We had 48 to about 72 hours to plan this historic moment. We pulled up all the tapes [and research files] on Camp David, organized the event, because you have the foreign ministers, the heads of states, who would walk in, et cetera. We had it all down. And the handshake is a very important moment, because in the history of Camp David, as Carter leans to Sadat and Begin and does his handshake, they put their hands together, which was a symbol that I think came out of those two weeks leading up to Camp David.

We don't have those two weeks. This is a moment that's literally thrown on the world out of Oslo. And so we had thought it would be wrong to imitate that handshake because Oslo and Camp David were not the same, number one. Number two, then you're just imitating and then you would get questioned on the imitating. And we knew also that picture would be a picture of memory. And prior to this Rabin and Arafat had not met unlike Begin and Sadat. So I proposed when we were meeting that we needed to come up with a handshake that reflected the spirit of the moment as well as the president's intentions.

And then someone jokingly said, "Well, Rahm, why don't you play Arafat." ... And John Podesta played Rabin at that point. And so we kind of shook hands and we were trying to figure out how the president did it. And so what we decided was the president first do Rabin. He would do Arafat. And rather than turn from one to the next the right thing for him to do is to lead the introduction, since they had not met prior to that literally two minutes in the depth room before they walk out on the red carpet.

And so what he wanted to do was introduce them introducing themselves to the world. And that's why he ends up standing back with his hands grasped. And you can see the fingertips beyond the two bodies. And so that was the role and the moment we were looking for.

It became its own handshake. And the reason it was powerful was that it didn't try to imitate Camp David. It used the precedent of Camp David, but it gave its own real meaning and reflected the truth of that moment, which was they had not met each other. And the president was going to introduce them to each other as representatives of the two respective peoples and publics. And I think that's why that picture stands the test of time, because the picture is honest to the moment.

They were actually asked to shake hands before.

Yeah. I think [Rabin] intellectually knew what he was doing was the right thing. I think he was physically uncomfortable [and] it reflected also the ambiguous feeling of the Israeli public. So he could reflect both their intellectual as well as their physical reactions, which were quite contradictory. And I think that's what made him a strong leader at that point. And he was asked before [to shake hands] and he said no. But when the president stood back, it could have failed because if Rabin said, "No, I'm not doing this," or Arafat said, "No, I'm not doing this," that moment would have collapsed of its own weight. And it could have collapsed of its own weight and it could have succeeded of its own effort. And because they did reach to each other, it worked. And it reflected they were meeting each other and that we were embarking on something new. And that's why I think that moment captured the truth of what was happening....

What were you thoughts at that moment? And the reason I'm asking you is, George writes that at this moment he thought it was the single most inspiring thing that he had been part of.

I told people not to clap or high five because there will be a lot of people in the audience who, as we clearly know, will have ambivalent feelings. And that if this just looked like a political event or felt like one -- and I think to everybody's credit, this was something beyond that. And to this day, I feel tremendous appreciation for the president to allow me to be a small role and part in that process....

Later that year the big fight is about whether or not to have a balanced budget. And this is something that the Democratic administration had not really ever struggled with before. Is there another ideological fight within the staff about whether this is something that we ought to be doing?

...The president [was] clearly determined that he was going to propose a balanced budget. And remember, in this process still we're fighting against the balanced budget amendment, but that we would propose a balanced budget. There was no ifs, ands or buts between him and the vice president on this. And [there were] elements of the staff that were opposed to it, said you couldn't do it. That was the last gasp and he had decided "I'm not having an intellectual ideological debate inside administration between whether I'm a New Democrat or an Old. I ran as one, and that is who I am. That is how I governed as governor. Those are the policies, those are my ideas, those are my principles and that's how I'm going to govern." And I think once he made that turn, I don't think there was every again kind of the open review of whether we're going to be X or Y or where we're going to sit on the kind of ideological spectrum.

Was there more, even more passion with the welfare reform debate within the White House?

Yes. And there should be. It was a big tough call. Bob Rubin was opposed to signing the welfare bill. He's not exactly what I call a flaming liberal. Leon Panetta, who if you remember his early days in the Congress was seen kind of as a moderate Democrat, he was opposed to it. When you're making a decision like that -- and I was for it and others were for it -- you should have an honest debate. And I think that debate served both the decision-making well, et cetera....

