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14 March 2023 by

Yes. He could have been all rhetorical about it. Certainly on free trade you would say that there was a consistency in his rhetoric during the campaign and the behavior of the administration after he was elected. So that, despite the extraordinary achievement it really was, I think may be seen by history as a small achievement. Theyd review it and youd go to a meeting where you received a 900-page memo, three quarters of which you didnt understand. Had there always been a sense on your part that your likely posting in the administration would be in Treasury or. Everything is susceptible to being phased in, to being cut back, to being pilot-programmed. It was after all largely negotiated by his predecessors, and yet he took a big gamble on that one, too, and thats sort of a kick in the midsection to a lot of his Democratic supporters. Having watched very carefully what Bob Carswell, who served for three plus years of the four Carter years as Deputy Secretary, did in that role, and that was actually rather different than my role. I think the critical revelation that day was the notioninitially I believe put forth by Allen Blinder, that a certain amount of deficit reduction ought to translate into a certain level of interest rate response, which in turn should be more stimulativeshould inject more stimulus into the economy than anything that we could do on the fiscal side. Of course, during earlier phase of this, Bernie Nussbaum had resigned, mostly over the fact that he met with me on this original matter. The vote was really the most dramatic moment I ever experienced in six-and-a-half years of government service. Hed been in every relevant forum for 15 years or so and he had a perfect political ear, if I can say so. He didnt like Clintons stimulus program. I left the White House around April, took a couple of months off, and went back to New York. We might have a thousand independent counsels operating under the freedom of the press, investigations. I want to be sure that there is a clear picture of that because he cant offer it himself. Right. Was it his personality? Yes, we could have had that. And, of course, the ATF agents didnt know what they were going to experience and he found himself exposed to an open line of fire. That happened, I want to say, late 93, that his nomination was effectively killed. I dont know how many people would have the political courage to do that, but I know I wouldnt have. I think history will probably record that as the most important achievement of President Clintons overall Presidency, not the vote itself of course, but the ultimate effects of it. That was a factor. But from the outside, one of the notable departures of that administration, and I think it began very early, was the cordial deference paid toward the Federal Reserve Board. We came up with a Btu [British thermal unit] tax. But yes, we had meetings in his hotel room at three in the morning. That was the logical place because I served there before. But as often happens, there is a moment when positions shift. When we took office and took a hard look at the deficit estimates, they were considerably worse than we had thought. I wasnt there because I was an expert in tax policy. Once again, were grateful for your time. The Clinton process was much more flexible, and I think better, than the Carter process, but that reflected the personalities of the two men. In fact, the exact oppositethe people who voted for it were punished in 94. In business. 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. Is this a case where the political people were encouraging him to hold his ground? Youre working on prospective personnel issues? There ensued a quite Byzantine process, as has been so widely written about with multiple task forces and enormous numbers of people involved.There were a lot of these Bill Clinton-style meetings, great big long meetings with far too many people in the room. It wasnt a process where people were maneuvering furiously to see who could get the last word in to the President or something. And then, of course, the political people in the White House: George Stephanopoulos of course, and others in the White House. Secondly, the National Economic Council would meet very often for purposes of reviewing where this stood; I was on that as a standing member. So Mack played relatively little role in this. We just didnt know, and thats pretty amazing, the biggest piece of legislation, the voting has actually begun. Twofold. We talked a lot about the organization of economic policy-making and the role of the Treasury because I had a certain history. And, to some degree it was also, of course, for Clinton to take the measure of certain people he might be appointing. Secretary Bentsen took a lot of heat not long after being sworn in saying hed like to see a stronger yen, and that touched off a lot of controversy. So there was not a war of the type that has so often been written about, just not true. He observed to me right off the bat that this was going to be very complicated and no cakewalk, right off the bat. So it wasnt invisible. In addition, Mr. Altman is a director of New Visions for Public Schools and a member of the Council on Foreign Relations. So maybe among the so-called populists there was a lot of anxiety as they saw this axis, the Bentsen-Rubin axis, develop and recognizing that both were relatively conservative. Everything imaginable. And deficit reduction was his top priority, a focus at the top? But there was a divide, so to speak, in the administration between those who felt that we should try to remake the healthcare system in this country in one fell swoop and those who felt we should pursue an incremental approach. There are some people who wouldsome of the George H. W. Bush people date the partisanship from the budget deal. The relationship between Clinton and Bentsen was quite unusual. Sure. 