Decisive moments in Clinton presidency Aides differ on when tide turned in his favor; DEMOCRATIC CONVENTION; CAMPAIGN 1996

THE BALTIMORE SUN

CHICAGO -- In the third week of January 1995, President Clinton summoned several Cabinet-level officials to an emergency Oval Office meeting on the deteriorating economic crisis in Mexico.

It was like no other meeting in the Clinton White House, and to one participant, the swift decisiveness of the president that day foreshadowed a reversal in the fortunes of the then-reeling Clinton presidency.

Tonight, when Clinton addresses the Democratic National Convention, his approval rating will be above 50 percent, and his lead over Republican Bob Dole will be at least nine to 12 points.

Most observers point to the epic budget showdown last winter as the defining event in restoring Clinton's political stature. Inside the White House, however, senior aides also believe that a series of less-noticed episodes during 1995 -- such as his handling of the peso crisis -- put him in position to take advantage when Republicans overplayed their hand on the budget.

The year began with Republicans ascending to power after the mid-term elections of 1994. They had taken control of both houses of Congress for the first time in 40 years, swept to victories in every contested governor's race -- and they had done it by making Clinton the issue.

Major health care reform -- at least as envisioned by Hillary Rodham Clinton's task force -- was dead. Republicans were in a position to shape the federal budget, and GOP leaders were setting their sights on the White House.

Publicly, Clinton conceded he was part of the reason the electorate was so dissatisfied. Privately, he complained bitterly to aides that Americans didn't appreciate what he'd been trying to do.

"He'd just had his head handed to him [in the elections]," said presidential adviser George Stephanopoulos.

But gradually, over the next year and a half, the Clinton White House turned itself around.

To White House director of communications Donald Baer, the first sign was the president's decision in June to counter the Republicans' seven-year balanced budget plan with one of his own.

"He wouldn't have been able to do what he did in the budget fight in the fall and winter if he hadn't offered that," Baer said.

"We wouldn't have had any credibility."

This move, controversial among House Democrats and liberals on the White House staff, was the first tangible sign that longtime Clinton guru Richard Morris had the president's ear.

"Dick was pushing hard for that," says Baer. "And when the Democrats on the Hill reacted against it, I remember being even more sure we were on the right track."

Swift action on peso crisis

To Stephanopoulos, the event that foreshadowed Clinton's new success was earlier, in that Oval Office meeting on Mexico.

Seated on a couch in the room that day were Secretary of State Warren Christopher, National Security Adviser Anthony Lake and newly installed Treasury Secretary Robert E. Rubin. Other top aides, including Stephanopoulos and chief of staff Leon E. Panetta, stood off to the side. The subject was the plunging Mexican peso.

Dole, then Senate majority leader, and new House Speaker Newt Gingrich had personally assured the president a week before that they would back his plan to shore up Mexico's currency.

Days later, they reported back that the White House could count on half the votes it needed from the Republicans -- meaning Clinton would have to garner the other half from Democrats in Congress for his plan to be enacted.

"It's their president," said House GOP leader Dick Armey.

But on Capitol Hill, Democratic leaders who blamed their mid-term losses on Clinton were in no mood to make sacrifices for him. Aware that he might lack the necessary support from his own party, the president asked Christopher, Lake and Rubin about the risk of doing nothing.

The trio argued that if nothing were done, Mexico's economy would all but collapse, dragging American border states down with it, vastly increasing immigration pressures on the United States and threatening the stability of Mexico's democracy.

But there was a third possibility, Rubin told Clinton. He could go it alone. As Rubin explained it, the president possessed the authority to draw on some $20 billion he could lend to Mexico.

"The president just thought about it for a brief moment, then said, 'Let's do it,' " recalled Stephanopoulos. "I'd never seen him like that. The whole meeting took 15 minutes."

White House political director Douglas Sosnik views another moment as the turning point. It came on April 7, 1995. Clinton was scheduled to give a speech in Dallas to the American Society of Newspaper Editors.

Top White House officials, including Panetta and deputy chief of staff Harold Ickes, wanted the president to speak on education -- VTC in fact, they thought the address was going to be on education right up until it was delivered.

Enter the 'Other Voice'

Instead, the president outlined a three-tiered strategy for dealing with the GOP Congress. First, he said, he would work with the Republicans where the two sides could find common ground. Second, he suggested that he would try to shape legislation he wasn't wild about, but could accept with modifications, by threatening a veto. Third, if they passed measures he thought were bad for the country, he would veto them.

Mike McCurry, the presidential press secretary, recalls wondering where the speech came from: "It was clear he'd been listening to this Other Voice."

That voice belonged to Morris, a secretive political consultant who had battled with Ickes in the 1960s when both were young liberals in New York, helped to launch Clinton's political career in the 1970s and gone on to work almost exclusively for conservative Republicans as a campaign consultant in the 1980s.

After the trauma of the 1994 elections, Clinton had quietly reached out to his old confidant. Morris' advice was at once intricate and simple: Move to the center of the political spectrum.

Both Clinton and Morris, knowing that Morris' presence would ruffle feathers, carried out a charade for a while. When Morris came to town, he would check into the Jefferson Hotel under an assumed name. When he called the White House, he was "Charlie."

"That Dallas speech was Dick Morris' coming-out moment," said McCurry. "He was no longer incognito. It precipitated a battle with Panetta. We had to sort out Morris' role."

To Sosnik, there was something about that Dallas speech that was more important than inter-office rivalries: Clinton seemed for the first time in months to be himself again.

"You always want a candidate who is comfortable in his own skin," Sosnik says. "Suddenly, he was comfortable again."

For McCurry the turning point came less than two weeks later, on April 19, after the Oklahoma City tragedy. He believes that Clinton's ability to give voice to the nation's outrage at the bombing while also leading it in mourning was a seminal event.

"My son Christopher was born two days after the bombing, so I was home with my wife when Clinton spoke to the nation about it," McCurry said.

"I watched him on television. I just sat there with Debra, holding the baby, weeping as he talked. I think that was when Clinton was awakened to the key tool of the presidency -- the awesome power of the bully pulpit."

Pub Date: 8/29/96

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