[How was the Oklahoma City bombing a critical moment for the president?]

Because I think the dark side of both America and some of the worst elements in America were allowed to be given voice to. And I think the public perceived it as that. ... Early on, remember, people are criticizing him for being a prime minister, and not a president. Oklahoma is that moment in which he emerges dogmatically and in his voice as a president. And I think the American people can see him there. Reagan did it in the Challenger blow up. I think in Oklahoma this president was a unifier. And it was a critical moment where we were looking in at ourselves and we saw the enemy. And he was able to bring out in a very dark moment of revenge I think the better angels of our spirit as a country. And I think that voice is crucial to a president. And he had found it....

Moving ahead to the government shutdown. He's got this extra capital, perhaps because of Oklahoma City. And things are turning around in the administration. It's a better year for the administration in a lot of ways. What turns it against the Gingrich Congress when you come down to those negotiations? When do you know that you get the upper hand?

There were three things. Newt becomes the face of it in the beginning. Two, he overreaches the role of the Office of the Speaker and tries to make it a prime minister which the system can't absorb. And third is the president's own tone of accommodation versus their obstruction. It is that combined picture that turns the tables....

Did you talk to [Hillary] during this week [she testified before the grand jury]?

Yeah. But Mrs. Clinton is not going to show even the closest of confidants any sense of weakness. And I don't think she would show that around the staff, because it could have an impact. And so I can't give you an honest answer. I mean, she was around. It's not like she was hiding. But I couldn't give you an honest answer of how she [felt.]...

Was there a sense among you and the political staff that at this point it's war with Ken Starr?

Well, I don't know if I'd use war, but it was clear that this was a battle to the end, to the finish. There is no doubt about that. Yup.

And the grand jury-

Yeah. Now I may be hanging a lot here, I know, but that moment in which [Hillary] is called in and around the State of the Union is a critical moment in changing the way the White House felt it was being treated by the Independent Counsel and what the intentions were.... [There] was no doubt that this was not being conducted purely on the level of seeking the truth. That there were political intentions and motivations of that office. They were timing things for political impact. And we were going to politically engage, yeah.

You say '96 is kind of sweet?

It is a sweet victory. It's a real sense of our accomplishment, his accomplishment.... I know that sense that a lot of people had written this guy off a lot of times. The biggest emotion was the victory, the sense of history, a part of it, and the political accomplishment of it. I'd been involved in politics. I like politics. And there was a political accomplishment, a win.

Through this presidency, even from the announcement, there was always a sense of headwind. People wrote him off through the Gennifer Flowers, through the draft experience, the gays in the military, the '94 election, and he had defied the oddsmakers again. And so there was that own sense of personal mission we were on and then once again being there.

He was the "Comeback Kid" again?

Comeback Kid--there's no doubt about it. One of the great things that the president has is people underestimate him all the time. I could probably write a good handbook for his opponents, the unbelievable amount of times they underestimate him, his determination.... His opponents always miscalculated the most central element of his being. He's the most determined person I've ever seen in my life. And I think I'm pretty driven.... I don't think they make that mistake anymore.

There was also a sense that he lurched from crisis to crisis. That there was always some kind of near catastrophe, there was kind of a lurching from moment to moment. Why did this president have a presidency like that? Why was there so much danger? Is it something about who he is personally?

Well, at one level you can drive it to him. But we're probably coming at it from different ways because he has fierce political opponents who are determined to sidetrack him. Second, he isn't a president that lays back. He throws himself into it. I'm not sure a lot of presidents [after] getting a trade deal decide they're going to take all their political capital and try to roll it on the Mideast peace agreement in the eighth year.

If you're doing this purely by where and when and how you spend your political capital, he has gone to the table a lot more times than where people would have said,"take your chips and go." ... And some people say he's just doing it for his legacy. He's got enough [in] my view. This guy goes back to the table and plays a lot more times where other people are taking their chips off the table. So your sense of going from crisis to crisis -- there are crises, but there's determination to spend. And part of it is we create our own. Because he decided to not take the political easy course. There are other crises....

