Chapter Nine

WHITEWATER

The glow of victory from NAFTA would be short-lived. That battle had been about Clinton’s policy values. In defeat, his opponents believed they might face better prospects in a battle over his personal values. Their target carried a familiar name from the 1992 campaign: Whitewater.

In the long history of presidential scandal, there was perhaps never a word freighted with more emotion and less precise meaning. In the minds of Clinton accusers, Whitewater became shorthand for cronyism, cover-up, and excess of the financial, political, and even sexual varieties. To Clinton defenders, Whitewater became a synonym for false accusations, partisan vendettas, and prosecutorial abuse. Even people well versed in the burgeoning Whitewater cottage industry soon had trouble remembering, much less explaining, how the whole mess got started. In the beginning, though, Whitewater stood for something specific, and narrow.

The word came from the name of a development of vacation homes along Arkansas’s White River. In 1978, when Clinton was attorney general and had just turned thirty-two, the Clintons borrowed money to make an investment in the project. Their partner, and the man who cut them in the deal, was James McDougal. An Arkansas original, a man of bluff talk and can-do spirit, McDougal was well known in influential circles as a political and financial impresario. Clinton had met him a decade before, while working for Arkansas’s most esteemed national figure, Senator J. William Fulbright. But Whitewater turned out to be a bum steer. The project languished unprofitably from its beginning, and McDougal proved to be a dubious collaborator for a couple with national ambitions. In the flush 1980s, he began dabbling in finance, becoming the proprietor of an institution called Madison Guaranty Savings and Loan. He turned it into a till. McDougal used Madison’s assets, among other things, as a source of ready loans for politicians, including Bill Clinton. Hillary Rodham Clinton, while at the Rose Law Firm, performed legal work for Madison. Boom inevitably went bust, crushing both Madison and McDougal. Taxpayers bailed out the failed savings and loan at a cost of some $50 million, part of the much larger S&L scandal that tainted the decade. McDougal had a psychological breakdown and was put on trial for fraud before winning acquittal in 1990. His once close friendship with the Clintons soured. And so what? The so what, in journalistic parlance, was a suspicion that in return for campaign contributions and other favors, Governor Clinton and his wife had used their influence to curb the regulatory scrutiny that would have prevented or exposed Madison’s flimflams before taxpayers got stuck with a large bill.

This was not an entirely frivolous suspicion. But the accusations had a disturbing, if little acknowledged, presumption. The Washington investigative apparatus—Congress, the Justice Department, and the media—that began churning its gears over Whitewater in late 1993 was breaking new ground by focusing on Clinton’s pre-presidential career. Historically, the machinery of scandal had been aimed only at alleged corruption by a president in office.

In an earlier generation, investigators might have been kept busy for years pawing through, say, Lyndon B. Johnson’s Texas laundry. Was the new standard really an improvement? Like many Clinton scandals, Whitewater was mired in slippery ambiguities. Its relevance to the pressing business of the nation was dubious at best. On the other hand, to let the matter drop required willfully averting one’s gaze from genuinely troubling facts. The government agency in charge of cleaning up the S&L mess in 1993 recommended prosecution of Madison for transactions in which the Clintons had at least a tangential role. Inevitably, in the small world of Arkansas politics, all manner of other Clinton associates now serving in Washington had links of one kind or another with McDougal and his tangled financial history. “The narrow issue is simply put: Where did the money go when taxpayers were forced to pick up the tab for the failure of Madison and Capital Management [another Arkansas firm connected to the mess]?” roared the Wall Street Journal’s arch-conservative editorial page. “Were these institutions run as piggy banks for a self-dealing circle in Little Rock? Did some of the taxpayers’ money go to cut the loss in Whitewater, or to fuel Bill’s political ambitions? Why were state and federal regulators slow to curb the abuse?”

“This is a man who rode into Washington on a pledge to end politics as usual, and every time the White House dodges inquiries about the old days in Arkansas, reasonable people begin to wonder about a cover-up and Mr. Clinton’s sincerity,” wrote the ostensibly more sympathetic New York Times. “Based on what’s publicly known, there’s probably not a crippling scandal here. But the White House is behaving as if there were.”

