In February of 1993, just as the pressure to get this economic plan out is building, there's also a sense among some that things aren't working as well as they should. There's a Camp David retreat. The political people and economic people go. Tell us a little bit about that retreat. I was there, and I think there was a feeling that the new administration needed to come together, and have its senior people talk their way through a little bit how they're working together, and where they were going. There may be different views as to how successful that was. My own view is that it didn't accomplish very much, and I think that, in many ways, these were just the natural start-up difficulties of a new administration. After all, what you had was a president who was, in effect, the chief executive officer of the largest economic entity in the world. He had to get his whole entity up and starting in one day, with people who, for the most part, never been part of this entity before. That is a major, major undertaking. I personally thought we were doing pretty well, but there were some who felt that it needed to have people come together a little bit, and that was the purpose of Camp David. I suppose some people felt it was successful. Was the White House staff, at this time simply too "green," too young, too inexperienced? The White House of that period did a far better job than it has been given credit for doing. One reason for that discordance between the job it's perceived as having done and the job I think it did, is because it did it in a way that Washington isn't accustomed to. Mack McLarty, the first chief of staff, was extraordinarily effective at getting people to work together. While there was a fair bit of roilsomeness, there also was a basic coalescence and a basic mutual undertaking. Without it, I don't think we could have gotten that first budget done the way we got it done, and gotten it enacted the way we got it enacted. The same thing was subsequently true of dealing with Japan and NAFTA and a lot of very difficult issues, with a process the president put in place. Mack's execution of that process, and support of that process, resulted in the White House working in a different way than Washington had seen before in many respects. In February 1993, the president has to tell the nation that he's going to have to raise taxes. What do you remember about that day and your advice to the president about how he ought to frame that decision? When you say that the president had to tell the nation he was going to raise taxes, what the president said to the nation was that income tax rates would go up on the top 1.2 percent of taxpayers. There would be a gas tax increase that would amount to about, if I remember correctly, about $36 a year for an average family of four, and that there would be a Social Security tax increase for the top 15 percent of Social Security recipients. So it was a very carefully targeted tax increase, and there was an increase in the corporate tax rate. It was almost entirely at those who could most affect to pay it, in order to get this economy back on track. That was the message that we thought that the president needed to get across, and it was our view that he should do it in a very serious, and substantive way, which he did in that February speech. Some of the political advisers wanted to see that tax increase using much different rhetoric. Paul Begala wanted to sell that tax increase as we're "soaking the rich." Yes. There was debate on the very day that the speech was delivered. The morning of the day speech was delivered, there was a draft running around. I remember saying to Hillary, "I think the president's got the substantive measure part of the message exactly right. But I do think there's a little question here of tone, and I think the president has to decide exactly what tone he wants to have." Hillary and I went down to speak to Paul, who was sort of the "holder of the pen." We went over sections of this with him, and, basically Hillary said, "Let's make sure that we don't have a divisive tone to what we're doing." She made an enormous contribution to avoiding what I think could have been a counterproductive tone. What was her role at that time? Hillary was there a fair bit of the time. She's very smart. Powerful? I wouldn't say that she was powerful, at least in anything that I was exposed to, other than the sense that she's smart. She would have points of view, and she was in some meetings and not in other meetings, and when she was there and expressed a point of view, it was a contribution to the process. Although you just told a story in which she wields her power pretty effectively, if she's the one going down to tell Paul Begala what ought to be in the speech and what ought not to be in the speech. We went down to speak to Paul. We went through this, and talked about various phrases and how various things should be done. But, ultimately, all that went to the president, and then the president saw alternative ways of presenting these things. And he had to make a decision about what tone he wanted the speech to have. In some of the books that have been written since, and in some of the reporting that's been done, you get some of the blame for health care reform. "Rubin didn't think it could work the way it was laid out. It was too expensive; too many unanswered questions. But he didn't want to stand up to Hillary." I don't remember seeing that, but I think it would be an inaccurate