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. You know, you call in for five minutes apiece and theyre all lined up. There were those who feltI would put Bob Reich at the top of the listwho felt the most important thing was to do a big stimulus program involving a lot of spending initiatives. So one knew through the press who was going and so forth. Until there had been hearings and so forth you dont get much of a sense of that. I dont mean that facetiously. It pains me to recognize that thats 35 years ago, but no, it wasnt the case. I think each person makes his or her own decision. They have made changes in policy, its not as though theyve stood still. And that kind of input isnt available during the campaign. But fundamentally, I was getting those assignments from the legislative staff. Yes. But you think that by January 20th, this basic division of the fundamental economic policy. I can recall that we had a fundraiser. Id have to do a little homework. 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. Everyone understood there was a lag factor. Did it come out of Arkansas? It was really quite revealing of Clintons inexperience to do it that way, and, for that matter his style, a poor way to do it. It doesnt make sense, it belies any grasp of history, and so forth. He must have wondered what he was doing. Clinton had talked of course during the campaign about cutting the deficit in half during his first four years. I mean, it was a larger package as it was originally conceived and then. There could be a lot of backsliding on that, well have to see. Keeping in mind that with the exception of labor, which is a heck of a big exception, all of the powerful economic groups in the United States were for it and Clinton had just gone through a bruising battle where many of them were on the other side of him. People have made that mistake and theyve suffered from it. There was a stimulus package that dwindled, right? Did he interact comfortably with the other leaders at the summit? But I think the most that the Fed can be expected to do is move short rates. In the very beginning it wasnt as availed of, as it quickly became availed of later. I think there were missed opportunities, yes; I dont believe they would have made a big difference however. Most of the trade was being handled by what was called the NEC [National Economic Council] deputies, which is the Deputy Secretary level of the NEC. Greenspans name hardly came up during these discussions. You had been designated the chief operating officer of the RTC [Resolution Trust Corp.]? He was named the first week of December. 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. Well take a break for lunch here in just a minute, but I want to jump track and ask you one set of questions about your own responsibilities within Treasury. Im not an economist, so maybe Im making a bad assumption here, but was there a discussion at this time about when you could start feeling some benefits from this pain that you were asking the President to accept at a fairly early stage in his Presidency? from Georgetown University and an MBA from the University of Chicago. A group of four of us were named at the same time: Bentsen, Rubin, [Leon] Panetta, and myself. Not surprising, given his state of origin. Only to a degree. Bentsen never lost an election, period, on which he was head of the ticket, ever. 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. Anyway. And it turned around and by November 84 as you remember, it was Morning in America and he won 49 states. That approach hasnt been able to capture a majority of the American public for 40 years and I dont think its going to capture the majority of the American public for another 40 years. Sure, sure. Bentsen was just a legend and Clinton had never served in Washington and Lloyd Bentsen was a king of Washington. Not at the outside, but eventually, I came into the second camp because I began to understand the scope of the issue. It wasnt going to be a war between the United States and the Soviet Union. 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. I guess I figured, were I to be appointed something, it would likely be in the Treasury, and perhaps, by process of elimination, nothing else seemed logical to me. You havent told us about your own appointment. Well, we were talking about lasting changes. But that group, top five, or six or seven, just masters of the game. My own view on that is that American history is filled with examples of severe and indeed brutal partisanship. I remember that very vividly, and I said, I want to do the honorable thing. I guess I probably began to help raise money, its a rough memory now, in the early fall, perhaps September of 91. Mrs. Bentsen responded. Can you give us a picture? You see a lot of candidates you know arent going to work that way. We had wonderful cooperation, at least in the Treasury. 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. For other people it was Clintons legendary one-on-one prowess and his effectiveness in small groups, but I dont think theres any one reason why this person or that. Abraham Lincoln saved the union. I thought, All right, well get half a loaf. As I remember the NAFTA campaign was kicked off only a month or two later. No, let me just correct the record. I mean, theyre all just issuing healthcare plans right now and there are some important differences among them, but 99 percent of the primary voters will not know those differences. He had just made it through this cliffhanging vote on which the administrations credibility for the next several years, I think, would largely depend, and it depends on the support of overwhelming shares of Democrats in the House and the Senate to get through. He knew every comma and apostrophe in the bill. Did it come from DAmato, or what? You ultimately get into a room like this and you say, youd better start to train me, tell me how this happened. Casey resigned and it was vacant. In a curious way hed compromised his own position. Doing concerted, multilateral action of the type youre referring to is really only appropriate in the midst of a crisis. But was it a battle? But in any event, it hasnt ended with President Clintons leaving. The Putting People First document, is it fair to characterize that as the menu choices that the administration was going to be making when it took office, but that there was not a great