roger altman house
Arthur Burns was the chairman of the Fed. There was concern that we had already spilled an enormous amount of blood on the economic plan. The feelings of people along the wayside were just very endearing. But you can imagine the irony of that comment because the Republicans to a man were opposing it because it is tax and spend economics, and the President is saying its going to go down because it is Wall Street economics. Education might be something in terms of opening. I believe Greenspan went to Little Rock. I think each person makes his or her own decision. The notion, by the way, in Bob Woodwards book, The Agenda, that Greenspan was hovering over the proceedings like an angel of death is completely fictitious. All types of dire predictions were put forward. Its fashionable for conservatives to say that the recovery had already begun on George H. W. Bushs watch and that if we just stood aside, the same results would have occurred, but those werent the economic forecasts we were looking at at the time, nor do I believe that school of thought to be accurate, but thats another matter. But Clinton did care quite a bit about it. I knew Bentsen enough by reputation to know it was not by any means all set up, so to speak, by the time I went in there. I should have said Larry Summers was an important part of that too. That was the logical place because I served there before. He observed to me right off the bat that this was going to be very complicated and no cakewalk, right off the bat. No. Not the first time he met with another head of state, but I think his first summit outside this country. So its really a role that varies from Secretary to Secretary in terms of what that Secretary wants, and thats just a history of it. So I dont think my reactions to that were really any different than anybody else following the campaign. I dont know how many people would have the political courage to do that, but I know I wouldnt have. You become President, theres a new Congress. I have to admit I didnt. 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. There just wasnt a candidate who had the capability to do that. This wont help you because its not very original, but theres something about President Clinton that had the effect of rubbing salt on a wound as far as his opponents were concerned. NAFTA had much broader support among the so-called or self-styled elites, the business leadership, all the economics community, the foreign policy establishment. No voters will cast their votes, even two years from now, even in 94, one year from now, on the basis of my having voted against it. Well, it was supposed to become the law of North America on January 1st, wasnt it? Its improved a lot since then, now become of course one of the leading universities in the country, but it was not at that time, in fairness. Well, I was thinking of both actually, but in the bill. But in any event, there I was, and this guy, as I say, was a master of the game. I dont recall precisely, but Im sure Im right that Clintons standing in the polls was ebbing. Youre only there because he allowed you to be, and you owe him a debt of gratitude for that because without him no service, and without service your life is less. I think our administration tried, as hard as it was possible to try, to change the dynamic of the U.S.-Japanese trade relationship. Youre serving your country. We had a macro economic task force. A lot of the talk was about the public credit markets responding, not so much the Fed. Im not sure anyone is ever going to pay a penalty in American society for that type of commentary. So in June 91 it wasnt completely unknown, it wasnt below the radar screen, but there was always a group of people who were political junkies and so forth, and Im certainly in that group, who were following it, just like theres a large number of people that are following it today, 17 months beforehand. Then, while the agreement called for there to be no further duties or tariffs or anything on everything, a whole variety of items were carved out in order to get certain votes. But by historians. It was a successful fundraiser. That was a factor. But its there on the record; everybody can read those reports. I think at the Pond House meetings there were also some of the Congressional leaders, werent there? I think thats a very important point because it turned out to be an awfully successful piece of legislation and not a single Republican voted for it. Clinton, as I mentioned before, held a series of marathon meetings, I recall that virtually all of them were on the Roosevelt Room, and they went on for four, five, six, seven hours, talking about possible elements of the economic program. Many people consider him, many of his opponents considered him to be setting new heights of insincerity and to have misrepresented a lot of his past. Fifty Republicans had announced their opposition, 49 Democrats had announced their support, and Bob Kerrey was strolling around, going to the movies, which is what he was doing. Did he come to you with an idea about what he wanted to focus on with the economy or some of his primary domestic policies, or was this at this point still in the process of being formulated? When we then proceeded on NAFTA [North American Free Trade Agreement], which was the next very dramatic moment. During the transition period, you are formally involved in the transition effort. 