Clinton was grateful for diversion wherever he could find it. The bad news continued last week. Senior aide George Stephanopoulos became the 11th top official to be subpoenaed to answer questions related to Whitewater. Congressional Republicans, energized by Whitewater, made progress in their campaign to force hearings on the Democratic majority. Associate Attorney General Webster Hubbell, Clinton’s best friend in Washington, resigned in a trail of ethics questions. Although Hubbell’s problems are largely unconnected to Whitewater, his loss only added to the general sense of anguish and disarray. White House aides, yearning for some relief, actually cheered Tonya Harding’s plea bargain. “Anything that knocks Whitewater off the front pages is considered good news around here,” one aide said.
Just as frustrating was the conspicuous silence from most congressional Democrats. The president’s most vocal supporter was Rep. Dan Rostenkowski-embodiment of the clubby, old-style politics Clinton came to Washington vowing to reform. The gruff Chicagoan, himself under federal investigation for misuse of House funds, won a hard-fought primary last Tuesday with Clinton’s help and tried to return the favor by rallying support on Capitol Hill. “This president is popular,” he told a meeting of Democratic leaders, repeatedly punching the air for emphasis. “He will stand by you if you stand by him.” But earlier in the week he acknowledged that congressional hearings on Whitewater were “inevitable.”
Although Rostenkowski backtracked later, he was only acknowledging political reality. The Senate voted to begin the groundwork, with dates left uncertain. Rep. Jim Leach, ranking minority member of the House Banking Committee, will try to use Thursday’s session on the S&L bailout as a Whitewater forum. He wants to discuss charges of political interference in a federal probe of Madison Guaranty (page 20), the thrift once owned by James McDougal, the Clintons’ partner in the Whitewater home development.
The New York Times opened another front last week by reporting that Mrs. Clinton made $100,000 in cattle futures in the late 1970s, based on advice from a top attorney for Tyson Foods. The report implied that Tyson, the largest employer in Arkansas, got state loans as a result. But the White House brushed off the story.
On a purely personal level, Hubbell’s departure was Clinton’s worst news. Organizational charts listed him as number three at the Department of justice, but he was also Bill Clinton’s closest friend. it was Hubbell to whom the president turned for a round of golf, a college football game on TV or, in the old days, a quick drive from Little Rock to Memphis for a slab of ribs. “it absolutely ripped his gut out for Webb to leave,” says an adviser. Hubbell’s abrupt departure leaves the Justice Department in disarray and Attorney General Janet Reno without a bridge to the Oval Office. The resignation was handled through intermediaries, and the Clintons made no effort to talk Hubbell out of quitting, an indication of how serious his problems appear to be. Former partners at the Rose Law Firm in Little Rock accuse him of overcharging the firm for personal expenses and setting up a cozy billing arrangement for his father-in-law’s parking-meter company. Hubbell has denied any wrongdoing.
The latest events only deepened the Clintons’ resentment of their treatment at the hands of political enemies and the press. “Totally demoralized” is how one Arkansas friend described the couple. The president erupted in an interview with Knight-Ridder newspaper reporters last week, delivering an eye-bulging, finger-wagging tirade on the news media’s “frenzy.” When not enraged, he’s stunned by how “utterly surreal” his life has become, as one aide put it. “These people say, ‘What did you know and when did you know it?’,” Clinton recently told aides. “I say, ‘Who are these people and what planet am I on?’”
Aides caucused for hours to debate precisely how Clinton should respond publicly. Vice President Al Gore advised administration surrogates to project calm reassurance. Clinton’s political advisers urged combativeness. The consensus strategy could be called Operation Change the Subject: move the Clintons out of their White House bunker and demonstrate that they continue to care about “real” issues. Hillary went to Denver, to kick off a series of health-care forums. GIVE ‘EM HEALTH, HILLARY banners began showing up to drive the point. Bill did a town meeting in New Hampshire, the site of his political resurrection during the 1992 primary season. “Bless you,” he said to a woman who declared that Whitewater was for canoeing. At a Boston fund-raiser he pounded the lectern and shouted “no!” nine times to punctuate his charge that Whitewater is just another Republican obstruction to the domestic agenda. Asked the next day about his outburst, Clinton replied with bizarre disingenuousness, “I was not angry. I was happy.”
Over the weekend, the Clintons planned to try some humor at the annual Gridiron show, a dinner sponsored by Washington reporters. In a video produced with the help of a “Saturday Night Live” writer, the First Couple will appear as “Harry and Louise,” stars of the commercials financed by insurance interests opposed to the Clinton health plan.
Clintonites say Rostenkowski’s victory showed that when Clinton focuses on issues like health care and jobs, he is still an asset to Democrats. “It tells members that [Whitewater] is not a political albatross,” says Clinton adviser Paul Begala. Ironically one key GOP strategist argues that it is the Republicans who have become distracted by Whitewater. William Kristol of the Project for the Republican Future warned in a memo this week that Clinton’s health-care bill could slip through while the GOP debates Whitewater. “An ominous atmosphere of health-care conciliation has descended on the Capitol,” Kristol wrote.
Still, the administration’s efforts to get past the story inevitably end up creating more muddle. In a series of selective leaks, the White House had been preparing the press and the public for the idea that the Clintons may have inadvertently underpaid their taxes over the years, and that it does not reflect wrongdoing. Aides passed word that the Clintons’ personal legal team, headed by lawyer David Kendall, will show the Clintons lost significantly less on Whitewater than the $69,000 they had claimed and that they owe back taxes and penalties. But the White House subsequently issued a statement that seemed to back away from the possibility of underpayment.
The Clintons have clearly extended the life of the whitewater scandal through excessive secrecy and political misjudgment. One mistake may have been underestimating residual public doubts about the president’s “character”-a product of campaign episodes like Gennifer Flowers and revelations about his draft history. The longer Whitewater lingers, the more voters will be reminded that this is not the first time the Clintons tried to evade the truth. And the longer it will be before they can get back to governing.
There’s nothing trivial about the First Family owing back taxes. In 1992, the Clintons paid back $4,000 for deductions improperly written off their personal taxes that should have been written off the taxes of the Whitewater Corp. But it’s still unclear how much more the Clintons owe, and no evidence has surfaced yet of any intent to underpay. To prove tax evasion, the government requires clear evidence of intent.
She shouldn’t have represented Madison before a state regulator appointed by her husband. Still, it’s not that simple. A junior Rose lawyer’s brief asserting Madison’s right to issue preferred stock was copied to Hillary as supervising attorney. The regulator sent back a “Dear Hillary” advisory, but the plan was never formally sought. Although she did nothing Illegal, she should have kept more distance.
