Well, first of all, I dropped all my Republican clients when I went to work for him. He was my only client at that point. And you have to understand why Bill Clinton had the staff that he had. Clinton has always had a staff of two: Al and Hillary. That's his staff. And anything he doesn't do himself, he works with those two on. And about 70 percent of what goes on in his presidency, he does himself--or he has no involvement in. But 70 percent of what the president does, Bill Clinton does himself. And the other 30 percent, he does with Al Gore or his wife Hillary.

And his staff was not a staff that he used in the traditional sense of the word, to help him work. They were really representatives, ambassadors to different factions in the Democratic Party. Stephanopoulos was there because he was sort of the ambassador to The Washington Post and the ambassador to Gephardt, on whose staff he'd served. Ickes was there because he was the ambassador to the minority community and the labor movement. Panetta was there because he was the ambassador to the House committee chairmen and the barons in the House and the Senate, from the budget process. Everybody was there as an ambassador to another wing.

In that way, he was a little bit like Abe Lincoln. Lincoln and Clinton had a lot in common in the way they were elected: In both cases, they were dark horses. In both cases, they were from small states. In both cases, they were not the favorite for their parties' nomination. In 1860, the Republicans would have rather nominated Seward; and in 1992, the Democrats would rather have nominated Cuomo. So Lincoln and Clinton both had to win the affection and the loyalty of their party, that they really hadn't had. And in both cases, their party controlled Congress.

So Clinton had in his Cabinet everybody that would have run against him for president. Clinton on his staff had ambassadors from every wing of the Democratic Party. Now, as long as that staff was performing and producing in '93 and '94, that was fine, that was great. Their job was to work with the Democrats in Congress, and they were very good at it. They passed a lot. The only bill they didn't pass was health care reform, and that was at the very end.

But then, when it turned out that he needed a different staff, because he wanted to move to the center--because all of a sudden he had a Republican Congress, not a Democratic Congress--he couldn't fire the staff. Because if he fired the staff, he'd be rupturing his relations with his own party. So in a sense, he had to supersede the staff. And that really was what he brought me in for, to create sort of a second level of staff that he would work with, apart from the permanent staff that he couldn't fire.

Beyond these sort of ambassadorial roles you just talked about, there's also another division. And it has to do with what ought to be polled, and what ought to be a matter of principle. And some of the people that we've been interviewing have suggested that your dominance as an advisor came to represent a victory of polling over principle. And there was resentment on that basis, as well.

Well, I think the first point is, you and I are conducting this interview in the year 2000, not being interviewed in 1996. Nightline would have run a feature on Bill Clinton's one-term presidency in 1996, not in 2000, had we not done polling, because he never would have gotten reelected.

I used to say to them, "What's the problem? We're only 34 points behind." When after the '94 election he was a lame duck, there was speculation on whether he was relevant as president at all. In fact, he was driven, I think in Canada, to at one point say, "I am relevant"--like Nixon saying, "I'm not a crook."

And the only reason that he went from being totally irrelevant in '94, to winning the election in '96, is that we did use polling to combine principle and polling. I want to elaborate on that a little bit.

He uses polling the way a navigator uses tacking in a sailboat. If all you do is set your rudder and say, "I'm going to sail for this point," your boat capsizes. Because it's a sailboat; the wind may not be blowing there. But if you say, "I want to get there, but the wind is blowing a little bit to the left, I think I have to go a little to the left," and then it comes about, and you go a little bit to the right; you end up where you want to go.

That's really how he handled it. He would say, "I want to balance the budget and cut the deficit. I've got a Democratic Congress, so I have to raise taxes." "Now I have a Republican Congress, so I have to cut spending. But ultimately, I get where I want to get: I balance the budget."

And I think that the advisors who were around Clinton felt that polling was not a legitimate part of the process of policy formulation, and that's ridiculous. It's an essential part of it. Franklin Roosevelt didn't poll because he had great political instincts. Now we have polls; we don't need instincts. But is that a change in principle? Is it a change in principle that we use a xerox instead of carbon paper? It's of the same order of magnitude.

