In an Uncertain World (19 page)

That's a good example of how distortions can stick when they aren't immediately and decisively rebutted. In reality, the income tax hike in our plan affected the top 1.2 percent of Americans and, I imagine, a somewhat similar proportion of Californians. The tax that did affect middle-income Americans—the gas tax—was tiny. I remember thinking at the time that a small energy tax could give us credibility in the markets, precisely because of the conventional wisdom that it was dangerous politically. But I hadn't realized how that very small gas tax could be used—or, more accurately, misused—to portray our program as a middle-income tax increase. Most of my colleagues also missed it, although George Stephanopoulos and some of the other political advisers had been very concerned about precisely this point.

One political issue we faced was whether to use class-laden language to sell our program. My view was that such rhetoric was inadvisable for multiple reasons. A key episode in that debate occurred when I saw a draft of the President's address for the joint session of Congress. I was disturbed by the tone of some of the rhetoric and went to Hillary, my office neighbor on the second floor of the West Wing, to make my point. Hillary not only agreed, she marched me down to the Roosevelt Room, where Paul Begala was working on the speech. She stood over Paul's shoulder as he rephrased the problematic passages.

Even talking about “the rich,” it seemed to me, had an unnecessary normative connotation, suggesting that there was something wrong with having been successful financially. This objection was not an expression of class solidarity on my part; I thought that discussing tax issues in terms of who should pay was entirely appropriate and a necessary part of any serious tax debate. My only issue was the choice of language; polarizing rhetoric could undermine business confidence in President Clinton and his policies. That confidence was crucial to achieving strong economic performance. And while no political expert, I felt that the politics wouldn't work either, because middle-income people didn't respond well to disparagement of economic success, and such language risked alienating the economically most successful as well.

My alternative way of presenting our tax increase was to argue that the affluent had done very well in the 1980s, while middle-income people had actually lost ground. The best-off should therefore bear a substantial part of the burden of reducing the biggest negative economic legacy of that decade, namely the deficit. And in fact, the upper-income individuals whose taxes were increased seemed for the most part to take it in stride. I remember telling the President that I knew many people with large incomes, and when I went back to New York, I didn't hear much objection. Nobody likes to have his taxes go up, but I was surprised at how little complaint there was.

In contrast to wealthy individuals, the business community did object vigorously to a 2 percent increase in corporate rates included in the original proposal. I remember in particular one visit I paid that spring to the Business Roundtable in Washington, D.C. I told these corporate leaders, quite a few of whom I knew personally from my days on Wall Street, that we were doing exactly what the group's members had long advocated—reducing the deficit. But most of these business people believed that deficit reduction should come largely or exclusively from spending cuts, with very little, if any, increase in taxes. I argued that we had to operate within a political system in which existing programs had powerful constituencies and often served important purposes, even if most business people didn't rate those purposes highly. As a result, there were limits on how much spending could, or should, be cut. Without help from the revenue side, powerful deficit reduction simply wouldn't happen. We expected further spending reductions through greater efficiency, but that was a longer-term process being pursued through the Vice President's Reinventing Government initiative and, we hoped, through reforming government health care programs.

This reaction was, in a way, typical. Business people often have unrealistic expectations of how much the outcome of a political process can—or should—resemble their ideal solution. If you offer business people 75 percent of what they want—on trade, workplace safety regulations, taxes, or whatever else—they'll tend to focus on the 25 percent they can't have. They may be willing to strike a bargain in the end, but they often don't tend to recognize either the validity of objectives different from their own or the realistic political limits. And the same is generally true for interest groups of all kinds.

More surprising to me than the Business Roundtable's response was the reaction of some in Congress who did understand the political process and who had always been strong advocates of fiscal discipline. Instead of crediting our attack on the deficit, they tended to dwell solely on the tax increases they didn't like. In fact, the deficit reduction in our plan came half from spending cuts (including interest saved by reducing the level of national debt) and half from tax increases. In our Roosevelt Room meetings, we had struggled to maintain this principle of balance. But to many of the longtime deficit hawks in Congress, the tax increase was all that mattered. The gas tax was a particular point of contention. I remember one Democratic senator telling me that a gas tax any higher than 4.2 cents per gallon would lose his vote for the plan. Practically, that didn't make any sense—why support a four-cent increase but not a five-cent one? The price of gas could fluctuate more than a nickel in a week of free-market movement. But politically, people were scared to death of the issue.