deal of attention at this point on priorities from among the elements in the menu? But I think he may turn out to have transformed the party, which really is an important historical achievement. Anyway, a couple of days later I flew to Austin, Texas and met him and Mrs. [Beryl Ann] Bentsen in a hotel room in Austin. I dont think its wholly right becauseand this may sound strange coming from mePresident Reagan I think will be seen very favorably by historians, mostly because hell be seen as the man who ended the Cold War, and Reagan didnt have to take the position of aggressive anti-Soviet behavior, but he did. I may have attended a few meetings, but I only began to be immersed in healthcare after the Presidents plan passed and I became the Treasury person on the Hillary Clinton healthcare task force. So I think Clintons own behavior did play a role in it and that in retrospect there would have been better ways for Clinton to have dealt with some of these things. Do you have the perception that there were some other instances where maybe this wasnt done? President Clinton gave you the opportunity to serve your country, its a privilege to serve your country. So it depends a lot on the people. Why was that a federal regulatory issue? I can recall David Halberstam on the way out saying to me that he never heard a politician as effective as Clinton since JFK [John Fitzgerald Kennedy]. I mean, to give you an example, wed been in office I think several days, and the Sunday after the inauguration I was sitting at home in New York because my family hadnt moved yet. Well, I dont think theyd like it. That was the moment, that day. I think I testified before the Senate for about thirteen consecutive hours and six or eight hours on the House side the very next day. Sometimes without him and sometimes with him, but if Mrs. Clinton was there, everybody else was. Dont ever talk down your currency; dont ever quarrel with the Federal Reserve Board. There may have been, but I know I didnt feel it. This giant controversy erupted over that. Here we are in June 2003 and the election as we all know is November 04, so its 16 months or so before the election, 17 months, and right now of course, the campaign among the Democratic aspirants for the nomination is hot, full-bore, and has been for several months. The country needs it, the Democratic Party needs it, I need it. 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. Mostly the latter. WebRoger Altman: Formerly deputy Treasury secretary, Altman resigned Aug. 29, 1994 following revelations he tipped the White House off to criminal referrals made by That was before the convention. But also the role of the media had been changing a lot and that role I think manifested itself very vividly in the Clinton years. But apropos of my comments earlier that classic, unreconstructed liberalism had never been my cup of tea, I never identified with Mario Cuomo. But its not too different from Clintons style, very personal, very, very personal. Then the President spoke to Kerrey. Bob Rubin talked with great credibility about the bond market responding, and James Carville was so amusing for so long afterwards saying he wanted to come back in his next life and be the bond market because everybody paid such fealty to it. I was just in awe of people like that. You know, theres another element of this. Stay as long as you can figure out how to cling to it. Of course I would say were not proposing to take over the healthcare system. I mean, we had these discussions, we had these ways to measure progress and so forth, that sometimes alarmed economists in the United States because they seemed protectionist. He was shot eight times, mostly in the chest. The politics of personal destruction as Mrs. Clinton is saying now on her book tour, common in American history, nothing new about it at all. I guess we have to just win then. Is he going to become President? The President was in a tough spot because he was hearing from a lot of people that the effort was too ambitious, but on the other hand, Mrs. Clinton was in charge of it. Of course, the fact of a summit means you have to have some agreement, and we had an agreement. He talked about a middle-class tax cut and, of course getting the economy moving. That was the day the earth moved and Clintons view changed. 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. So there were a couple of weeks of high anxiety, maybe more than that, maybe everybody was in a state of anxiety between the election and yes, it wasnt at all clear who the Secretary of Treasury would be. Mr. Altman began his investment banking career at Lehman Brothers, advancing to general partner in 1974. One of the themes they advanced was deficit reduction, not the only one. Anything in particular you recall that can flesh out the record? But I think one misunderstood aspect of his embracing NAFTA wasat that point he was being widely criticized for lacking in principle, lacking in conviction, a weathervane all over the place politically. It just depended on the size of the concession. The media to some degree has shifted for, in my view, simple generational reasons, to the right, and the right-of-center media is much more monolithic than the rest of the media, and so its ability to concentrate its opposition and its influence emerged as much greater during the Clinton years. I did. But I dont really think that was the reason that he voted for it, but only an hour before the vote in the Senate did we know we had his vote. Phil Gramm, Ill never forget, predicted that it would usher in a new depressionI mean depression, not recession. Clinton chose in Bentsen, with the possible exception of [Robert] Dole, who obviously wasnt a candidate for this, the most experienced person in the entire United States Congress. No, it never got to a vote. I dont know why we were the earliest on the list. Im not quite sure what their input was. But the election result itself was anticlimactic. More has been made of that than should be. He did a version of what Carter did earlier, which was end up positioned to the right of most of his opponents in the Democratic primaries. You can do it through tax increases and