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Inside Politics

President Clinton Strikes Deal With Independent Counsel; Washington Welcomes the Bushes

Aired January 19, 2001 - 5:00 p.m. ET



JAKE SIEWERT, WHITE HOUSE PRESS SECRETARY: Today represents the conclusion of the Lewinsky investigation by the Office of the Independent Counsel.

ROBERT RAY, INDEPENDENT COUNSEL: President Clinton has acknowledged responsibility for his actions.


BERNARD SHAW, CNN ANCHOR: A chapter of scandal closes for President Clinton. We'll have details on the deal he closed today with the independent counsel.

JUDY WOODRUFF, CNN ANCHOR: Also ahead: The next first lady weighs in on the abortion controversy. Does she see eye-to-eye with the president-elect?

SHAW: And we'll have more live coverage of these festivities on this eve of the Bush inauguration.

ANNOUNCER: This is a special edition of INSIDE POLITICS, with Bernard Shaw and Judy Woodruff in Washington, and analysts Jeff Greenfield and Bill Schneider.

WOODRUFF: Thank you for joining us.

In less than 24 hours, George W. Bush will be sworn in at the Capitol Building behind us. But President Clinton is, at least to some degree, stealing the show. On his final full day in the White House, Mr. Clinton reached an agreement and made an admission: guaranteeing the independent counsel's investigation of him would go away.

Here is our senior White House correspondent John King.


JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): On his last full day in office, one last drama: a deal that ends the Monica Lewinsky investigation and removes the threat of prosecution when he leaves office. President Clinton acknowledged in this court filing that, when testifying under oath in the Paula Jones sexual-harassment case, he "knowingly gave evasive and misleading answers concerning his relationship with Monica Lewinsky," and that, in doing so, "he engaged in conduct that is prejudicial to the administration of justice."

At issue, this sworn testimony back in January, 1998.


UNIDENTIFIED MALE: At any time, were you and Monica Lewinsky together alone in the Oval Office?


UNIDENTIFIED MALE: Did you ever have an extramarital sexual affair with Monica Lewinsky?



KING: Mr. Clinton agreed to a five-year suspension of his law license and to pay $25,000 to settle disbarment proceedings back home in Arkansas. In exchange, independent counsel Robert Ray agreed to close a seven-year investigation that was initially about the first family's Whitewater land dealings, but ultimately turned to Lewinsky and led to the president's impeachment.

RAY: This matter is now concluded. May history and the American people judge that it has been concluded justly.

KING: Clinton lawyer David Kendall negotiated the deal.

DAVID KENDALL, CLINTON ATTY.: He has, from the beginning, at least from the grand jury, conceded that he tried to conceal the relationship with Ms. Lewinsky. He tried to conceal that. And we have acknowledged that that was evasive and misleading.

In the end, Mr. Clinton paid $850,000 to settle the Jones case, a $90,000 fine for contempt of court for giving misleading testimony, the new $25,000 fine to settle the disbarment proceedings. And he agreed not to seek reimbursement for the millions he has spent defending himself against the independent counsel. To the end, allies insisted much of it was a partisan witch-hunt.

JOHN PODESTA, WHITE HOUSE CHIEF OF STAFF: After you peel away all these other investigations, what did you find at the end of the day? There was nothing to Whitewater. There was nothing to most of these other things that he was subpoenaed for, investigated for.

KING: But the affair and impeachment will forever cloud assessments of his presidency.

DAVID GERGEN, FORMER CLINTON WHITE HOUSE ADVISER: There's no doubt in my mind that the struggle over the Lewinsky issue and all that cost him the opportunity to reform Medicare, and I think probably Social Security. So it did have -- it was very, very expensive to him politically, in terms of his legacy.


KING: Now, Mr. Clinton had repeatedly said he was prepared to defend himself once he left office. But he authorized those secret negotiations between his lawyer and the independent counsel, believing it was best, if he could get a deal, that he leave office without the cloud of investigation, as he ends his political career and his wife -- and as his wife begins hers in the U.S. Senate -- Judy.

WOODRUFF: All right, John, I want you to stay with us, because right now we are going to be joined by CNN's Bob Franken, who has been covering the investigation of President Clinton since day one -- Bob.

BOB FRANKEN, CNN CORRESPONDENT: Well, like so much of this investigation, it involves a parsing of words. Every single word in the acknowledgment made by President Clinton involved heavy negotiations between attorney David Kendall and independent counsel Robert Ray.

