The first vote on one of Clintons issues was a defeat, which presaged a lot of the weakness that then afflicted him during 1993. He told me what was going to happen to the Clinton healthcare bill the day it was announced, actually before it was announced. The first thing that we typically do is a quick voice identification so that the transcriptionist will know whos talking at any given time.Im Russell Riley, the project leader for the Clinton Presidential History Project. Speaking out of school? I didnt. I recall taking maybe one or two trips with him outside New York, mostly just for my own enjoyment, to see what it was like. Thats something we dont have a lot of information about. So you can imagine sitting next to Mrs. Clinton at dinner. Bentsen was chosen during the first week of December. But there was the sense, based on conversationsI think you could go back and say that there were some discussions between Bentsen and Greenspan, Rubin and Greenspan, Clinton and Greenspan, although the sum total of those conversations probably took an hour. He doesnt even know about the advent of optical scanners in grocery stores, and that was the theme, that was THE central theme as codified, so to speak, in [James] Carvilles famous comment, its the economy, stupid. Everything is susceptible to being phased in, to being cut back, to being pilot-programmed. I worked in the White House. There was also a very memorable event that was held in the East Room of the White House, and recall that within a week or two of this event, Clintons own position on NAFTA was still up in the air. Yes. The assessment was correct because, I cant recall the size of the economy then, but today it is about $10.7 trillion. By that late stage of the budget battle, all the concessions and fine-tuning that could be made to the bill had already been done, so you had a package at that point that wasnt going to be reopened. I think everybody has a different calculation. I left the White House around April, took a couple of months off, and went back to New York. At the end of the lunch he asked me if I would serve as Deputy Secretary and I said I would. The Clinton years were not in any respect unique from that point of view, but that partisanship for some reason or other seems to go in cycles and we just happen to come into office at a time when the cycle was moving up in terms of the scale of partisanship. We met for six or seven hours in the Governors mansion there. I think his views at that point were in formation. Did he come to you with an idea about what he wanted to focus on with the economy or some of his primary domestic policies, or was this at this point still in the process of being formulated? I thought, All right, well get half a loaf. I think each person makes his or her own decision. Those are two different questions, Id rather answer the will be question. I moved over to the White House, was given a strange assignment, which was to go run this thing called the Summit of the Americas which occurred in December of 94, which was this meeting of literally 35 heads of state in Miami for three days to talk about why you would have a hemispheric free trade agreement. You know, she made comments like I could have stayed home and baked cookies but I decided to be a real person, which served to severely antagonize a lot of traditionalists. Like everybody else, I thought he was finished when the Gennifer Flowers event emerged. How do you think Clinton ultimately is going to be read by historians, this Presidency? That was a factor. Ill never forget, I went in to see one of them whod been shot eight times. Can you tell us a little bit about the second role? You look at the turnover that she hador in her case did not haveon her staff, and the turnover that he had. During the transition period, you are formally involved in the transition effort. Japanese discussions were harder, but the G7 summit was fine, it was easy. He is a trustee of MIT and serves on its Governance Committee. The only other observation that just randomly runs through my mind is, I was always described in the press as an intimate of Clintons and that was just not the case. That was on a Friday evening. And presided over eight years of peace. But I think the most that the Fed can be expected to do is move short rates. They just didnt believe it would work. Ive never either been attracted to that approach nor felt that it was an effective one. Senator Kennedy was for it from day one. Whatever was going on on the deck of the Titanic was comparable, but it was absolutely frantic and incredibly dramatic and tense. But for reasons I dont fully understand, it goes in cycles, and we came into office at a time when an up cycle so to speak on partisanship was asserting itself. Yes. Right as it was up, the Wall Street Journal does a full-page profile on Bentsen, right here on the right. The great Presidents that you mentioned, the ones that loom large, as you said, are all crisis Presidents. I did the best I could. Id met him a few times, but not ever to speak to. And there were obviously a whole host of people who were against it from day one and you werent going to change anybodys mind in the latter category. Secretary Bentsen was too important and had other things to do than