Well, one time James Carville takes out a piece of paper--and he's with a number of his colleagues--and draws a picture representing Clinton. And he says, you know, "Where does Clinton stand?" And I think, talking to them, you get the sense that there is almost a despair during this point that even his closest advisors don't know what is the core Clinton, what are the beliefs that he holds which are stronger than any poll.

In understanding what is the core Clinton, you can't look for ideology. You have to look for achievements. The core Clinton--If you sat down with Bill Clinton in 1991 and you said, "What do you want to achieve as president?" he would say, "I want to reduce welfare by half, I want to cut crime in half, I want to end the budget deficit, I want to reduce the student loan rate, I want to increase home ownership, I want to raise per capita income, I want to bridge the gap between the top fifth and the bottom fifth, I want to have a positive balance of trade, I want to lower tariffs around the world, and I want to reduce the number of conflicts throughout the globe." That's how he would talk, and that's how he thinks. And he sees goals, not ideologies.

You know, Felix Rohatyn--I think he was credited with saying, "The difference between the French and the Americans is that the French value ideas above facts, and the Americans value facts over ideas." And Bill Clinton in that sense is the ultimate American: "Don't tell me if it's liberal or conservative, or capitalist or socialist. Does it work to accomplish my goal, or doesn't it work?"

And when they said, "We don't know where Bill Clinton stands," he stands where he needs to stand to accomplish the objectives he has in mind. And when you look at his legacy, he accomplished every single thing he set out to achieve, and then some.

Sometime in the spring of 1995, you urge that Hillary Clinton change her role in the White House. What was that advice, and why?

It became very clear to me at the end of '94 and the early month or two of '95 that there was a zero-sum game going on between Bill and Hillary, in terms of the public's eyes. The public was unable to accept the idea that you would have a couple with two powerful people in it, and that their power would reinforce one another; and the stronger one was, the stronger the other would be, and the stronger they'd both be. Maybe that's not how their individual marriages worked; but they couldn't accept that. There was a zero-sum game: If Hillary was powerful, Bill was not; if Bill was powerful, Hillary was not.

And the public liked very much the Hillary Clinton that would go out in public and defend women and children and fight for her agenda. What they didn't like was the behind-the-scenes Hillary who would vet nominees for Attorney General, or who would make suggestions for the Cabinet, or who was the person who would formulate the inner working strategy on different issues, like health care reform. And they became very suspicious of that Hillary.

But more importantly, Bill Clinton could not be seen as strong until Hillary Clinton was seen as weak. Because the public assumed that the power belonged to one of them. It couldn't belong to both simultaneously, in their view.

And therefore, it was very important for Hillary to kind of assume much more of a lower profile, and to focus much more on public advocacy than private machinations. I, in fact, felt that it was not a good idea for her to hide. I felt it was a good idea to talk about things like Agent Orange in Vietnam, or the Gulf War disease, or breast cancer, mammograms--issues where people would like her and identify with her on. But not to be seen as the power behind the throne.

Even so, there was no question she was the power behind the throne in the White House.

Oh, no, she wasn't. In '93 and '94, she was. And in '98 and '99, I think she was. But in '95 and '96, she absolutely was not. She was completely out of the loop. She used to have to come to me when she wanted an appointment for somebody and say, "Please talk to my husband to get Ann Lewis appointed communications director."

The relationship between Bill and Hillary oscillates based on the political facts of the moment. In the aftermath of Gennifer Flowers, she had tremendous power, and she was a crucial element in the White House in '93 and '94. But after the defeat of '94, which was largely--which Clinton in his own mind attributed largely to Hillary's health care proposal, and the sort of left direction, Hillary had very little power in the White House in '95 and '96: never came to strategy meetings, was never involved in any of the major decisions, and really was out of the loop. She came back into the loop after Monica Lewinsky, and then she really in effect took over. It was kind of a silent coup. But in the period of '95 and '96, she was nowhere in evidence.

She was still important enough for you to worry, according to your book, about when you were on her bad list. I mean, you talk about there being no colder experience in the world than being frozen out by Mrs. Clinton.

Well, I had always had a good relationship with Hillary. In fact, she was instrumental usually in bringing me in from the cold after Bill had screwed something up, to try to get it right. And we had always had a good relationship.