In January of '98 the [Lewinsky] story first breaks on "Drudge" and then in the Washington Post. When it first breaks, what is your sense?

...Twice a week [I] bike 12 miles on a stationary bike. I think that was the fastest Wednesday morning bike ride I ever had in my 12 miles. Because I got up about 5:30 in the morning and read the paper. And I'm reading, and I read the headline in the Post. And I think I pedaled pretty quickly that day. So that was my first reaction. I don't remember Tuesday night knowing that it was going to break Wednesday morning....

Did you believe it when you read it?

No. I didn't believe it.... I'll cite everywhere I believe what I said then which is I couldn't quite get the relationship between researching a 24 year-old real estate deal plus researching a 24 year-old woman. I said that outside of the fact that both of them were 24 years old, I didn't understand the correlation between the two. And I always thought [Ken Starr] was doing a real estate deal, at least that's what I was being told for the last five years. ... That's how I thought then which is kind of not different than what I think now....

What did the president tell you?

Well, he came over to the Oval. This is how I remember that morning. And Nancy said, "The president wants to see you." And I said to him, "Is this true?" And he said it wasn't true. And I said, "If this isn't true, you better get your head in the game. We have a fight here." And I said, "Because a lot of people are counting on us."

When you found out it was true what was your feeling?

Well, you act like there's a moment you find out it's true.

Well, there must have been a moment when you did.

Well, yeah, I mean, I think there's different aspects of this story. To this day I don't believe he ever told anybody to lie. I don't think he ever advocated to her or told her to lie. That's not the person I know....

McCurry said, and I think it's kind of an accurate way to phrase it, "If it wasn't complicated, we would have had the answer early on." So, I mean, I kind of knew that. If it wasn't complicated, you would have known the answer. It's clear it was not a yes or no. It was a more complicated question and it was a more complicated answer....

You've been serving this man for many years. The president tells you it's not true. In fact, it is true. The president lies to you. What were you thinking then when you found out the president had not told you the truth?

Well, what did I think then when I realized he hadn't told me the truth? I'm not parsing words, but my view is probably when I asked him "Is this true?" he was probably answering the question about -- because if you remember the headline, it was about the suborning perjury.

Oh, come on, Rahm. I mean --

Give me a second. I'm not giving him any grace period here, okay? I think this is the nuttiest, dumbest thing to do, okay. And I said that. He took an amazing amount of risk with his presidency and with all of us. There is no doubt. I have said it to him. He's said it. I'm not saying anything to you he hasn't said. It's a foolish thing.

...In retrospect I know exactly what he was doing when he was answering me. I'm not just saying I'm happy, disappointed, I was mad or upset. I'm not just giving you a rationalization. I'm thinking through. You asked me "What was he doing?" I'm sure what he thought is he was answering the question I asked him about the subjugation of perjury truthfully, knowing full well my question asked about the entire story. I'm not giving it any grace. I'm just telling you I'm sure that's what he was doing. And I'm guessing, but I'm positive that's how he could say to me in a clean way.

You're telling me you don't believe the president lied to you?

I think I'm being pretty clear. No, that's not what I'm saying. I know he wasn't being honest with me. And I know when he said that, he wasn't being honest with me. And I'm not trying to rationalize what he said. I think I'm being quite clear about all that.

I guess what I'm asking you is what effect did this have on you? I mean, you're a loyal staff member.

... I'm more angry about involving himself with her and putting the presidency at risk than telling me the truth about it.... I'm more upset about the being voracious and being honest with me. I'm more upset about having taken the risk and the foolishness behind that.

On the other hand I'll tell you this. I said it then and I'll say it now and I'll say it the rest of my life. I do not believe the government has the right to investigate somebody's private life. And so when you ask me what I feel, and it's not a single moment, but through that entire twelve months when on the worst of days for me, I believed I was fighting against the right of using the most powerful law enforcement agency in this country to investigate somebody's private life. And if you can do it to a president, you can do it to any American. And I will tell you my grandfather did not come to this country, nor did my father come to this country to see that happen. And so, yes, I made a lot of rationalizations....