Confronted by this rude challenge to their integrity, the Clintons in the last month of 1993 and the first of 1994 faced two critical decisions, one flowing from the other. Their choices shadowed them for the next seven years.

The first decision was whether to make a voluntary disclosure of their own financial and legal records. Reporters for the Washington Post, which had been pursuing the Whitewater questions with vigor, had made a written request for precisely these documents.

As the Clintons saw it, the question once again was whether to feed the Washington beast, in the hope it would go away sated, or stand on principle and bring the beast to heel. Accommodation had been chosen in earlier episodes, starting with the January decision to dump Zoë Baird as attorney general nominee. But those other matters did not hit so close to the family home.

The political advisers, including George Stephanopoulos and David Gergen, were uniformly in favor of disclosure. However irritated these men were by Whitewater inquiries, they were products of the Washington culture and subscribed to the capital’s conventional wisdom as it had been understood since Watergate: Public disclosure was the only sure defense against accusation. Moreover, they argued, if disclosure was not voluntary, it would soon enough be compulsory, once the investigative machinery began churning out subpoenas—and that was to be avoided at all costs. On the other side were the lawyers, led by White House counsel Bernard Nussbaum and personal attorney David Kendall. They lived by the litigators’ creed, by which nothing was to be yielded without a fight. During this intramural battle, longtime Clinton counselor Bruce Lindsey, who was himself an attorney, served as the first family’s representative. Lindsey, a lean and handsome man with an inscrutable countenance, was far from a neutral arbiter. He was himself deeply offended by what he viewed as a niggling and irresponsible Washington press. If the Clintons released their records, all it would do was produce negative stories, which in turn would produce more questions—and demands for still more records. These were private records, he said. It was time to draw a line.

Lindsey drew exactly that line one day in a visit to the Washington Post newsroom. The meeting had been arranged by Gergen, who had arrived essentially to sue for peace—learn what documents the paper wanted and find a way to make disclosure happen. But while Gergen tried to be agreeable, Lindsey grew more irritable and combative with the assembled reporters and editors. When the delegation returned to the White House, Hillary Clinton was outraged that Gergen had presumed to be making disclosure commitments about her personal affairs. The moment marked the end of any effective influence of the Washington veteran she had helped recruit six months earlier. When the president precipitously canceled a meeting Gergen had requested to make his case about how to handle the growing crisis, the adviser thundered to McLarty that it was unacceptable.

Gergen had joined the White House under the promise that he would be given full access to the principals. So the next day, a meeting with Clinton was arranged. To Gergen’s surprise, Clinton was accommodating. “I agree with you,” he said. “I think we should turn over all the documents.” Then the president revealed the passivity of his role in the unfolding drama: “You’ll have to speak to Hillary and get her agreement. If she agrees, we’ll do it.”

The first lady refused to see Gergen. She had already made her views clear at an earlier meeting. “These are my papers. They belong to me,” she said. “I could throw them all in the Potomac River if I wanted to.”

Why did she feel so strongly? Theories abounded, then and later. Some took her at face value: She simply regarded the family’s private papers as nobody’s business, never mind the questions being raised by Whitewater. Later, as many of the papers she was shielding were indeed made public—exactly as the proponents of voluntary disclosure had predicted—there were certainly embarrassments within. These included the revelations that years earlier she had scored big through trades in the commodities markets—a fact that seemed a bit hypocritical from a couple that had denounced the 1980s as a “decade of greed.” Even so, there was nothing in those documents that would have caused the Clintons anything more than passing discomfort. There was shoddiness, perhaps, but not illegality.

One possibility that was widely discussed was that Hillary Clinton did not wish the Whitewater records made public because they would spur inquiries into the relationship between the president and James McDougal’s ex-wife, Susan, which was widely rumored to have been more than platonic. This prurient speculation underscored how Whitewater, for all its arcane records and impenetrable paper trails, always resided in the same neighborhood as sexual scandal.