In January, a book by David Maraniss came out called First in His Class, that quoted me as saying that Hillary wanted a swimming pool built in the Arkansas governor's mansion, and that I had talked her out of it because I was concerned about the political backlash--which is a true, if somewhat innocuous, story. She was very mad at me for doing that, and February, March, April, and May, didn't talk to me; wouldn't take my calls, wouldn't return my calls, and I had nothing to do with her.

I would send her memos every week or two of advice, and she would take it. And at one point, I called Bill and I said, "You know, I've always had a good relationship with Hillary. She's not talking to me." And he would say, "She's not talking to me much, either." And I would say, "Well, you know, I know that I'm not long for this world if I'm not in touch with both of you." And he said, "She takes your advice." And then I had a comment that maybe was a little too smart. I said, "Yeah, I leave the food out at night, and in the morning it's gone. But I have no relationship with her."

Then I was meeting with Susan Thomases one of Hillary's closest friends. And in the middle of the meeting, lo and behold, Hillary called Susan, and she wanted to speak to me. What coincidence. And from then on, we talked constantly.

What was it like being frozen out for those few months?

Well, I was frozen out during a period in which she was very removed herself. She was shattered by the '94 defeat, unnerved by it. At one point in December, or November of '94 , we were talking on the phone, after the defeat. And she said, "Dick, I'm so confused. I just don't know which end is up. Nothing works any more. Nothing that I do works. I just don't know what to do. I just don't think I have any political judgment any more. What do you think I should do?" And she was unnerved, and she really needed a period of retreat.

I also think that that was a period of some difficulty in their relationship. And I think that during that period she was basically sort of out of the loop for everybody, and then came back in. I think it was me, but I also think it was her relationship with her husband at that point.

You also talk about incurring the president's wrath at different times. And one of the examples that you gave was, you had leaked a story to David Broder of the Post, and the president calls you up.

Well, yes. This was kind of a ceremonial thrashing, I feel. I had worked with the president on his speech for a balanced budget, and he had given that speech. And I had been one of the people who was fighting for it. And it was over the objections of his staff, and they knew it was over their objections.

And I had called Broder and I had given him kind of a spin as to what I thought the strategic goals the president was trying to achieve were. So Clinton kind of gathered all of the staff around, and picked up the phone, called me up, and yelled like hell at me. And I kind of got it midway that this was sort of a performance for the other people in the room. And there's some stuff he said that kind of indicated that. So that wasn't a real thrashing. But I have gotten real thrashings from him.

What are they like?

Well, one of the most telling was ... David Maraniss came out with his book, First in His Class, in early 1995, which was really the best biography of Bill Clinton. And in it, I had quoted to him how Clinton and I had worked together in the 1978 campaign for governor; not just on the governor campaign that he was running in, but in the Senate race, to defeat Jim Guy Tucker, who was ultimately Clinton's successor as governor of Arkansas.

And he called me in a fury, in a rage. He said, "What did you talk to Maraniss for? What did you tell Maraniss?" And I said, "I told him that you and I worked together on the negative ads against Tucker." And he said, "Why did you tell him that? Can't I trust you? Can't I trust anybody? Why are you doing this?" And he was really screaming. I was at a restaurant, and I had to hold the phone away from my ear.

And I said, "What are you mad about? You ran against Tucker in '82, and we ran negative ads on him up the gazoo. What are you hollering at me about? '78 was tame compared to '82." And he said, "He knows about '82, but he doesn't know about '78!" And I said, "You're the president. He's the governor of Arkansas. What do you care?" "He controls the state police!" screamed into the phone.

And I said, "I'll take care of it." And then through an emissary I sent word to Tucker apologizing, and Tucker sent back that it was no problem. And got that back to Clinton, and he was calmed down. But it was significant to me because of the nerve that it touched, in light of the subsequent investigations; but also, in terms of the temper. It was the first time he'd ever really screamed at me--Well, the second time. I had a run-in with him in 1990. But the temper is something new in his personality. He really did not do that in the 1980s. It was in the '90s that that began to develop.