The first sign of serious trouble was Congress's defeat of the President's stimulus package in April. The stimulus package played a useful role in a deficit reduction program, because the deficit reduction measures in the budget could take quite some time to develop credibility and have an impact on the economy. Compared to the deficit reduction, the stimulus package was tiny—$16.3 billion versus $496 billion—but the stimulus provided a near-term insurance policy if the program wasn't succeeding quickly enough, in which case Congress might lose patience with deficit reduction and reverse course. I argued that the more you cared about long-term deficit reduction, the more you should be in favor of the short-term stimulus package. As it turned out, we didn't need the insurance. Economically, the defeat was relatively insignificant, but politically it was perceived as a major setback for Clinton. The President had asked for something, and Congress, controlled by his own party, had refused his request.

The defeat of the stimulus package cast some doubt on the prospects of our larger economic plan. The story of that legislative battle, culminating in a two-vote victory in the House and a fifty-fifty tie broken by the Vice President in the Senate, has been well told elsewhere. As those votes were being taken, a group of us including the President, Bentsen, McLarty, and Panetta crowded around the TV in the President's private study off the Oval Office, unsure of how the House would vote. The next day in the Senate, the fiftieth yea was that of Bob Kerrey of Nebraska. The last holdout in such a situation has considerable power: typically someone in that position will ask for some tangible benefit for his constituents. But Kerrey wasn't looking for anything like that. His demand was for a presidential commission to study the future of entitlement spending. We agreed and breathed an enormous sigh of relief. Had the President lost on his initial budget, not only might economic recovery have been stymied, but, as Mack McLarty said, the whole Clinton presidency might have been imperiled.

CHAPTER FIVE

White House Life

WORKING IN THE WHITE HOUSE sometimes felt surreal. With the exception of the Oval Office and a few other key spaces, such as the Vice President's office and the Cabinet Room, much of the West Wing was cramped and shabby. Our NEC offices on the second floor were nondescript, lit with fluorescent lights and filled with ragtag office furniture that looked secondhand. But the people who met in the West Wing were the key officials of the U.S. government. I'd be having a normal discussion with some people around a conference table and it would strike me that this nice man, Warren Christopher, bore the title Secretary of State; that fellow whom I'd known for years, Lloyd Bentsen, was Secretary of the Treasury; and that bright, argumentative fellow over there was the Vice President. And what we were discussing didn't affect just my company, but the fate of the country and the world. Every so often I'd stop and think to myself,
My God, I'm sitting in the Oval Office having an argument with this guy I know, Bill Clinton, who is President of the United States.

After a few seconds, though, that slightly otherworldly sensation would pass and I'd return to the discussion as if these people didn't have those titles. Even though the stakes were enormous and I cared greatly about the issues, I generally went to work and did my job, as I would have anyplace else. But then I'd pass by South African President Nelson Mandela in the hallway or see PLO Chairman Yasser Arafat shake hands with Israeli Prime Minister Yitzhak Rabin and be struck all over again. Then Gene Sperling would wander in with a decision memo and the spell would be broken.

In an environment where many tended to push themselves forward, my natural inclination was to stand back a bit. Erskine Bowles, who joined the White House as a deputy chief of staff in 1994 and tended to take an anthropological view, told me that what happened inside the Oval Office was sort of a rugby scrum to get up next to the President. Even in the smaller meeting in the chief of staff's office that followed the large morning staff meeting in the Roosevelt Room, some people would cluster as close to the head of the table as possible. I always liked to be away from the center, whether in the Oval Office or the chief of staff's office, where my regular seat became the foot of the table. That little bit of physical distance felt more comfortable to me, and let me read the room and comment from a perspective ever so slightly removed. I didn't worry about being overlooked. No matter how far away you were sitting or standing, you could always just say, “Mr. President, I think this, that, or the other.”

This distance afforded a clearer view of Clinton's relations with others inside and outside the administration. Evident to me from the first was Clinton's unusual skill as a listener. He could relate to someone else's point of view in a way that made that person feel not just heard but understood. Listening in that way was more flattering than ordinary flattery; here was the President of the United States, and he really cared about what you had to say. And this was not calculated or phony. Clinton was like Gus Levy with clients at Goldman Sachs, able to make people feel like the center of his world because they were the center of his world while he engaged with them. The President's charm, like Gus's, lay in the fact that he meant it. Moreover, Clinton processed what he heard. He would make comments referring to what someone had told him days or weeks before. And his views reflected his considered reactions.