to go down to Waco, Texas, and try to figure out what was going on there. I have to admit I didnt. from Georgetown University and an MBA from the University of Chicago. I really believe it was that day that his view changed. Of course it was a very small kind of backwater type of situation, not a big one. Clinton, as we all know, is very open, but also a very undisciplined guy. Its very difficult to do that during a campaign. Chrystia Freeland, Financial Times US managing editor, interviewed Roger Altman, co-CEO of Evercore Partners. That happened, I want to say, late 93, that his nomination was effectively killed. Were there things about those campaigns that you had learned in preparation for this one that proved to be particularly helpful? I just remember that being contemporaneous with the real beginning of an organized effort here. A few questions about that. You didnt have to spend much time around them to see this. Ultimately they were in effect combined into one big wish list, and that wish list went forward. We had wonderful cooperation, at least in the Treasury. Did you know him, you said you hadnt known him before then? Im just saying the Japanese side very much viewed it as a zero-sum game, therefore anything we got was, from their point of view, giving up something. Did he interact comfortably with the other leaders at the summit? The idea of making changes or improvements in the IRS is a pretty tough idea, but you find yourself doing things like that. How difficult was it to do what you were doing in an environment where Mario Cuomo was sort of floating around trying to figure out. But all Im trying to say is if you look at Lloyd Bentsens background, Rob Rubins background, and even to a much lesser extent my background, we knew about monetary policy and we knew about the role of the Fed. It was excellent. So we already had quite a taste of the Congressional dynamic and overall political dynamic. We were the easy solution for the press. It was Clintons first, if I recall correctly, major international summit. But I remember we went to Little Rock. I cant cite the examples that I can cite about the National Economic Council, because I studied that for Clinton, but I doubt it. So he didnt say, I know Im going to lose all these folks, but Im going to do it anyway. It got more organized as 92 unfolded. After all, John Kennedy is seen in the middle by historians. I was asked a second time to do it on the healthcare. Is the existence of a war room something. But that was really after the economic program passed. But I dont recall encountering him at all. You would have thought Senator Bentsen would have felt that way also, unless there was an assumption that this was literally going to be a few weeks time. Okay, the election occurred and, for reasons Ive never fully understood, Alice Rivlin and I were the first two to go down to see Clinton, of those he was looking at for appointment purposes. You were involved in the Little Rock Economic Summit? Do you have any recollections or observations about the President in that environment? Which has become a part of the conventional wisdom about this period now, perhaps based on Woodwards analysis. Well, health insurance reform was going to be very complicated, no matter how you cut it, because 85 percent of the people are already insured and only 15 percent are not, but welfare reform is something where huge numbers of people have opinions, even though they dont collect welfare. Because it promotes a lack of confidence in financial markets and, for that matter, a lack of confidence in the business community, a sense that that administration doesnt know what its doing. Yes, because obviously I was seen as somebody who had business credentials to some degree, conservative credentials, by Democratic standards at least. So this is the case where basically hes saying, My Presidency and this party are going to rise or fall based on whether we succeed in this or not. Yes, that was bad advice. Theyd been working on it for two or three weeks or whatever one does, but, as they usually do, the day before the profile runs, they want to come in and interview him so they can have a current aspect to it. I think part of him saw an embrace of NAFTA as an opportunity to reestablish that he was a person of conviction, that he wasnt just in the pocket of the old traditional Democratic constituencies, wasnt just a tax-raiser and spender. I also learned that when I saw that, it wasnt likely to ultimately succeed. There were, however, many people who thought, I would say this was the majority view: well ask for this, were going to end up with this. Today, Evercore is the fourth-largest investment banking advisory firm in the world, with more than 130 partners and over 2,100 employees. If you go to Monticello, to his actual tombstone, then you know that he drafted his own epitaph: Governor of Virginia, founder of the University of Virginia, and author of the Declaration of Independence. I think Clinton authentically saw healthcare as more important, believed it was a bigger national problem, and thought he was tackling the bigger of the two. No, I just remember the meeting in Little Rock quite vividly, and I think one of the first presentations was given by Allen Blinder about