The Pact Between Bill Clinton and Newt Gingrich

Two powerful foes secretly plot to reform Social Security and Medicare.

Monica Lewinsky during her deposition in 1999.

Monica Lewinsky during her deposition in 1999.

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The real problems would be on Capitol Hill, however, where the president's efforts would once again pit him against the leadership of his own party in the House. Relations between the parties were more cordial, less partisan in the Senate, making it easier to build a centrist coalition of Democrats and Republicans. In the House, Clinton hoped to bypass the party's liberal leadership and reassemble the coalition of suburban "New Democrats,'' who tended to be socially liberal but fiscally conservative, and "Blue Dogs,'' largely rural, southern conservative Democrats, who passed the balanced budget bill.

Despite being pushed by the two most powerful political figures in America, a massive overhaul of Social Security would be an uphill fight. Clinton always said that he needed at least 100 Democratic votes in the House to support a bill. Could he muster that many votes on an issue as controversial as Social Security? Could Gingrich, who had already suffered one rebellion and seen his hold on power seriously eroded, bring along enough moderate Republicans to seal the deal? All the key players—Clinton, Gingrich, Bowles, White House congressional liaison John Hilley, and Bill Archer—were cautiously optimistic. ''It wasn't crazy for them to think that if they could do the impossible and pass welfare reform and the balanced budget bill, they could do Social Security,'' reflected Bruce Reed, the president's chief domestic policy adviser.

The plan was for Clinton to make his bold initiative for reforming Social Security and Medicare the centerpiece of his State of the Union address in January 1998. Gingrich would follow the president's speech by making positive comments about the initiative. He would then ask Archer's Ways and Means Committee to make specific recommendations. Both sides would try to keep the issue off the table in the 1998 congressional elections, before pushing it through a lame-duck Congress in December. The president asked the American Association of Retired Persons and the Concord Coalition, an influential lobbying group that advocated fiscal discipline, to organize four regional forums to discuss the issue. The national ''dialogue'' would conclude with a White House conference on Social Security in December 1998—the same time that Congress would be voting on a reform proposal.

Just weeks before the State of the Union address, the administration started signaling that it would support some form of privatization. ''Given that we have to work with the Republicans, it's hard to see a plan passing without some individual account piece,'' a Clinton adviser told Business Week. Gingrich revealed his hand in a speech at a local Cobb County event. The goal was to strike a bipartisan note while positioning himself to come out in favor of Clinton's Social Security agenda. "There's no crisis, but there's a long, steady problem unless we invent a better model,'' he said.

Clinton and Gingrich set Medicare reform on a slower track. On January 16, the president and speaker managed to convince two allies to serve as cochairs of the National Bipartisan Commission on the Future of Medicare. Clinton friend John Breaux, a moderate Louisiana senator known for his ability to forge compromise, was appointed chairman, and Gingrich colleague Bill Thomas, powerful head of the House Ways and Means subcommittee on healthcare, agreed to serve as administrative chairman. The president and speaker charged them with producing a set of recommendations by March 1999.

By mid-January, Bowles believed everything was on track. The president and the speaker were looking forward to the annual State of the Union address, scheduled for January 27, when they would make public the plans they had carefully laid over the previous months. No one, however, was prepared for what happened next.

Breaking news. Early on Wednesday morning, January 21, Bowles arrived at his office in the White House at his usual 7 a.m. starting time. He liked to spend a few hours getting caught up on the news in preparation for his daily briefing with the president. While some White House officials had learned the previous evening that the Washington Post was running a story about the president having an illicit affair with an unnamed White House intern, Bowles learned about it for the first time when he opened the paper sitting on his desk. There across four columns at the top of the paper read the headline: ''Clinton Accused of Urging Aide to Lie; Starr Probes Whether President Told Woman to Deny Alleged Affair to Jones's Lawyers.''