I suspect it was. I think that Alan Greenspan was talking directly to Lloyd Bentsen, and Lloyd Bentsen was talking directly to the president about it. Alan Greenspan was saying essentially this: "Unless you dramatically cut the budget deficit, we are not going to reduce short-term interest rates. And if we do not cut short-term interest rates, this economy is going nowhere. It's never going to take off. The price that you must pay for us cutting short-term interest rates and getting this economy moving, is you've got to sacrifice your beloved investment agenda." So at this point, Alan Greenspan, the chairman of the Federal Reserve, essentially has Bill Clinton in a vise grip? Yes, Alan Greenspan and the Fed had Bill Clinton in a vise. There was nothing that he could do. He had to begin to fairly dramatically cut the deficit to regain so-called confidence on the part of Wall Street. Of course, the intermediary there is the Federal Reserve Board. Setting short-term interest rates sends a very powerful signal to Wall Street as to how confident Wall Street should be about the willingness of the president to avoid inflation. Here's the dynamic at this point in time. The economy is almost flat on its back. It's slowly coming out of recession. We didn't even know it was coming out of recession. It still looked pretty bad, with unemployment very, very high, way up above seven percent, and in parts of the country it's nine or ten percent. Unemployment, slow growth -- the president knew he had to do something to get the economy going. Was it going to be a stimulus package? Well, many of his economic advisors worried that the effect of a stimulus package would be too slow. The government couldn't spend fast enough to get the economy going, and the stimulus package would have to be too big to really have any market effect on the economy, and we were already deep in debt and deep in deficit. If you had a big stimulus package, you'd go even deeper into debt and deficit. So what you really had to do was count on the Federal Reserve Board to reduce short-term interest rates. That would get the economy going, because then people could borrow more easily, companies could borrow more easily, people could borrow for homes and for cars. That would be kind of an indirect way, but ultimately a much more effective way of getting the economy going. But in order to get the Federal Reserve Board to play ball, the Fed and Wall Street had to believe that Bill Clinton was serious about cutting the deficit. The irony, of course, was that the Republicans had built up that deficit. George Bush didn't have to worry about dramatically cutting the deficit. But a Democratic administration comes to power with the burden of proof against it in the eyes of Wall Street. "You guys, you Democrats, you are taxers and spenders, and spenders first. You are likely to aggravate inflation. The deficit under you guys is going to get worse, and we want proof that you are serious about cutting it before we are willing to play ball with you." Later in the summer, NAFTA takes the fore. You are passionate about this. AFL-CIO President Lane Kirkland is in your ear all the time. Elsewhere in the administration, there is enormous pressure in support of NAFTA. How did the president deal with that? He had you and labor in one ear, and Rubin and Panetta in the other. Well, personally, I was and still am a free trader. I think that free trade is inevitable and overall it helps everyone. But labor was very against NAFTA. And I remember appearing on so many stages in front of various labor groups and being booed off the stage because I was representing the president, and the president was committed to NAFTA. He was committed to NAFTA in the campaign. He said, during the 1992 campaign, "I am going to sign the North American Free Trade Act." What was your advice to him during the debate though? My advice to him during the campaign was to sign it. And then later, once, Kirkland was telling you guys that it was going to be a "f-ing disaster," and you were going to come to regret it. You passed that on to the president. What was his reaction? He shrugged. He was willing to take on organized labor over the North American Free Trade Act. I think the real issue there was what kind of priority NAFTA should get. Should it be one of the highest priorities of the administration in those first years? Should he spend a lot of political capital on it? Should he delay health care in order to get NAFTA done first? And the first lady wanted health care first. She didn't want him to expend political capital on NAFTA. She was concerned, and in retrospect she was absolutely right, that if health care came after NAFTA, then health care might never get done. Already the momentum was building for some sort of universal health care. He had the political capital to get that done, but the business community was telling him NAFTA was more important. And Lloyd Bentsen, the most senior member of the cabinet, and a man of great insight and wisdom and experience to whom the president deferred quite a bit, Lloyd Bentsen was adamant. NAFTA must come first. In fact, I remember Lloyd banging his finger on the table, "We must get this done right away." And so the president decided that that was going to get the priority. My job was to deliver the news to organized labor. And that was not pleasant, but they knew it was coming. Beginning the next year, the Whitewater scandal comes roaring back. What impact did that have on Bill and Hillary personally? How did you see it affect them? I think that they were very hurt by that Whitewater investigation. The first lady was bewildered by it. She had already taken a great deal of heat during the campaign of 1992 for who she was, for how she acted. And she felt hurt by that. The Whitewater investigation, she felt, was unjustified. There was nothing wrong. They did nothing. It seemed to be some sort of a political vendetta. And in the midst of everything else that Bill Clinton wanted to do and the first lady wanted to do, it seemed just a huge burden. You sat next to her at dinner following her one and only press conference in eight years at the White House, the so-called "pink press conference." Do you remember her conversation with you about the way she was being perceived because of Whitewater? I remember that she felt good about the press conference. She had been very effective. That was the word we heard from everyone, all of the pollsters, all the political people, my little free-floating focus group, my wife and sons and friends. Everybody thought