In the evening of Oct. 28, 1997, House Speaker Newt Gingrich headed to the White House to meet with President Bill Clinton, ostensibly to hammer out final details of the 1998 budget. In reality, Gingrich and Clinton were putting finishing touches on a deal to create a centrist political coalition to fix long-term problems facing Social Security and Medicare. In his new book, The Pact: Bill Clinton, Newt Gingrich, and the Rivalry That Defined a Generation, Steven Gillon, resident historian of the History Channel and a professor of history at the University of Oklahoma, reveals the behind-the-scenes machinations that led to the meeting and how the potentially historic effort was derailed in an instant by the Monica Lewinsky scandal.
While there were dozens of reform plans circulating around Washington, ranging from minor tinkering to radical overhaul, there was a growing consensus around "middle ground'' proposals that combined some structural changes in the retirement age with some form of private accounts. There were also hopeful signs that the public was ready for a serious discussion about Social Security reform. An August 1997 survey by Clinton pollster Mark Penn found that 73 percent of Democratic voters favored some form of privatization, and support was especially strong among younger workers. Independent polls also showed that many young people believed that without significant change the programs would not be able to provide for them in their old age.
Given the high risk involved, Clinton realized that he could not undertake this without bipartisan support, and, Chief of Staff Erskine Bowles reflected, "He knew to do this he needed to work with Gingrich.'' He was confident that he could hold moderate and conservative Democrats and bring enough Republicans to the table to make significant reform. The danger, however, was that Republicans would seize the surplus and use it for tax cuts. Some of Clinton's advisers suggested that he make a surprise announcement of a total overhaul of Social Security in the 1998 State of the Union speech. Mindful of the healthcare debacle, Clinton rejected this option, believing it was important to bring Gingrich and other Republican leaders into the discussions. He also wanted to engage in a public education campaign that would make people aware of the sacrifices that would be necessary. Instead of coming out with a detailed plan, he would establish guidelines for the discussion. "Save Social Security First'' was the slogan he developed to describe his strategy, making clear that he would reserve all of the budget surplus until Congress produced a viable reform package.
The president reached out early on to two of the most powerful Republicans in the House: Gingrich and Bill Archer. As chair of the House Ways and Means Committee, Archer would have control over any plan to reform Social Security. While Clinton talked privately with Archer, Bowles reached out to Gingrich. Initially, Gingrich, who had been burned before on Social Security, was reluctant to get out in front on the issue.
It did not take long, however, for Gingrich to recognize the potential of a possible Social Security reform package. Bowles provided Gingrich with the same assurances that the president offered to Archer. The president would take the political heat for controversial proposals. Politically, the president and the speaker were closer than anyone realized. They recognized that their parties needed to change in response to new circumstances. They both believed that any effort to update Social Security would require government to incorporate some measure of choice, and that meant some form of privately managed account.
The exact details would have been worked out later, but the broad outlines were clear. Gingrich was willing to give up the tax cut for a proposal that included private investment in Social Security. "The balanced budget bill was Act I,'' Gingrich reflected. "This was Act II.'' Instinctively, both men still wondered whether the other was setting a trap in preparation for the upcoming elections. Would Clinton leak word that Gingrich was once again trying to tamper with Social Security and Medicare, reinforcing his image as hostile to the old and poor? Would Gingrich tell reporters that the president was ready to accept the centerpiece of Republican proposals for Social Security: privately funded accounts?
Dramatic change. Both men had seen their views of each other evolve over time. Clinton had once viewed Gingrich as an ideological bomb thrower, a reckless, power-hungry right-winger. While he still considered Gingrich temperamental and unpredictable, Clinton also believed that deep down inside Gingrich wanted to be remembered as a statesman, not a rebel.
Gingrich's views of Clinton had undergone the most dramatic change. He came to the speakership convinced he could dictate terms of surrender to the new president. He learned that Clinton possessed more backbone than he had imagined and that he was a skilled political fighter. He also over time disabused himself of the idea that Clinton was a "closet liberal.'' By 1997, he appreciated that Clinton "was a much more complicated person.... With the exception of his McGovern period, Clinton really is a southern Baptist populist,'' he reflected years later.
Convinced there was an opportunity to work together, the two men agreed to the secret White House meeting. While the discussion focused on their plans for Social Security and Medicare, the president and speaker also tried to unblock obstacles that threatened to derail the budget negotiations. Much of the conversation revolved around the horse trading on bills necessary to pass the 1998 budget. They focused on two controversial issues: Clinton's ongoing efforts to pass fast-track legislation, which would give the president greater authority to negotiate trade agreements, and appropriations for the United Nations.
The two leaders worked together to neutralize other hot-button issues. The speaker made clear that he needed a deal on the census. Democrats wanted to replace the traditional approach the government used to count people for the census with a new method based on statistical sampling. Republicans blocked the change, claiming that sampling favored Democrats. Realizing there was no easy answer, Clinton and Gingrich looked for a way to "kick it down the road''—coming up with a short-term solution that would placate all sides. The question of abortion in international aid, according to a White House official, "was always the last issue at 7 a.m. after you've been up two straight nights.'' Although the abortion issue was important for the large contingent of social conservatives in his party, Gingrich viewed it as a bargaining chip that could be used to exact concessions from Democrats on issues that were more important to him, such as increased spending for defense and space exploration. Neither he nor Clinton wanted it to block their larger agenda. "How do we punt this thing?'' they asked. Clinton raised the issue of "school testing.'' In his 1997 State of the Union, Clinton had included provisions for fourth-grade national testing in reading and math, but majorities in both houses voted against it by a vetoproof majority. Clinton wanted to revive it, and Gingrich offered constructive advice on the best way to proceed.
After the hourlong meeting, Clinton provided his guest with a brief tour of the Lincoln Bedroom before rushing off to dinner. Both men left feeling confident about the possibilities of success. There were still some major hurdles. There was enough distrust between the two men that neither was ready to fully let down his guard. The ''coalition'' was real, but fragile, capable of unraveling from the sheer weight of their mutual distrust. From Gingrich's perspective, the two men recognized that they shared common interests on some major policy initiatives. But they were "not going to be buddies for the rest of their lives.''
Clinton and Gingrich were both taking big risks. Politically, Gingrich was taking the bigger gamble, since he faced the possibility of a rebellion that could cost him his speakership. There would be no deal without Gingrich, and White House aides worried whether he could maintain his grip on power. For now, he talked about creating an ''echo chamber'' by getting a small number of influential members to speak out in support of the reform effort to insulate himself from the inevitable conservative backlash. The president had to contend with some political perils of his own. He knew that the initiative would not be popular with some members of his administration. The situation was further complicated by Al Gore, who now viewed administration initiatives through the prism of his own campaign for president less than two years away.
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.''
When Bowles asked the president about the story that morning, Clinton denied it. ''Erskine,'' he said, ''I want you to know that this story is not true.'' Bowles was crushed by the alleged charges, which he assumed were untrue. He was also devastated that a potentially great moment had been lost. Whether true or not, he understood the political implications: All of their hard work in building the alliance with Gingrich had been destroyed. There was no doubt in his mind that Clinton and Gingrich would have created a plan for reforming both Social Security and Medicare that year and, perhaps, set the stage for a new period of bipartisanship. ''Gingrich wanted to do it; Clinton wanted to do it. It was a real missed opportunity,'' he said. ''Monica changed everything.'' l
Reprinted from The Pact: Bill Clinton, Newt Gingrich, and the Rivalry That Defined a Generation by Steven Gillon (Oxford University Press). Copyright © 2008 by Oxford University Press.