the economic outlook and the extent to which certain amounts of interest rate response would produce likely amounts of growth response. I doubt it. I knew Bentsen enough by reputation to know it was not by any means all set up, so to speak, by the time I went in there. In addition, Mr. Altman is a director of New Visions for Public Schools and a member of the Council on Foreign Relations. Clinton had talked of course during the campaign about cutting the deficit in half during his first four years. That was the moment, that day. Well, it was also a surprise to many in the administration because the truth is, the fight over the economic plan took every ounce of energy that everyone had and attention didnt really turn to NAFTA until that was over, and that was over in August. I cant think of anything you didnt ask me, or anything I didnt say that I would have liked to have said, so with that exception. There were so many different Japanese Prime Ministers in that period I cant remember which one we had at that moment. It struck outsiders as the administration never passed up an opportunity to say, This is the preserve of the Federal Reserve. The election occurred and about a week later Reagan was getting a haircut in California and he came out of the barbershop. Second of all, I am not a classic liberal, so Ive thought for 20 or 25 years that classic 60s liberalism was the wrong way to go. Now I did not attend that, but the issue of the Presidents economic plan and whatever adjustments were going to be made and the efforts to push it forward were discussed, perhaps in most cases the number one item, at the senior staff meeting each day. He said, What do you want to do? Bentsen tended to say very little at those meetings except at the end, when Clinton would turn to Bentsen and say, What would you do, Lloyd? If you think about his history, Bentsen had been a highly decorated war hero. But I think in Washington, except in dire emergencies, politics rules, and most Republicans had the view that they would rather die than vote for a tax increase. How early were you beginning to get a sense that the Republicans were going to be an historically difficult problem for this President? Is he going to become President? We believed that by maintaining the highest standards of excellence we could create a firm unlike any other in terms of capabilities to advise on highly complex strategic transactions, dedication to our client and our experience and professionalism. But in any event, there I was, and this guy, as I say, was a master of the game. No, it never got to a vote. It just depended on the size of the concession. Does that resonate with you? Yes, Clinton was gregarious, obviously bright. For example, Putting People First was reissued, I believe in June of 92. By that time, Clinton had his idea of the middle-class tax cut, and he had his idea of cutting the deficit in half during his first term, I think it was. President Clinton, in retrospect, his disavowals on some of his private life were almost certainly false and the way he handled the Lewinsky matter was about as bad as it could be because heessentially swore before the American people that he didnt do it, and of course then recanted. So we had no legal violation and no ethical violation and I had come to the conclusion that this thing was over. Were you privy to the conversations that he had? I thought that was pretty funny. Youre working on prospective personnel issues? It certainly wasnt optimal. But the next day, Monday, I was on a plane to Waco, Texas. In 1987, Mr. Altman joined The Blackstone Group as vice chairman, head of advisory business, and investment committee member. First of all, Clintonand I consider this a very important historical achievement, well see how it lastsmay turn out to have transformed the Democratic party. Well, when we actually re-did Putting People First, we went to Little Rock and worked on it for a few days. Actually, as often happens in Washington, accounts of that testimony appeared in a lot of newspapers and mostly on page D20. So Ira was, to some degree, as youve read thousands of times, off in the corner doing this whole plan. Everyone understood there was a lag factor. Could you see at that point a set of priorities emerging with the candidate? Clinton is nothing if not rigid. Bentsen, of course, didnt know the House as well as he knew the Senate, so it wasnt unusual that he himself wouldnt know in the House. Its fashionable for conservatives to say that the recovery had already begun on George H. W. Bushs watch and that if we just stood aside, the same results would have occurred, but those werent the economic forecasts we were looking at at the time, nor do I believe that school of thought to be accurate, but thats another matter. The political process requires an outcome. The office on Vermont Avenue probably opened between two and three weeks thereafter, lets say, picking a time, the 25th of November, just guessing, 20th to 25th. Oh yes, this is not long after the key members of the economic team are chosen. One of the things that you mentioned that was in your portfolio was selling the budget package. some of these were extemporaneous, he had no notes, but he was quite an impressive speaker, I thought. Did you