This is part of what could captivate people about Bill Clinton but could also lead to a certain amount of misunderstanding. Clinton listened so sympathetically that people who were unaccustomed to him often took it as duplicitous when he later came out against their positions, as with Newt Gingrich in the crucial budget negotiations of 1995, when the Speaker mistook Clinton's comprehension and engagement for assent. By that time, I had seen enough that I could tell where Clinton really was. Sitting in White House meetings over the years, I would say to myself or to someone next to me, “That person is going to think Clinton is leaning toward his position. But he's going to get a big surprise, because Clinton doesn't agree at all—that's just how he listens.”

From his own staff, the President expected candor, and my approach was to tell him what was on my mind—though in some cases diplomatically. Clinton specifically told us during our Little Rock transition meeting, “If you all don't tell me what you really think, I'm dead.”

That comment reminded me of what John Weinberg had once said to me at Goldman Sachs: as a CEO, you have a special place in the minds of your subordinates. People in your own organization have a natural tendency to pull their punches around you, to soften the bad news and try to tell you what they think you want to hear. Because you're a bit of a king, you can easily get an unrealistic sense of the wisdom of your own views and your merits as a leader. (Walter Mondale once told me that when he was Vice President and then his party's presidential nominee, everyone laughed uproariously at his jokes. Then he lost the election and realized he wasn't so funny after all.) To keep a realistic sense of yourself and to make well-informed decisions, you have to go out of your way to make people feel comfortable disagreeing with you.

A President faces these problems in the extreme. But Clinton meant what he said in Little Rock and worked to draw out disagreement with his own views. And contrary to what I've heard and read about some administrations, the people around Clinton generally said what they thought. The instinct to pull punches was often present, but most of us resisted it most of the time—although some more than others.

People outside the administration were a different matter. From time to time, business leaders would meet with me and express strong criticism of one or more of the President's positions—and on some issues (tort reform, for example) I agreed with them. But when the same people met with Clinton in the Roosevelt Room or in the dining room in the residence, they often either muted their opposition or even sounded supportive of those policies. Then, when I'd later tell Clinton that the business community disagreed with those positions, he'd respond, “Bob, what are you talking about? So-and-so was here last week, and he didn't say that.” I always encouraged those who met with him to be frank, and he encouraged candor as well. But frequently that didn't work.

Disagreeing with the President may also have been harder for people who joined the administration later. Some of us who had known him as governor of Arkansas remained comfortable approaching him in a certain way. But a President acquires an aura that can inhibit challenge, and some of those who signed on in later years seemed more affected by it. Midway through the second term, when I directly and strongly expressed disagreement with the President in a Cabinet Room meeting over his reservations about applying conditionality to debt relief in Africa, I caught a look of sharp surprise on the faces of some officials who had little contact with him.

One of Clinton's characteristics that could be upsetting to people who weren't used to him was his temper. Once when I was in the Oval Office, the President blew up at Roger Altman over a health care issue. A few minutes later, the two of them were talking as calmly as ever. People who worked in the White House soon learned that Clinton sometimes vented his frustration in an explosive way, but that those outbursts didn't mean much. His anger was like a tropical storm. It blew up suddenly and then went away.

Despite working closely with Clinton for six and a half years, I never developed the kind of close personal relationship with him that others in the administration such as Mickey Kantor, Ron Brown, Vernon Jordan, and Erskine Bowles had. We had an easy, informal working relationship, but I was never somebody the President called late at night or palled around with on the golf course. This measure of personal distance never interfered with our working relationship and, in Judy's view, might even have been helpful in some ways.

   

WORKING IN THE White House was preoccupying like nothing else I'd ever done before, in part because it was always with me. The issues I was dealing with were often on the nightly news and in the newspapers. While at Goldman Sachs, I hadn't exactly left my cares at the office when I went home at the end of the day, but I hadn't had to live with the ever-present public focus and spotlight of Washington.

And that spotlight has a strong tendency to be critical. On any issue, partisan opponents might be trying to make my job more difficult, in part through ad hominem attacks. On top of this, the media tended to be critical and emphasize conflict. Tony Lake, President Clinton's first-term national security advisor, who had served in two prior administrations, told a group of us early in the first term to expect the press to write stories—whether well grounded or not—about who was up and who was down, which could create divisions among us. Tony said we had to keep working together and not to let those stories get to us.