You develop a theory that comes to be known as "triangulation" after the '94 elections. And just very briefly, what was your thinking?

Well, we were locked into a very sterile conflict between the left agenda and the right agenda. And it was like going into a restaurant and not being able to order a la carte. If you wanted to have pro choice, you had to vote for the Democrats and accept high taxes. If you wanted to have pro life, you had to also accept government--less environment. There was a coupling here on both sides that was inappropriate.

And I felt that what you should do is really take the best from each party's agenda, and come to a solution somewhere above the positions of each party. So from the left, take the idea that we need day care and food supplements for people on welfare. From the right, take the idea that they have to work for a living, and that there are time limits. But discard the nonsense of the left, which is that there shouldn't be work requirements; and the nonsense of the right, which is you should punish single mothers. Get rid of the garbage of each position, that the people didn't believe in; take the best from each position; and move up to a third way. And that became a triangle, which was triangulation.

For those of your viewers who are into philosophy, it really is Hegelian in concept: the idea of a thesis, an antithesis, and a synthesis. And when we originally discussed it, we did so in terms of Hegel, which we had studied at Oxford. But in American politics, we spoke of triangulation.

In June 1995, the following spring-summer, is the fight over the balanced budget. This is not necessarily the most popular thing on the White House staff. You somehow persuade Clinton that it is in his best interests.

The deficit in American politics was an excuse for both political parties to do their thing. The Republicans used the deficit constantly as an excuse, as an issue to run against the Democrats and talk about fiscal irresponsibility. The Democrats would always talk about protecting Social Security and Medicare, and pretend that any budget cut that balanced the budget had to eviscerate those programs. And both parties found it so convenient, that they didn't want to get rid of it.

And I felt that in opposing the Republican budget cuts, we had to make clear that they were not necessary to balance the budget; that you could get rid of the deficit, as we in fact have done, and still preserve Medicare, Medicaid, education, and the environment; that you could cut the Post Office, or the Department of Labor, or minor programs, without really getting into the stuff that people cared about.

And I told Clinton that I felt, "No amount of rhetoric will convince people of that. You have to actually produce a balanced budget without cutting these programs." And the staff was opposed to that. They were liberals who I think for the most part really didn't want the deficit to go away. They were having too good a time with the deficit. Because as long as there was a deficit, they could run against the Republican cuts.

I felt that was just continuing a sort of World War I static dialogue of one against the other, and that what you needed to do was to show there was a way to balance the budget without cutting those programs. So I urged him to give a speech explaining that to the country. And every member of his staff, except Erskine Bowles, opposed that. And ultimately, he decided to do it.

Later on that year, the president moves toward a series of smaller themes. You talked about giving that advice in '94. But beginning in 1995 there are things like school uniforms, which seem to be coming out of nowhere. And for people who wanted them to take big ideological stands, this was another example of a president who seemed to be practically a Republican.

Well, people wanted him to build walls. But to do that, we had to use bricks. And education is a good example. He made a series of very minor, very tiny proposals: school uniforms, values ratings on television, an offensive against teen smoking, higher standards in the school, 100,000 extra teachers, gun control on school property, a whole host of these things. And when you put them all together, they amounted to a very significant education program.

My point to him was that you have to go brick by brick. You can't do the whole thing all at once. I also felt that there was a very important role for the president to be a leader in proposing things that he couldn't necessarily do. Education is, again, a very good example. The president has no real power over education. But he has the power to influence America's political climate, so that the education issues which are determined at the state and local level can be affected by the rhetoric the president is pushing.

This really is part of a broader theme, which is the formal powers of the American presidency have largely atrophied. He doesn't run the economy any more. The Federal Reserve Board does that. He's not really commander-in-chief of the armed forces, because he can't incur casualties without slitting his throat politically. The power to tax is a theoretical power. If you raise taxes, you're cooked in America today. The power to regulate: People are strongly against government regulation.

So you have to replace these formal powers with the informal powers that Clinton brought to the presidency: the ability to persuade, the ability to float issues that kindle enthusiasm at the grass roots and change politics up and down the spectrum. And it's in that context that you have to look at what I call the "bite-sized achievements."