characterization of what occurred. I think that the president's and Hillary's and Ira Magaziner's perceptions with respect to the health care system were, in many respects, basically right. Our health care costs were a very large percentage of GDP relative to other countries. It was increasing rapidly, and there were large numbers of uncovered people. This was clearly a dysfunctional system. There were a lot of debates about how to best approach this, but what the president and Hillary wanted to do, and Ira, was to bring market forces to bear on how our system worked. It's clear, in retrospect, that this was just far too big an undertaking for the political process to do all in one fell swoop. But I think their perceptions to what was wrong, and quite a few of their observations with respect to what should be done about it, were about on track. And as far as the debate is concerned, it's a matter of record that Laura Tyson and I, and to some extent, Lloyd Bentsen, at various times felt that various proposals that were made needed to be reexamined and reanalyzed. Ultimately, the president made a decision as to what he wanted to do. With health care being one-seventh of the economy at this time, did you think that basically they were biting off far more than they could chew? I thought, and I still think, that a lot of what they thought should be done about it made sense. There was never adequate debate about whether it should all have been done at one time -- if that were politically possible -- or whether you should have eased into it, so that you could see how pieces of it worked before you did other pieces. In retrospect, it would have been a good debate to have. Independently of the substance, the politics clearly turned out to be that you couldn't do all this at one time. Although you agreed with the analysis of the Clintons on what was wrong with health care, you had some genuine problems with the plan that they were developing? In the initial proposals that were put forward, there were a number of us who had some reservations. There was a report on the front page, I believe of the New York Times, about a very large meeting. It took place in the Roosevelt Room with the president, Hillary, and quite a large number of staff people. Laura Tyson and I, principally, argued that pieces of the program needed to reanalyzed, and perhaps to some extent redesigned. In fact, substantial changes were made after that. My own instinct in all of this is that a lot of what they talked about doing would have made a lot of sense, had it ever been enacted. I do think that probably the politics became impossible. But had it not been for the politics, you could have taken their basic proposal, and worked from it to something that would have been substantially better than we have today.. Even though deficit reduction is being emphasized during this period, the president is perceived in many ways as a liberal. How was it that this new president, who is adopting your policies, became perceived as such liberal? The president wasn't adopting my policies. I am absolutely convinced that the president was elected with an internalized view that he had to deal with this immense deficit and debt loads that he had inherited. I think if you look at what the president did in the time that he was in office, and the measures that he proposed, and the strategy he proposed, I'd say he was an economic pragmatist. Why people label him as a liberal is sort of a political message issue, and I don't have a good answer to that, other than that was a tendency -- particularly in the business community -- to operate on the presumption that anybody who's a Democrat is likely to be somewhat liberal. But if you disassociate the president from his label, and look just at what he's done and what he proposed doing, I think that you would say that, with the exception of health care, this was an economic pragmatist. In early summer of 1993, the president reportedly is in a funk, and his confidence is a bit shaken. According to the Elizabeth Drew book, "He was so low that Bob Rubin asked a cabinet officer to please try to cheer him up." What was that story about? I don't remember that instance. I'll say this. I think it may be fair to say that the president is probably the most resilient person I've ever worked with. And I have worked in other circumstances with people who've had to deal with enormous pressures. But there may have been individual instances where it was useful to have somebody go and provide some encouragement. That would be true of all of us. But I think when people look back on this presidency, and they say, "What was this man about? What is he as a person?" I think "resilience" would be one of the characteristics that they're likely to identify. It's an interesting choice of words there -- resilience. . . . It seems that this White House and this president have been characterized, time and time again, by going to the brink of disaster, only to pull it out of the embers. I would put it differently, though I don't think it's inconsistent with what you said. If you look at the economic policy issues, he made a succession of judgments, or succession of decisions -- the 1993 deficit reduction program, NAFTA, and the Mexican support program as three examples -- that were very, very difficult, politically. Clearly, in each case, he put himself in a position where there was a very real risk of political failure. But he had the strength, and I would say the