But that was sometimes more easily said than done. Howard Paster, the administration's highly effective first congressional liaison, made a very shrewd point after he was criticized in a few stories. Recalling Tony's comment, I told Howard that such stories come and go and that he shouldn't be concerned. But Howard, who had been a very successful lobbyist in Washington for many years, said that once the press views you in a certain way, that view tends to stick. Being human, none of us was able to put media criticism completely out of mind, but different people reacted to this media environment in different ways. Some became highly focused on how they were perceived and seemed largely driven by a focus on perception—which, ironically, seldom worked. Others were better at putting issues of perception into perspective and concentrating on their substantive and political objectives. I was generally fortunate in my press coverage at the NEC, which may have made it easier to absorb the criticism we did get.

Washington's critical spotlight added to the stress of an inherently uncertain White House role. At Goldman Sachs, Citigroup, or any other company, you have a job and a role. Whatever your title may be, whether CEO or clerk/typist, you have an idea where you fit into the organization. Positions may have some fluidity, but they also have fairly clear definitions. For someone working in a senior position at the White House or one of the cabinet agencies, by contrast, it was never entirely clear what your role—or anybody else's—was.

On a daily basis, this uncertainty could manifest itself in the question of what meetings you were going to be in. Struggles about who would be in the room were frequent and sometimes ferocious. I once called Sandy Berger, who succeeded Tony as national security advisor, about a meeting I hadn't been invited to. Sandy, who sounded stressed, said it was fine for me to come. Then he sighed and said that he sometimes thought his main job was deciding who got into meetings.

The larger uncertainties related to what effect you would have in your job. An administration is a President-centered universe; your title didn't define your influence on the President's decisions—and that influence could change at any time. That ambiguous and unstable structure may help explain the constant, intense jockeying that seems endemic to most administrations (though ours probably had less than most). Everyone felt it, although people reacted in different ways. For me, an additional issue was whether people native to the political world would think that I “got it.” The President said to me shortly before his inauguration that the health care task force was going to operate under Hillary and Ira Magaziner. “You're going to be the strongest person in the White House, and you've got to help me make this thing with Ira work,” Clinton said. And I thought to myself,
You know, that's a ridiculous thing to say. I don't know about the White House; I don't know about Washington; I don't know how to do any of this stuff. I'm just hoping to be relevant and have an impact.

I was not a fan of efforts at formalized camaraderie within the administration. In the middle of our putting together the economic plan, the Clintons invited the entire cabinet and the most senior White House staff to Camp David for a weekend of bonding and discussion of strategy. The concept—which was the Vice President's—might well have been good, but the event itself was pretty awful. Saturday night, after dinner, we sat around in a circle, and each of us was supposed to talk about something the others didn't know about us. The President talked about having been overweight when he was in school and how everyone had made fun of him. When my turn came, I said I didn't have anything I particularly wanted to share. By that point, Lloyd Bentsen had wisely gone home for the evening.

I arrived in Washington knowing a good bit about how Wall Street worked, and some of what I knew was very useful. But I also had a strong appreciation for how much I didn't know about the ways of Washington. My chief asset in navigating this unknown terrain was recognition of my shortcomings and a readiness to learn. I subsequently saw others pay a price for having a different attitude. Sometime during the transition, I took a walk down Pennsylvania Avenue with another new administration official who had never been in government before and was coming from the private sector. I was talking about how difficult and complex this new world was and about how much we outsiders had to learn about it. My future colleague said, “Bob, you and I know how to do things. We'll do them the same way down here that we did them at home.” Applying the rules of business to politics was his formula for success. I told him that I didn't think our life in Washington was going to work that way. As useful as our background was likely to be in certain respects, much in Washington was very different.

Steve Silverman, a staff member who worked in Cabinet Affairs, once said to me, “You know, some of us from the campaign were afraid that people like you, who came from big positions in the outside world, would be the big feet and that we'd be kicked aside.” He was pleased that the administration hadn't turned out that way, but I would never have dreamed of thinking like that. I was an amateur coming into a world of professionals. People such as Gene Sperling and Sylvia Mathews were impressive to me because they knew so much more. In this new realm of government and politics, I was, in a way, their considerably older junior associate.