Indeed, days after the White House had made its decision, the conservative American Spectator magazine and the Los Angeles Times each published accounts of the president’s extracurricular activities as governor. Both accounts drew a lurid and detailed picture of sexual excess, and alleged that the governor regularly used his state police security detail to facilitate his exploits and shield them from his wife. They relied on interviews with state troopers arranged by Little Rock lawyer Cliff Jackson, once a friend but now an antagonist of the president. As the stories were being reported, Clinton’s first instinct was to believe he could manage the situation himself. He called several of the troopers in his former detail and raised the possibility of federal jobs with them (though not, he said later, in exchange for silence). This belief that he could massage the situation to ensure a happy result only fueled more stories.

For White House aides, it was excruciating to have to discuss such controversies and their fallout in the presence of the couple. Yet the Clintons masked their own discomfort, in part by adapting the detachment of lawyers—as though it was a case they were discussing and not their own lives. Clinton, recalled press secretary Dee Dee Myers, latched on to a motive he said explained all: The troopers were simply upset because they wanted Washington jobs and did not get them. Hillary Clinton, too, seized on motives, drawing a link between the timing of the stories and the recent success on NAFTA. Both latched on to small contradictions in the stories as a way of dispensing with their contents in full.

Meanwhile, Clinton’s chief aide during the Little Rock years, Betsey Wright, who had taken an inventory of the governor’s potential vulnerabilities before his presidential run, told Gergen that the stories unfortunately seemed more true than not. Clinton’s Little Rock life plainly had been a sprawling mess, and he would spend a long time—longer than anyone could have then predicted—trying to outrun the consequences. The Spectator article, in particular, with its oblique reference to a woman named “Paula,” would echo.

For the moment, however, the sex stories passed quickly from view. Most of the press, and most of the public, regarded them as titillating but unworthy. Whitewater, by contrast, persisted—less salacious but vastly more worrisome in its potential to undermine the administration.

The decision not to make a voluntary document disclosure to news organizations produced one of the great what-if questions of the Clinton years. What would have happened had the Clintons listened to their political advisers instead of their lawyers or their own instinct for privacy? Might this have released the air from the rising scandal, letting Whitewater drift into obscurity? A voluntary document disclosure would not have satisfied the Clintons’ Republican skeptics, of course. However, presuming that a disclosure would have yielded only embarrassments and not clear suggestions of illegality, it almost certainly would have satisfied the Democratic skeptics.

Instead, suspicions about what awkward facts the Clintons were shielding continued to mount. The revelation in late December that Whitewater files had been taken from Vincent Foster’s office at the insistence of White House aides increased the frenzy. By the new year, the pressing question for Clinton was whether he would ask Janet Reno to appoint a special prosecutor to investigate Whitewater. Increasingly, the clamor for him to take such a step was ominously bipartisan.

“This looks like a meeting I might be interested in,” the first lady said as she walked in unexpectedly on January 4 to a gathering of senior political aides and lawyers assembled in McLarty’s spacious West Wing office, scene of now daily hours-long meetings on whether Clinton should accede to the clamor.

As she arrived, Stephanopoulos was making the case for the inevitability of an outside prosecutor. At the time, the law establishing independent counsels had expired, and the president and Congress were still months away from renewing it. But the attorney general still had the power to appoint a “special counsel,” a prosecutor who would report to her but exist outside the standard Justice Department bureaucracy—thus enjoying a greater measure of independence and, in theory, public confidence. Reno, who had been resisting such an appointment, could scarcely refuse if Clinton urged her to appoint one. It was an odd circumstance to have a president initiate a criminal probe of himself, but this was exactly what the political team, and at least some of the lawyers, were urging. Stephanopoulos listed his points. As long as the issue dragged on, he told the first lady pointedly, it was going to draw media attention and political momentum from more worthy projects, like her own health care initiative. Meanwhile, even Democrats like Senators Daniel Patrick Moynihan, Joseph Lieberman of Connecticut, and John F. Kerry of Massachusetts were calling for a special counsel. The president should simply bow to the inevitable.

One person who agreed with this view was Harold Ickes, the New York lawyer. He had been blackballed by bad publicity himself a year before in Little Rock. After clearing his name, he was now back, having been appointed days earlier as White House deputy chief of staff. He was by instinct a fighter, but not in this case. “We were confronted by the iron logic of the editorial pages,” he recalled ruefully, years later. “If they did not do anything wrong, why not have an investigation and clear their names?”