she had done very well. She was obviously relieved that that particular press conference was over, but she was also hurt and bewildered, and I think quite pained by Whitewater. It was worse than a distraction. It really it seemed to her to be some sort of almost retribution, political retribution. She didn't understand why, but there was anger directed at her. She was hurt by the anger. How powerful was she in that first term? The first lady was the first advisor, the most important advisor. Al Gore was the second most important advisor. But Hillary Rodham Clinton's influence was on every domestic policy that was important. She was quite interested in labor issues, in education, in job skills, job training. She was most interested in health care, and she just dove into that issue. Was that a mistake, ultimately, when you look back, to have the first lady in charge of revamping one-seventh of the economy? In retrospect, it's easy to be a Monday-morning quarterback. She would probably say it was a mistake. Sure, it's hard for a first lady to be in charge of such a major undertaking, the largest most ambitious undertaking, or at least attempted undertaking of the first term, or perhaps the whole eight years of the Clinton administration. It's difficult under the best of circumstances for anybody to be in charge of something of that magnitude, but for the first lady to be in charge was particularly difficult. She had not been elected to anything. She had not been directly appointed in terms of a formal appointment, to anything. And because she is the wife of the president, it's difficult for people to criticize her, to say, "No, you mustn't do this, that's wrong," because, after all, you're talking to the wife of the president. And so that there was a subtle intimidation that also went on among the people who were working on that project. Did you or any other cabinet officer have the political wherewithal or the personal relationship to get on the phone and say, "Mr. President, this is a bad idea, it's not working?" The economic group, of which I was a member, didn't really know what was going on. The health care task force was meeting in secret, and we only heard rumors. . . . Even though I was the secretary of labor, it didn't matter. We were still not in the loop with regard to health care. Finally, we all got together. Ron Brown and Lloyd Bentsen, Bob Rubin, Laura Tyson and I, and a few others, and said to the president and the chief of staff, "Look, we have to know what's happening here. We've got to be able to evaluate this in economic terms. What we've heard sounds a little scary. It may be right. It may be a good plan, but we want to subject it to some sort of economic analysis, some sort of evaluation." And at that point we did begin to get involved. What was the reaction from the president when he hears his economic team is getting worrisome about his wife's pet project? The president was not pleased that there was potential discord in the ranks. He wasn't pleased about a lot of discord with regard to things that he wanted to do anyway, even if his wife had not been in charge of that task force. But he had already sunk a lot political capital into this issue. He had already been making speeches, he had devoted a great deal of attention to this. He had been involved with the first lady and Ira Magaziner in discussing the details of this plan. At this late stage, for the economic team to nose its way in and start asking hard questions and express doubts, well, that didn't meet with a great deal of joy on his part. During your conversations with Mrs. Clinton at this time, you talked to her about being captive in the White House, and she tells you that she is able, or has on occasion, been able to escape. The White House is a prison. It's impossible for a president and a first lady to get out without being recognized, without being noticed. You have Secret Service people around. Even in my humble outpost at the Labor Department, I was in a bubble. It was hard for me to escape. And you can imagine how difficult it was for them. She said that she occasionally escaped by putting her hair up in a baseball cap and putting sunglasses on, and getting on a bicycle and bicycling on a towpath that still runs next to the Potomac River. She'd have Secret Service people on bicycles behind her, and nobody would recognize her. After all, if her hair's up in a baseball cap and she's got sunglasses on and she's on a bicycle, you're not exactly going to think it's the First Lady of the United States. At one point some Japanese tourists flagged her down, stopped her. They had cameras, and she thought, "Oh, they recognize me." And then she said that she got off her bicycle reluctantly, and one of the members of this little group of Japanese tourists handed her the camera and said, "Would you mind, please, taking our picture?" You say that Hillary Clinton had enormous power. You take advantage of that at some points. You write where you are feeling frozen out, that you are not in the loop, and you use Hillary as a way to get back in. Tell us about it. I could, as a cabinet member, call the president whenever I wanted, but if you want to actually write a memo, it's more complicated. The first few memos I wrote to the president, I discovered, showed up on a lot of people's desks. In fact, that memo was leaked to the press. And I thought to myself there has to be a way of getting to him directly and not going through the bureaucracy, because if I say anything slightly controversial, I'm going to be on the front page of the Washington Post, and I'm going to be in trouble and he's going to be in trouble. I wanted to be able to be free to talk to him, but in memo form. How could I do this? Well, I explained to the first lady my problem, and she said, "Don't worry about it. Just drop your memos off at my office, and I'll give them directly to him." So we had a little back door. And that worked very well. The economic plan finally passes in August of 1993, by one vote. Were you over at the White House when that vote comes in? The economic plan was in danger of going down to defeat. It was very controversial. A lot of Democrats didn't want to vote for even a slight tax increase. The Republicans, certainly, were uniformly against it. The cuts in the budget were tough for a lot of people to take on the Hill. It was unclear that that thing was going to pass. And the White House had set up a war room. Now, remember, there had been a precedent for a war room. That war room had come directly out of the campaign. What is a war