As this dragged on and it was clear the president was going to be impeached, was there a point when you thought "This is it. This presidency is on the precipice."

Well, I mean, the first five weeks, the first five months, the first five minutes, you know, sure.

You thought it was over for Clinton?

Well, yeah. I mean, yes. I didn't think you could topple a government for a personal act to be honest. ... And thank God for the American people. Because in the end they kind of had a sinking suspicion that ultimately you were not throwing a president out, no matter how foolish the act was, for sex....

What about the day the president testified before the grand jury from the private residence? James tells us that he runs into Mrs. Clinton. Mrs. Clinton asked James to help. What's your mood at that point and feeling among the staff with whom you were close on that day?

I don't want to dress up anything. The fact is you're in that moment. We're all very driven people. And you have a job to do. And so it's not like you get these moments that you step outside your body. I mean, you got a speech to write, a decision to make on whether we should, in fact, address the country. You've got a huge amount of testimony, his testimony. You have the event. And you're not naive or absentminded to history. There's a few of us, you know, Erskine, Doug, Paul, John, myself, on the kind of political side, on the legal side who are essential to holding the place together and keeping the agenda going as well as managing this other issue.... It was a decision internally, Erskine, the political operation and the lawyers, [that] Paul would be the designated writer if we were going to give a speech. The decision was up to the president after the testimony whether he wanted to give one....

The late afternoon, early evening after that grand jury testimony in the private residence, you see the president and Mrs. Clinton. What's their demeanor? What do they say?

...I think he seems relieved that it's over. Nobody quite believes this when you say it, but she's not withdrawn. She's quite out there. She's making jokes about certain questions that they asked and what [the lawyers] were pursuing....

There's a point when he takes a break and after about 45 minutes or an hour of this, he wants to take a break. He will give a speech. We make that decision, but he needs some time. Now, a few of us knew [that] the time he takes is basically to deal with bin Laden.... And what we really were doing was giving him some downtime to meet with some of the national security people.

James Carville tells us that when he sees Mrs. Clinton in the solarium it's obvious that she's been quite upset, that she's been crying and she asks James for his help. Was there a sense that that was a very difficult moment for Mrs. Clinton?

James may have the right memory. But as far as I remember Mrs. Clinton was talking about -- I think they asked ridiculous questions about the sunglasses and stuff like that. So I remember her and the lawyers telling us about that whole exchange. So I don't see that part of Mrs. Clinton. But that's not a part of Mrs. Clinton's going to show in a wider audience....

Let me say this. If that was her mood in the solarium, we all would have felt that. That's not the mood I remember in the solarium. Doug, Paul, Erskine, John and I are up there, plus the lawyers, her, and James. I'm probably leaving some people out, but that's not the mood I remember. But she may have been just like that when she probably saw James on another floor where other people were not around.

Is there heated discussion or debate about how conciliatory the president should be or what his tone should be?

The draft that was presented at that point, I think by Mickey, had a much more confrontational tone to being subjugated to this. Not exactly an irrational reaction. On the other hand, I think the draft that Paul was asked to write struck the tone of both the responsibility, the apology, and accountability --it had a strength to it in that area. And then there was a discussion and a debate and an argument about what was the right one. And then, you know, kind of compromised and balance those out, et cetera....

I remember Doug and I looking at each other and said, "Well, there's something screwy. The lawyers are back there working on the draft with the president, and the political people and the communications people are the ones leaving."

Well, you guys lost that argument.

Right. We did lose that argument. [The speech] was true to what the president wanted to say. I just think that it had some of what Paul said, but not enough of the draft that Paul had. But, you know, hindsight is perfect....

The Starr report comes out and then all the lawyers come out. Is the reason that the lawyers were out and not you guys because you didn't want to have to defend that behavior that was documented in the Starr report?

Well, not defend. I think there's also a sense [that] after a certain point we had lost some credibility. This was now more legal. The questions were going to be more in the legal arena and [the lawyers] needed to, you know, show up and put some time out there....

What was the tension between the legal and the political team during that scandal? What was the sort of cause of that? You had different jobs, I know.