resilience, because there were times when things looked pretty bleak, in, in all of those three situations. But he had the resilience and the strength to fight for these proposals, and, ultimately, to be successful. Had he made easier decisions, politically -- though I think decisions that would have been less good for the economy -- then he never would have gotten near the kind of extreme political difficulty he would have had, if he had lost in any of these measures. Was there something about Bill Clinton himself that led the White House to seem to lurch from crisis to crisis? I'd make two comments in that respect. One, the president was willing to make very tough political decisions that, in many ways, had not been made for a long time, and for good reason. They were tough. And if you're willing to make tough political decisions, then you are putting yourself at real risk, and he did that on a consistent basis. Those were exactly the right decisions for the nation, but they did expose him to a succession of political risks. Once he said to me, "I sometimes tend to express the complexities of issues in public, and people might prefer to have somebody ride up on a white horse and announce what they were going to do." That might have given people a little sense of, to use your term, lurching. I don't think it was lurching at all. I think it was a man who has an enormous ability and an orientation toward seeing the complexity of things. That's extremely good when it comes to making good decisions, and sometimes did it in public, in ways that people are not usually accustomed to seeing. How did Vince Foster's suicide in July, 1993, affect the president? . . . Vince struck me as a very sensible, very sound individual. I remember thinking to myself, before he died, that this was somebody that I'd like to go to and sit with when there were difficult things that I wanted to just talk out. I think it was a great shock to everybody and I'd include myself in that, even though I didn't know him that terribly well when he committed suicide. I don't think it had an impact on the functioning of the administration but I think it had a very strong emotional impact on a lot of people. Later that summer, in August, the deficit reduction bill finally passes the Senate, but it is a harrowing day. Yes, it was a harrowing day. In the House, it passed by one vote. I remember being in the Oval Office the night of the vote, and a little television screen there showed the floor of the House. It showed the count as it was building. We were sitting and watching that vote, and it was, to use your term, harrowing. But, ultimately, it passed by one vote. I think there was a sense of very great unease as we watched it, and then of course in the Senate; it was a tie, and then the vice president cast the tie-breaking vote. In the Senate, the key senator is Bob Kerrey, and he's missing. Quite a number of people were uncertain at various stages. But as you correctly say, in the Senate, in the final analysis, Bob Kerrey did seem to be the critical individual. There was a fair sense of unease until Bob made up his mind, what he was going to do. Were you, at that time, worried that the thing might not pass? All of us were concerned. Substantively, we felt that if it didn't pass, it could be a terrible shock to the economic system, including the markets. And, politically, if it didn't pass, it obviously would be an enormous setback to the president at the very beginning of his presidency. That, once again, makes the point that he took a very tough path, politically, because he thought it was right, economically. He could easily have taken a more moderate deficit reduction path and not have to face this kind of political difficulty. In September, 1993, the NAFTA debate heats up. Different people in the White House have really different views about whether NAFTA was the right thing to push at that time. Many of the political people were really against the idea that the economic team was pushing. My view is not complicated. I think that our own open markets, and opening markets abroad, contributed enormously to the economic conditions of the past seven and a half years, and NAFTA was a part of that process. It was a very good thing to do for this country. Our own open markets -- although it's not politically popular to say this -- resulted in lower prices, more competitive pressure in this country, greater productivity and all the rest. The president, despite the enormous political difficulty in pursuing this trade liberalization agenda, has done so from the beginning of the administration with NAFTA right through the China WTO accession. Did you want to put off health care in favor of NAFTA? I don't remember it being framed quite that way. The decision, as I recollect it at least, was made was to go with NAFTA, to try to get that done quickly, and at the same time, to move aggressively with health care but in a way that was consistent with working on NAFTA. I do not recollect whether that meant some deferral of the health care effort or not. Mrs. Clinton, at this time, reportedly is angry with you and members of the economic team for suggesting that health care be put off while NAFTA is pushed. That may or may not be. I truly do not recollect it. Clearly, if you were going to have a full court press on NAFTA, you couldn't, at the exact same time, have a full court press on health care. But how much that delayed actively moving ahead with health care, I do not recollect.