room? It's everything that that name signifies and symbolizes. You're in a war. There's an opposition. You want to plot exactly where the opposing armies are, who's in your camp, who's against your camp, who you have to telephone, what you have to do, what ammunition you need to use. And there was a war room for the purpose of getting that budget through Congress and getting those votes. Right up to the last minute, we didn't know that we had the votes. There was a lot of arm-twisting, a lot of holding hands, a lot of reassuring. Some members of Congress, some Democrats who voted for it, subsequently were punished by the electorate. They did not get back in. They were worried, justifiably, about their jobs. And right up until the last moment, in the White House, there was a sense of drama, and foreboding, and hope, and we watched the tally come in, and we saw that we had enough votes. Al Gore went up, broke the tie, and there was then jubilation. We had won. This was a big one. This was a hard one we had won. Do you remember the president's reaction? The president was relieved, deeply relieved. Had he lost, he would not just have lost the budget battle -- he would have lost enormous political face. The message would have been, "This guy cannot deliver." And if a president puts so much behind something and cannot get it done, the president, by definition, becomes weak. This fight and the narrow win by one vote reinforces an idea in Washington that has been with Bill Clinton since the campaign -- that he lurches from crisis to crisis, only to pull it off at the last second. Is there something in Bill Clinton's personal makeup or character that leads to this lurching from disaster to disaster? It's a pattern that we saw over and over again. It is a pattern. Look, everybody wants to be an armchair psychologist with regard to Bill Clinton. It's the greatest national sport there is. And I think even when he leaves office, for years to come there will be analyses upon analyses of this complicated personality. Is he the kind of person that works best under pressure when there's a crisis? Yes. Many people are like that. I have every reason to believe, from what I have seen and from the person I've known for 30-odd years, yes, he works better, indeed best, when his back is against the wall and he's really in trouble in a way. I remember at Yale Law School he didn't study very much until an exam was looming, and boy, when that exam was breathing down his neck, he worked. Those all-nighters, that pressure -- he focused. In July 1994 . . . what does Congressman Newt Gingrich tell you about health care in the House dining room? This is one night that the House is late in session. I'm running around up there trying to lobby to save a little piece of the Labor Department's budget, and I ran into Newt Gingrich and his colleagues at a dining room table, and they were in a great festive mood. Newt Gingrich was starting to feel very confident. . . . Newt Gingrich sees vulnerability, smells vulnerability, smells defeat in the air for health care, and I think he sees himself as the House speaker, sees the Republicans taking over Congress. That's what he said to me. . . . "Page 187: 'Mr. Secretary, your boss is a nice man, but his wife shouldn't be making policy. Health care is dead.'" Cheers and laughter from Newt's table. And he said to me, "Mr. Secretary, health care is going down to defeat. The first lady should never have been in charge. You're in trouble." And all his Republican colleagues cheered him on and applauded. It was almost as if we were in a sporting arena. You know, I remember thinking at the time, "Here we are in the dining room of the House of Representatives talking about something that's extraordinarily serious, affecting 40 million people that don't have health care, and he's quite boisterous about that fact that this thing is doomed." In the brinkmanship leading up to the shutdown, the president was reluctant to push this to the brink, but he was being encouraged to do it. What were the stakes for him here? The stakes were enormous -- not only were the stakes very high in terms of the government of the United States stopping and not functioning, but in terms of all of the people who could have been hurt as a result. Some people were hurt as a result, but the stakes in terms of who would be blamed for such cavalier carelessness, with regard to the institutions of government, were much, much greater. Would he be blamed because he drove the Republicans ultimately to this point, or would the Republicans be blamed because they didn't deliver to the president the appropriations that the president wanted? It wasn't at all clear who would lose that blame game. And the party that lost the blame game would probably lose in the 1996 elections, or at least suffer major setbacks. So the stakes were huge. Newt Gingrich had come to town at the start of 1995 as, in effect, the next president. He was called Speaker of the House, but he almost was inaugurated. He felt at that time just an enormous sense of victory. His Contract with America seems to have been, at least in his mind, endorsed by a majority of the electorate. Bill Clinton had so badly lost ground in 1994. It was a terrible repudiation. And so where is power in Washington? That's the big game. That's the big question. It was with Newt Gingrich. Could he hold onto power? If he held onto power, this presidency would have imploded. Bill Clinton would have been irrelevant. And ultimately, that was the question that was at stake. What was the turning point? Was it the fit of pique that the speaker had on Air Force One coming back from the Rabin funeral, or was it the "spinmeisters" at the White House who were able to tell that story with such great relish to those of us in the Washington press corps? What was the turning point in framing that debate so the president won and Gingrich lost? Gingrich began to look like a power-hungry, power-crazed politician. He began to lose public respect. The incident on Air Force One about him complaining that he wasn't treated well, that he didn't get the right seat, was just one of a number of incidents. I think the press began buying into the story partly because it was spun very cleverly by the White House -- partly because, in fairness, I think that was a true story -- that Gingrich was carried away with himself, was trying to behave as if he was president, and was acting deeply irresponsibly. On top of that, yes, the White House was very clever in how it positioned the president and how it portrayed Newt Gingrich.