Hillary Clinton had a ready answer. She had served on the House Watergate committee staff, she reminded the group. She knew what a real scandal was, and she knew what the standards were. Appointing a counsel when there was no legal basis for suspecting wrongdoing was a horrible precedent and an abuse of the process. Of course, this was no matter of legal theory for her. The accusations were an almost physical assault on her own sense of virtue. As she spoke, this usually calm and incisive woman lost control. Tears welled as she turned on Stephanopoulos. As Stephanopoulos recounts in his memoir, she railed, “You never believed in us. In New Hampshire, it was just me and Susan [Thomases] and Harold [Ickes] who believed in us. . . . You gave up on us. We were out there alone, and I’m feeling very lonely right now. Nobody is fighting for me.”

This emphasis on the need to fight—and her impatience at her own team’s instinct for concession—was a recurring theme in the days ahead. At another meeting, she contemptuously compared the aides before her to the staff of John Kennedy’s New Frontier. “JFK had real men in his White House!” she taunted, as a group of advisers looked sullenly on.

The president himself was deeply torn. As a matter of strategy, he agreed with the political advisers—or at least he told them he did. People from Ickes to Secretary of State Warren Christopher were dispatched, at the president’s direction, to talk with Hillary about the unavoidable next step. It was to no avail. (“The biggest fucking waste of time,” Ickes reported with his usual bluntness to colleagues.) Emotionally, the president shared his wife’s indignation—and was suffering from it more than anyone else. His own patience snapped later that month on his first overseas trip as president, to the Ukraine and Russia. He stormed out of a television interview when an NBC News correspondent asked questions about Whitewater. “You had your two questions,” he seethed. “I’m sorry you’re not interested in the trip.”

But both Clintons were gradually giving up the fight against a nearly uniform front from their advisers. The president himself had little emotional energy to resist. Days before his departure for Europe, his mother, Virginia Kelley, died after a long battle with breast cancer. In a surreal scene, on January 12, Clinton got on the phone from Kiev, Ukraine. It was 2 a.m., local time. Back in Washington, the first lady and a large group of aides sat in the Oval Office with a speakerphone. It was highly unusual for people to meet in the Oval Office when the president was not there. Stephanopoulos again labored through his arguments for a special counsel. White House counsel Bernard Nussbaum offered a highly emotional rebuttal. The special counsel was an “evil” institution, he said. Prosecutors could roam freely and indefinitely, without limits or oversight, and would keep searching until they came up with something as a way to justify their efforts. Nussbaum, who had earlier resisted a voluntary document disclosure, now urged one. The Clintons should even testify publicly before Congress—anything to avoid the appointment of a prosecutor. Now it was the president’s turn to get emotional. What Nussbaum proposed would be insane, he shot back; there would be nothing but Whitewater in the news for the rest of the winter.

Hillary Clinton brought the conversation to a close and ordered everyone but David Kendall out of the office. The president’s disembodied voice conveyed his fatigue and depression. “Look, I think we’ve got to do it,” he said. “We’ve got nothing to hide, and if this keeps up, it’s going to drown out our agenda.” Then, even Kendall left, and Hillary Clinton picked up the phone to talk to her husband alone. She made one last try. “Why don’t you sleep on the decision,” she suggested. “If you’re still willing to do it, we’ll send a request to the attorney general in the morning.”

“No,” he responded, “let’s get this over with.”

And so it was done. The next week, on the administration’s one-year anniversary, Reno appointed a respected New York attorney and former federal prosecutor, Robert Fiske, as special counsel. Clinton soon fired Nussbaum as White House lawyer, after an accumulation of misjudgments convinced the president and his staff that this combative litigator was the wrong choice for such a politically sensitive post. Few of Nussbaum’s allies disputed the judgment. But, on the question of Whitewater, the lawyer was a prophet without honor. In the months and years ahead, his dire warnings about the perils of a special counsel were vindicated beyond even his own imaginings.