do any traveling with Clinton on the campaign around New York or outside of New York? Richard Nixon resigned from office. Youre in such a good position to give us a comparative portrait of transitions internally. That was the logical place because I served there before. My testimony was rather a highlight of that. Again, I had the benefit of Lloyd Bentsens views. You see a lot of candidates you know arent going to work that way. We can all speculate. We had lunch. I stay in touch with him. The film director, known for making films that are highly naturalistic, but with a stylized Can you walk us through that? But there was a discontinuity between the campaign and the administration, In this respect exactly right. I dont know why we were the earliest on the list. The ultimate plan was way too complicated for the Congress and the country to grasp and understand and soberly assess. We had a good discussion and I went back to the airport and flew home. Ill never forget, it was just a few days after the election and Carter, of course, had been beset by the Iranian hostage crisis and the failure of Desert One and so forth, the rescue effort. But its interesting to put it into perspective. But my role was shaped largely by two things: one, Bentsen and what Bentsen wanted; and two, the fact that I had a reasonably close relationship with the White House. He may have kicked it off in a certain sense, but it has continued even more strongly to some degree in the last couple of years, but that was another broad historical development, critical historical development, which characterized the Clinton period. I recall speaking about 20 minutes before the vote to Marjorie MargoliesMezvinsky,with whom I had developed a friendship, and it became evident to me that she was very reluctant but willing to vote for the bill. There was a concern that wed spill all the rest of our blood on NAFTA and have nothing left. He was shot eight times, mostly in the chest. You had the bilateral talks with the Japanese and the G7 format. He told me what would happen to the Clinton stimulus bill the day it was put forward. I mean one of the oldest rules of Presidential management is, take your pain up front. Where the negotiations broke down, I dont know what caused it. Its possible that President Clinton rues the fact that 9/11 didnt occur on his watch, because it was a transforming crisis and did transform, at least to date, the present President. That was quite a bit later. One of the reasons why the ultimate votes on his economic plan were as close as they could possibly be, one vote in the House and tie vote in the Senate, was because he was dealing from weakness. I started having to respond with a standard boilerplate response to the effect that the RTC has these procedural options and we were choosing among them. The social aspect of it also involved here? Some people thought they were misguided. There just wasnt a candidate who had the capability to do that. That was the first time we had an opposition takeover. How difficult was it to raise money in the environment, Cuomo aside, just for somebody who had been a Governor of Arkansas in a campaign season when theres. At the time we were working on it there was a sense on the Japanese side that it was a zero-sum game. And the field against which Clinton ultimately competed was not a strong field. But it was a rather fluid, floating group. But it doesnt mention that he was President. Things like, I cant remember what example we used, but Senator X voted for us because he was afraid hed have to have lunch with the President again, things like that. I might have a point of view about what those ought to be based on certain inputs I was receiving directly from the Hill and we need to work more on this or that. Before we come back to this, I want to pose one question and that is about the Presidents style when he was working the phones with members of the House. Secretary Bentsen had already left. Sure, I did. And Bentsen, who full knew this was going to be on the front page of the Wall Street Journal said, Im not in the Senate. Do you think that making this effort was driven by foreign policy considerations first and foremost, or was it genuinely an economic policy? New York, Corporate | In fact, it was six months before. I referred to the Bert Lance affair when I was serving the Clinton administration, and in that case the controller of the currency, who is an independent regulator, was charged with looking into it and delivered a report that ultimately proved to be Bert Lances downfall. It wasnt trade; trade was not a big issue in the campaign. Against that test, a noncrisis Presidency, what can they achieve, under the extremely adverse politics of this time, thats been building up. The bigger gamble then was, as you say, the long term, the response in the long-term credit markets, whats going to happen, and that, I take it, is where Allen Blinders. They just didnt do it. But, first, right at the outset, it was a terribly flawed idea to have a full-time member of the administration serving also as the head of an independent regulatory agency and that should have dawned on me in the earliest going, just the inherent conflict there. 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