then you have to choose the tax, and you can do it through spending reductions and you have to choose the area youre going to focus on. I really think its just that basic. Why didnt that work, from your perspective? So monetary policy has gone from being considerably more powerful than fiscal policy in 93, to being the only policy in town in 2003. It was going to be a different kind of animal. Altman ran the White House war room during last Do you have any recollections of seeing anything different in him as a candidate at that point for that position? During the transition period the question was, Who are we going to nominate the head the RTC? Was this a group of people that you primarily put together, or is it bits and pieces of people that the Clintons had known. But I didnt unilaterally choose all the members of it. The key players turned out to be the so-called blue dog Democrats. In retrospect, I think those are the two main reasons he embraced it. He loved policy. And presided over eight years of peace. But what actually turned out to happen was that each Cabinet officer, or at least many of them, came up with a list of favorite initiatives they wanted. Then later in the process I was asked if I would go do a war room for healthcare of the type we did for the budget. You get there and then you figure out what your actual sequence of initiatives is going to be. 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 the politics of the Btu tax, as compared to other types of energy taxes, were not well considered. Were there things about those campaigns that you had learned in preparation for this one that proved to be particularly helpful? I think that there wasagain, I dont follow this that closelybut there was a fast reaction in short-term rates when the Federal Reserve Board loosened, early on, in what appeared to be quid pro quoGreenspan offered some assurance to Congress that the Fed would be cognizant of the Federal. I wouldnt necessarily accept that. No admission fee, no contribution required. He has difficulty speaking. Did the portfolio members that you were approaching on NAFTA change from the work you were doing. There are many people in the administration who dont like the welfare reform that was ultimately signed, believed that Clinton ultimately turned centrist on the issue and anybody could have done that and once you did it as a Democratic President, you were going to have welfare reform. The entire economic team flew on a chartered plane down to Little Rock. Ira Magaziner himself, whom I had known for some time, was a gigantic intellect. You were both involved then in student government. In general, no. He lost that election. Now streaming on: Powered by Those things were at a peak in 94, just at the time healthcare was on the table. We had a bad one against the yen when the dollar touched an all-time low of 80 yen. The independent counsel statute had, if my memory serves, expired during the Clinton first year, then was revived, and then was allowed again to expire. She inspired, continues to inspire, fierce loyalty and he doesnt. What specifically arose was that the statute of limitations on any prosecution involving the failure of an S and L was about to expire. So I dont think my reactions to that were really any different than anybody else following the campaign. The American political system has changed a lot. Casey came to see Bentsen and essentially asked to be reappointed and Bentsen told him, No. All the groundwork had been done before the storm broke, so there were probably three to four hundred people. By and large Bentsen talked to Clinton when Clinton called him.That was the way it worked. There was quite a discussion that day about long-term interest rates, as I said the credit markets rather than the Fed. So two points: one, I support what the President did and I think he deserves a lot of credit for it. We can all speculate. During the preparation would you call that an organized group? Was that true of Georgetown at the time that you were there? He was quite in the minority at the time. I follow it pretty closely, and I have a hard time figuring it out. 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. Actually it was mundane. No. Then of course, the Senate voted the next day and we only had 49 votes that we knew about and Senator Bob Kerrey was the undecided vote, the only one left. She didnt cast it because of me, but it just became obvious to me in that conversation that she was very reluctant to cast that vote. Each day hed give a speech and mark off a day, counting down the days to the expiration of the statute of limitations and saying these people at the RTC damn well better be sure that justice is served, the Clintons arent off the hook. Not particularly. But wasnt the Clinton economic plan somewhat right-of-center too? Theyre going to ask you about it, say nothing. You couldnt say to yourself, Well in the end hell be fine. He predicted them. At the end of the lunch he asked me if I would serve as Deputy Secretary and I said I would. Why a war room? You didnt need to be a management consultant to see they werent well organized. You had the bilateral talks with the Japanese and the G7 format. But the tax increasesand there were two main ones, the energy tax and the upper bracket increasewere seen by the Republicans, every last one of them, as unacceptable and became their rallying cry. I was to call Bentsen promptly. But I really could never figure that out. Well, if you were to ask me for a moment when looking back on it, one could perhaps see that we were moving into a new period of partisanship, I would have chosen instead the [Robert] Bork battle, which I think changed quite dramatically the whole process on Supreme Court nominations and the grounds on which they were debated. But absent such a crisis, history tends not to treat you as a great President. and Lloyd would say, I wouldnt do it, Mr. President, or I would do it. Are you including in this the difference of approach between the campaign-oriented, the political people, and the policy people, as well as the differences among. Decided to do this. 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