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. No, let me just correct the record. I was not involved in the decision as to the sequencing of healthcare versus welfare reform. No, he doesnt, not in terms of the way I would define close friends, genuine friends. This had been the thrust of the campaign, so expectations were very high that Clinton would come forward with a real economic program, a comprehensive program, and from the moment that all these folks were chosen the question was, what is that program going to be? Yes, because obviously I was seen as somebody who had business credentials to some degree, conservative credentials, by Democratic standards at least. I mean, I have no reservations about when Lloyd Bentsen approached me, I think he thought it was just going to be very brief and wed send some name up and it wouldnt take long to get that name confirmed and I might end up spending two or three months doing this. We had an autos task force with certain members of the Clinton administration and certain Japanese counterparts on that. He was fully free to say no to that. In the end the answer was no, nothing, period. I mean, I saw a lot of the two of them and I became quite friendly with Hillary, and by the time I left the administration was actually much more friendly with Hillary than I was with the President, even though ironically Id obviously known him first. One is that it had a very rocky beginning in New Hampshire, and Im wondering if you have recollections about your reaction to the news events that occurred and to the electoral results in New Hampshire and how the President was able to deal with those things. I was very pleased that he decided not to run because I thought it would just mean the Democrats might well lose again. I then had the brilliant ideaIm saying this, obviously sarcastically, that I should inform the White House what those procedural alternatives were. Actually the bigger debate was over what came after NAFTA, welfare reform or healthcare. I dont think there have been many members of Congress in the 20th centuryI would think of Lyndon Johnson, Russell Long, Richard Russell. Luck plays a big role in politics, and he was really lucky that a number of candidates who could have been very strong ones chose not to run. Were now in the pre-election period. I talk to the President now from time to time with some frequency. You havent told us about your own appointment. That they felt that people who had served the President. So its a free vote, ideologically and politically. Of course, during earlier phase of this, Bernie Nussbaum had resigned, mostly over the fact that he met with me on this original matter. McLarty called me in my hotel room in Tokyo and asked me if I would be willing to take in effect a leave of absence from the Treasury and go to manage a war room that they wanted to set up to try to get this bill passed, the Presidents economic program. 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. The election took place on the first Tuesday of November. So it depends a lot on the people. One of the things that you mentioned that was in your portfolio was selling the budget package. I think he saw the political opportunity presented by that in addition to the basic merits of NAFTA. A little bit. Can you walk us through that? Clinton had his own style of charm and Bush has a little bit different style, but not very different. Then once he started to make the rounds in New York, he generated very considerable positive reaction and became self-fulfilling, and raising money for him became quite a bit easier. Clinton of course had committed to that during the campaign and it made fiscal sense in the sense of there being so much economic slack. Then Marjorie made her famous walk to the well, with the Republicans serenading her, Bye, Bye Marjorie, but if theres a more dramatic moment that one can have in government service, at least if youre working in some sort of economic capacity, I cant think of it. Everything imaginable. I did the best I could. Now remember, Clinton had said he was going to cut the deficit in half. Was there awareness at that time, I mean, in the perspective of 2003, I recognize the world looks different. For example, out of that Tokyo summit, bilateral summit, Clinton, [Kiichi] Miyazawa, or whoever the Prime Minister was at the moment, came a commitment from the Japanese to lower their current account deficit from what I think was 2.5 percent of GDP [Gross Domestic Product] to less than 2 percent. Well, not really. Did you do anything else? I attended Georgetown University and I was a year ahead of him. 