In the fall, the big issue in '95 is the government shutdown. You're polling at this time, at what moment can you tell the president that taking a goal line stand is going to help him? Because the president's instinct, according to everybody we've talked to, is "Let's cut a deal."

Bill Clinton is like a sparrow: He likes to prepare his nest. And he gathers twigs and branches. And when his nest is just right, he sits in it. And he'll stay in it till hell freezes over.

In May and in June of 1995, he was building his nest. That was the balanced budget speech. It was crafting an alternative position that reached a balanced budget, but didn't eviscerate the important programs. And he was at the same time developing a method of protecting his nest. And that was raising money for television commercials that would explain his position to people, even if the news media was not really covering it.

And when he had completed both of those missions, it became very clear to him that the viable strategic course was to settle in his nest and wait everybody out; and that he would win the budget shutdown, because he had properly positioned himself.

Now, that's not to say that at any given point in that process he wouldn't have jumped at a budget deal. He wanted one, and I was almost frantic to try to help him get one. And ultimately, the deal that he offered to the Republicans in '95 and '96 was the same as the one they accepted in '97. We just had to go through an election, and they had to learn the reality that they couldn't get their way on everything.

But the president was always very decisive when he had carefully prepared his position. And you have to see the balanced budget speech, the money for TV advertising, the soft TV ads that everybody criticizes, as essential to the positioning that permitted him to make that goal line stand on the balanced budget.

Was he moved by how the public was reading it? In other words, you were doing overnights in that stage. And at some point, you were able to go in and tell him, you know, "This is working."

From the very beginning of the process in early August we told him, "This is working," to stay firm, not to move, throughout August, throughout September, throughout October, throughout November, throughout early January--all of that six-month period of the confrontation.

We kept telling him two things. The first is, "Your position is well prepared, the people understand it, and they're supporting you." But the second thing is that, "In the crucible of this fight, you are getting rid of your weakness image."

From the very beginning, Bill Clinton had two big problems: a third of the country thought he was immoral, and a third of the country thought he was weak. Now, we couldn't solve the first problem, but we could solve the second one. And the budget fight was a way of solving the second problem. Because in the course of resisting those budget changes, in the course of taking that two government shutdowns and not blinking, he convinced people that he was strong, and it solved his most solvable problem. Still couldn't solve the morality one, but we sure could solve the weakness one.

During this time, you keep a back channel open to Trent Lott, the Majority Leader.

Right. Well, Clinton always wanted a deal. He always wanted an accomplishment. He felt that if he balanced the budget, he would win by 20 points, and he was right. The reason he has high job ratings now--after all of the scandal, after all of the impeachment, after all of everything--is the tremendous stuff that he accomplished in '96 and '97, in basically, almost singlehandedly, producing a balanced budget with all of these programs protected. And he knew that that was the big political goal.

Now, Bob Dole was the leader of the Senate, and he had one agenda, which was to get elected president. And to do that, he believed he had to stop Clinton from achieving a balanced budget. But underneath him, you had Trent Lott, who was the number two in the Senate and no friend of Bob Dole's. He had won that Whip post over Dole's objection. And he was not looking at Dole getting elected president. He was looking at reelecting Republicans to the Senate. And he realized that, unless they produced some achievements, they wouldn't get elected.

And Lott understood that his candidates running for the Senate were more incumbents than they were Republicans. And Clinton understood that he was more of an incumbent president than he was a Democrat; and that ultimately, if things worked out, the incumbents, be they Republicans or Democrats, would both be helped to a new level of popularity.

And I was constantly working with Trent, to get him to sort of try to sell to the Republican leadership that point of view. And the key audience was Gingrich, who was increasingly realizing that this confrontation was undermining his capacity for leadership, undermining his reputation and, as it turned out, destroying his political career.

And as he began to realize it, he began to feel that it was necessary to come to a deal. But he could never really bring himself to pull the trigger. The deal was always just elusive, and the real problem was that Dole didn't want it.

Did you keep the back channel to Lott a secret? Or was that well known among the White House advisors?

Well, I reported every single word, both to Clinton and to Lott. They both told me, "Tell the other everything that I'm telling you. There are no secrets between us." And I did that.