We had different jobs, different responsibilities. I mean, we thought we had a public opinion, political battle. Not that they didn't think they had that as well. But they also had a client and a legal mind frame. And it was making the political and the legal world work together. Or when they weren't working together, which one was the priority....

You know, maybe I'm naive. I don't think [the lawyers] were being malicious in an attempt to deceive, or whatever. But they had their own balance and understood that we were all trying to balance competing needs here.

How would you characterize the relationship between the administration and the press? Not during just this period, but--

...As an institution, bad. With individuals, good. That's how I characterize it...

Did that carry over from the campaign? Were relations bad because the campaign had been, to a certain extent, defined by scandal? Was there an "us" versus "them"?

Oh, it was bad. Some people note the mistake -- and it was clearly a mistake -- of banning the press from upstairs as stupid and wrong. I put it farther back. You guys kept writing him off, and he won. And we wanted to take a victory lap in the end zone and, you know, and pound the ball. Big mistake....

If you want to capsulize this president, what is his legacy to you?

I'm sure a lot of people talked about the economy. So I don't want to. There's no doubt the economy stands as a major accomplishment both from deficit to surplus...

I think if you look at his presidency, there's three to four areas, and I'll try to tick them off. One, his follow-through in ending welfare as we know it. He changed an entitlement. And the early on prognosis of that is it's been very successful. I think we'll have good and bad days ahead of it. But he changed a way the government dealt with a part of American people. I think he's instilled the right values. He put work back at the center of it. And even parts of the bill that he didn't like, he changed them in form. And I think it was one of the most major domestic changes that will be felt -- as we did when we created the welfare system -- it will be felt equally for the 60 years....

The second major change is higher education in America.... Pre-president Clinton, the only commitment the federal government ever had to higher education directly was to poor and low income people. And through the tax code, $10,000 and the Hope Scholarship, he created a new middle class entitlement for higher education. And no Democratic president, no Republican president, no Democrat or Republican Congress will ever take that away. They will never dare the political wrath that will have. And we have more Americans now going to education -- both junior college and four-year college and beyond -- than ever before. And I think the reform to making the financial cost not the prohibitive factor is instrumental in that. Ending an entitlement and creating a whole new one.

The third piece I would say is in the area of civil rights. I don't think it's a coincidence that African-Americans refer to this president as the first black [president]. I think they have felt [a] more integral part of this community. And I extend that to gay and lesbians. If you think back in the '80s, how we treated AIDS and [those] who had AIDS, to today where gay Americans are part of the political system, part of our culture. That is both in the tone and the temperament of this president. He has made a whole part of this country not feel outside, but inside. It was not easy, but I think his temperament and his sense of justice permeated that debate.

And then lastly, you know, a lot of people are going to talk about Russia, China, the Mideast, Bosnia, Ireland. We are the dominant country both economically, culturally, and politically.... And I think if you look at our relationships to our allies and to the third world countries, that we have accomplished a great deal without stoking those fires of resentment that are just sitting there because we are the dominant country economically, militarily, and culturally. And managing both that resentment and that dominant enigmatic power position is not easy. Regardless of whether you talk about China, Russia, whatever area of the world, how you deal with that resentment and that power is the most central force. And I think the president, because of his political skills, handled it unbelievably well.

If you ask me ... the four areas I said: in the area of foreign policy, in America's power and its resentment in the world for that power; his sense of civil rights, of making a part of America who was excluded included; welfare reform; and higher education -- those are my areas of where I think his lasting legacy will be remembered for. It's not to say that it's not the economy. If I said that, it just doesn't hold up to the test of water. I think those are the really the forgotten areas...

What is the biggest change you've noticed about him in the eight years, the most striking thing to you?

You know, I think his ability to laugh at his opponent, not take their criticism personal, but able to kind of laugh at them.... I don't know if the president early on could enjoy that. And I think it took him a while to realize they were his political opponents and they opposed him for a reason. And I mean, those were real disagreements and he was quite comfortable where he was and he was quite comfortable not to be where they were. And I think the biggest change is not making that a personal thing that he had to win them over.