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. So we had no legal violation and no ethical violation and I had come to the conclusion that this thing was over. Thomas Jefferson is under-appreciated as a President. So it was a quick learning experience for Clinton. I mean I hired really good lawyers, and they told me pretty early in the process that on the substance there was no issue, that you have to worry about the fact that in this country prosecutions can become very political, but they just didnt think that it was much of an issue on the legal precedence and the substance. Anyway. That was the first thing I did. But I think the most that the Fed can be expected to do is move short rates. I mean, it was just a morgue. Do you have the perception that there were some other instances where maybe this wasnt done? That was the day the earth moved and Clintons view changed. But before then, somebody was charged with thinking about transitional issues, actually before the November election, and my question to you is whether, in your work in Treasury transition, you had relied on any work that had been done before? The great Presidents that you mentioned, the ones that loom large, as you said, are all crisis Presidents. I took a trip out to Oklahoma to visit the district of a Congressman from Oklahoma whose vote we needed, and ultimately I think we got. Not surprising, given his state of origin. Yes, but the independent counsel is not a Clinton-era novelty. Earlier in Little Rock, was she in attendance at any of these meetings? Less and less now that shes her own public figure, but thats her nature. It was easy. How early were you beginning to get a sense that the Republicans were going to be an historically difficult problem for this President? Well, the war room, first of all, was operated quite differently from the National Economic Council. Was there a representative of the campaign. Its very puzzling to me how that could happen when the man had such an obvious gift for feeling peoples pain and a very strong public presence. It was a few votes, not one vote. So it was a very interesting dynamic. Im a little too close to this, because Im not sure how history will view it. A lot of time of the National Economic Council was spent on it. The political process requires an outcome. As I recall, Al Gore wanted it, cared a great deal about it, to some considerable degree got his way on it. The first summit was easy; there were no huge international tensions. And it turned around and by November 84 as you remember, it was Morning in America and he won 49 states. So my average day was spent a few blocks from here, working full-tilt on the business responsibilities I had. So he chose someone who not only had a great reputation and tremendous stature, but who could particularly help him with Congress, and it was a shrewd choice. The hearings ended around the fourth or fifth of August and it was now the seventeenth or something. But, in any event, the presentations were very effective and that was, I think, the most important single day in the evolution of that original policy. I really believe it was that day that his view changed. By the time 94 was over, the Congress was in Republican hands. I think we had a sandwich or something and I took off and went back to the airport. There were so many different Japanese Prime Ministers in that period I cant remember which one we had at that moment. For example, Putting People First was reissued, I believe in June of 92. So we were not classmates, and we were not buddies in that sense, but we knew each other pretty well by standards of students who were not in the same year. And its not the right move to inform a Cabinet officer that his team is Mr. X, Miss Y, and Miss Z. So you wouldnt have had any involvement on Capitol Hill or anything like that at the time? It was just not the way to run the railroad. I did. He loved it. This is just a tradition, The answer is, in my viewthis is just my recollection now, other people would have a different onewas economics first, foreign policy second. I guess we have to just win then. We sat there, the two of us, watching it on television, mostly in silence. She had a million task forces, but the senior one. Right around that time I was put in charge of the Treasury transition. A certain candidate or two will be perceived as the heavyweights in the field, and thats an amorphous thing, but you become anointed that way by the media, and if you have the right set of political skills you can capitalize on it. Bentsen was chosen during the first week of December. But fundamentally, I was getting those assignments from the legislative staff. But, you know, its history, its participating right there in the actual, critical moment of history, and the sense of participating is very uplifting. One of the reasons it was bloodless was because the Soviets knew what they had and didnt have and what we had and they didnt have. There was quite a discussion that day about long-term interest rates, as I said the credit markets rather than the Fed. Yes, hes just that way. I would say presided over, Id have to check the statistics, but probably the greatest period of economic prosperity in the entire century, or ushered in the greatest period of prosperity in the entire century. There was some action forcing the schedule and the President would have had to ditch the treaty, just say, Ive decided Im not for it. I was given an office over in the Treasury. He told me what was going to happen to the Clinton healthcare bill the day it was announced, actually before it was announced. Bob Rubin was the ultimate financial market person, knew the role of the Federal Reserve so well. The American political system has changed a lot. You didnt have to spend much time around them to see this. I think it just evolved rather randomly that not many of those former Carter people got involved with Clinton. To cut the deficit in half to run because I served there before the world different. 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