I never told anybody outside of Trent and the president what each was saying to the other. But the White House staff was furious that I had this back channel, because they wanted all those communications to go through them, so that they could sabotage the budget deal.

Because their philosophy was very different. They said, "You're absolutely right, Dick. If you have a budget deal, the Republicans will get reelected to the Senate, and the Republicans will get reelected to the House, and Clinton will get reelected president. But we won't get our Democrats to control the House and the Senate." They were Democrats; I was a "Clintonista." And my job was to help Bill Clinton get elected; and their job was to try to get the Democrats across the board elected.

And you didn't care if the Democrats controlled the Congress.

I didn't care at all. In fact, I feel that it was in many ways better for Bill Clinton if the Republicans did, because it permitted him to get rid of the craziness of the liberals in the Democratic Party and go with the centrist achievements that I think have worked so well for the country.

Which was treason to people on the White House staff.

That's right. As I said, the people on the White House staff were more ambassadors from the Democratic Party than staffers who were loyal to Clinton. And at some point, the interests of every president clash between his role as an incumbent and his role as the head of the party.

As the head of the party, if your party is in the minority in the House and the Senate, you don't want anything to pass, so that you can run against a do-nothing Congress--like they do now in 2000. Democrats have sabotaged everything for the last two years, so that they could take control of Congress.

On the other hand, if you are the president, you want to accomplish stuff, because you want to have a record as an incumbent. And it doesn't much matter to you who else gets credit for it.

For someone like Leon Panetta, former Congressman, loyal Democrat, this is almost the ultimate act of disloyalty: a senior advisor to the president openly suggesting that it's better for Clinton if the Republicans, not the Democrats, take over Congress.

No, well, I never said that publicly. And I never really said it to Clinton. And I'm not sure I really believed it at the time. But I did feel that I didn't much care who won the races for Senate or Congress; my job was to get Clinton reelected. And the best way to get him reelected was to do a good job for the country. And the best way to do that was to make a deal with the Republicans and get stuff through.

If we can fast-forward to the time when Bob Dole left as leader, and Trent Lott became leader, at that point we passed a whole series of important legislation for the country: minimum wage increase, portability of health benefits, immigration reform and, most important of all, welfare reform.

It's those achievements that, A, permitted the Republicans to keep the Senate and the House but, B, permitted Bill Clinton to get reelected and keep the high ratings that he's had throughout his second term. That was a two- or three-month period of such incredible achievement in the legislative process that it's really the shining moment of the eight-year presidency, and has set in motion the high ratings and the successes that he's had.

Back up a little bit. Before Dole gets the nomination, one thing I wanted to go over- Clinton is not worried about Bob Dole becoming the Republican nominee. He's worried about who?

Colin Powell. Clinton was apoplectic on the subject of Colin Powell, terrified of Colin Powell. For three months, all he could think about was Colin Powell. And he would talk about the press giving Powell a free ride, that the press is promoting Powell's candidacy. And he was going through all of that.

This was when Powell was doing the book tour?

The book tour, right. And I did a poll which showed that Powell could defeat him for president, but that there's no way he'd win the Republican nomination. That when you told Republican voters that he was in favor of affirmative action, that he was in favor of gun control, that he was essentially pro choice on abortion, that he favored immigration, when you told them those positions, they ran screaming.

And this was a situation where you had a candidate that could win the election, but couldn't win the Republican nomination. So I told Clinton, "Don't worry about Powell. He's not going to run, because the polls are going to show him that he can't win the nomination. And he's not going to go into a fight he can't win."

And sure enough, Powell dropped out, saying that it was family issues. And I don't mean to disparage that, but the fact of the matter is that he couldn't win the nomination. And that was a vast relief to Clinton.

How involved is Bill Clinton in the ads that you're making for the '96 campaign?

Oh, very involved. Clinton really saw them as 30-second speeches that he was giving to the country. Most of the ads featured him speaking for much of the ad. And he would work very carefully on every comma, every dot, every "t"--dot every "i" in the advertisement itself. And he loved doing it. He was very good at it. And he did that throughout '95 and '96.