Politics

Panetta's Moment

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Bill Clinton was being treated to the good side of Newt Gingrich. When congressional leaders gathered at the White House in July for a dinner devoted to foreign affairs, the Speaker was, recalls a top Clinton official, like Wellington opining on world affairs. Gingrich lamented those Republicans who would slash contributions to the U.N. "We have to find a way to get more of them to travel abroad," Gingrich said.

Clinton officials wish this was the Newt Gingrich they dealt with all the timestatesmanlike, bipartisan. Alas, they know better. "It's like Wellington, yes, but Wellington leading the Huns," says the Clinton official, disparaging Gingrich's House. And it is in the fight over the budget that Gingrich most resembles not a British statesman but a German Vandal.

Clinton aides are buoyed by pollsincluding private numbers garnered by Clinton pollsters Mark Penn and Doug Schoenthat show the Republicans hemorrhaging. The public finds the GOP's cuts too extreme, Gingrich too rabid. "It's like health care," says another Clinton pollster, Stanley Greenberg. "People are concerned. They feel the process is moving too fast." White House officials know, however, that their joyride could also come to a screeching halt: if the budget deal collapses, the president will suffer.

More than anyone in the West Wing, Leon Panetta is responsible for making sure Clinton comes out on top. Of course, in any administration, the chief of staff would play a determining role in budget negotiations. But Panetta comes to the table immersed in the minutiae of reconciliation, appropriation and other buzzwords of the budget morass. In the '80s, Panetta chaired the House Budget Committee; in the '90s, he directed the Office of Management and Budget, where his deficit hawkishness led ex-Clinton adviser Paul Begala to tell Bob Woodward that Panetta was "the Poster Boy for Economic Constipation."

These days, at the very least, Panetta is a poster boy for stamina. Each workday morning is consumed by the budget. At the 7:30 a.m. senior staff meeting,  Panetta can be seen at the long table in his West Wing office, near photos of the tumultuous coastline of his native Monterey, California, and a photo of Mr. Smith Goes to Washington director Frank Capra visiting the Lincoln Memorial. With a yellow legal pad before him, Panetta begins each meeting with foreign affairs, a tip of the hat to cold war tradition. But the second, more pressing topic is invariably the budget, and it is here that Panetta is making his mark. “He's the field general,” says Clinton adviser George Stephanopoulos. That may be an exaggeration, but on many fronts Panetta leads the charge. When it comes to negotiating with the Hill, Panetta is the man to see. The coordination of administration efforts--from crunching numbers to staging events like a recent Clinton phone call to rural leaders to bemoan GOP cuts--is under Panetta's purview. This is the Panetta moment.

Whether Panetta will be given authority to cut deals himself remains uncertain. “We did the negotiating with Leon,” says a senior Republican, recalling the rescissions bill that passed earlier this year. “But when it came down to the final deal we dealt with Clinton, Gore, Hillary, everyone but Socks.” Panetta knows that Clinton, who kept him in the dark about the key role of adviser Dick Morris, is a coy arbiter who seeks counsel far and wide, revealing his hand only after hinting at his agreement.

Panetta faces a Congress and a president who remain worlds apart. Crash-and-burn scenarios being war-gamed at the White House take on more credence. Clinton could well veto a reconciliation bill that cuts Medicare too much or ends signature programs like his expanded Earned Income Tax Credit.

Most observers have blamed this budget stalemate on ideology, but the hidden burr is memory. For Panetta and Gingrich, the budget battle is shadowed by the recollection of the 1990 budget summit when George Bush abandoned his no-new-taxes pledge. At a closed door meeting at Andrews Air Force Base near Washington, the two squared off. Panetta, then House Budget Chairman, cut the deal. Gingrich walked out, the sole dissenter. “He sat in the back of the room reading the newspaper,” recalls one Democrat who was at Andrews. “We knew he wouldn't come along.” To this day, Panetta sees 1990 as a triumph of responsibility. That is not surprising. Panetta, a Republican who turned Democrat in 1971an era when such things actually happened--is like another ex-Republican, Bob Kerrey: he still has a fiscal conservative streak. (Panetta, a Nixon-era official, bolted the GOP over civil rights, not economics.) No wonder Tip O'Neill felt the avuncular Californian insufficiently loyal and blocked him, for a time, from chairing the House Budget Committee. Panetta, thus, recalls the 1990 deal with pride, a model of fiscal sanity. (Most Democrats celebrate the Andrews agreement because it forced Bush to flip-flop.) Panetta, who wishes Bush had defended their deal, longs for a bipartisan era. “In the past you had people like Tom Foley, George Mitchell or for that matter Bob Dole or Bob Michel who in the end were more interested in making the process work,” Panetta told me. “They would never have contemplated defaulting on the debt ceiling.”

Today, though, it is a rougher era, perhaps less suited to Panetta-style geniality. The House, after all, is now led by someone who recalls his 1990 dissent as his finest, Churchillian hour. Indeed, Gingrich's famed cri de coeur at Andrews catapulted him from gadfly to Speaker; it enshrined him in GOP mythology as the first to predict and distance himself from the Bush demise. When he visited the White House in September, Gingrich stood in the Cabinet Room, pointing to the spot where, in 1990, he told Bush that the Andrews deal “was the biggest disaster of your presidency.” Clintonites pray that the Speakership has tamed Gingrich. “Now, Gingrich is Bush. He has to deal,” says a top Clinton adviser. Perhaps. But many Republicans think that Gingrich would relish walking again, leaving Leon and his legal pad in the lurch.

This article originally ran in the November 6, 1995, issue of the magazine.

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