For instance, Robert Ray wanted the word "false" used, as opposed to "evasive" and "misleading." They negotiated the less-impact words "evasive" and "misleading." They negotiated the word "knowingly." "Intentionally" was not a word that was used. That may have more impact. The independent counsel insisted that the term "prejudicial" to the administration of justice was in there.

That is, according to people close to the independent counsel, a desire to have the president on the record talking about the fact that he may have violated standards of obstruction of justice. There are other questions about, for instance: "knowingly." Does that meet the standard in a perjury matter of willfully telling a lie under oath? Does the question raise up questions about criminal contempt? Every single word of this was meant to create an impression, both sides trying to get what they wanted and not giving away anything -- Judy.

WOODRUFF: Bob, let me bring John King back in here.

John, why so much agonizing over this language? At one point, the president says in the statement: "As it turns out, my testimony was false." Why doesn't he just go out and say: I didn't tell the truth; I lied?

KING: Because he's the president of the United States. And we are sitting here on his final full day in office debating his legacy. Historians will do it for the next 25 years. He does not want the record to say that he knowingly lied or that he knowingly obstructed justice. And, indeed, his lawyers and his staff say he did not, that -- remember, they're trying to make the distinction that when he testified in the Paula Jones case, that he thought questions about Monica Lewinsky were out of bounds.

He thought questions about his personal life were out of bounds. And so, in a civil deposition, he was being evasive. They will not use the words deliberately lied. They say evasive. They're also trying to make the distinction that, in the criminal testimony, in the Ken Starr case, that they believe he told the truth.

So what they're trying to say here is: Look, this was a deposition in a civil case that we think was a political witch-hunt, and the president fudged. And in this criminal case, he told the truth. And none of this should happened to begin with.

But as we know, it did happen. The president paid a very high price for it financially. And he will certainly pay a very high price for it in terms of the ongoing debate over his political legacy.

WOODRUFF: And just quickly to Bob Franken: Bob, how much leverage in all of this did Robert Ray have? Could he have, if wanted to, brought an indictment and then carried through with a jury here in Washington?

FRANKEN: Well, that's actually a two-part answer. He made it very clear that he was pursuing the indictment. It was also made very clear that he had very little chance of ever getting a guilty plea in Washington, or, quite frankly, anywhere in the United States, a country that is probably -- no probably about it -- sick and tired of this entire matter.

WOODRUFF: All right, Bob Franken and John King, thank you, both -- Bernie.

SHAW: Now let's bring in our senior analyst Jeff Greenfield and senior political analyst Bill Schneider.

The legal cloud has been lifted. The perception cloud remains.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: The perception cloud remains. We are heavy into Clintonian distinctions here. It depends on what the meaning of "knowingly" is when we analyze this. But, look, what this amounts to is a public shaming, which is what a lot of Americans thought that Clinton needed.

After he was acquitted, there was never a feeling that he should have been driven out of office. And there was never much sentiment that he should be subject to criminal penalties. But some form of public shaming was in order. And, in fact, we have found over the past two years, since he was acquitted, more and more Americans say: It was right -- that Congress was right to impeach him. They never should have driven him out of office. They didn't want that. And they still don't think that should have happened.

But they think impeachment was the proper penalty. And he's ending his administration with the kind of public shaming that I think a lot of Americans think is appropriate.

SHAW: Jeff.

JEFF GREENFIELD, CNN SENIOR ANALYST: There are three people who should be joining us today. The first is Humpty Dumpty, who, in "Alice in Wonderland," said: When I use a word, it means what I say it means.

And this has been the history of President Clinton's use of language. The second is comedian Jackie Mason, who is the only one who could do justice to a statement like this: I knew I was evasive, but I didn't know I was knowingly false. But later, after I knew what I didn't know then, now I know I was false.

And the third is George Orwell -- more seriously -- who talked about the impact of bad language and bad thought in that classic essay, "Politics and the English Language." And when we consider Clinton's legacy, I will say I think one of the things that he did that we will not approve of is the way he made the use and abuse of political language even worse than it was when he got here.

SCHNEIDER: And there was a consequence. Remember John McCain? He was the candidate last year who caught the public's -- the voters' imagination, more than Bush and Gore. Remember what his theme was: straight talk. Americans responded to that because that defined John McCain as the un-Clinton, someone who wouldn't say: "It depends on what the meaning of is is," "I didn't inhale," "I did not have sexual relations with this woman," knowingly gave evasive and misleading answers.

McCain caught the public imagination because he said: I'm going to give you straight talk.

WOODRUFF: But in many respects, Jeff Greenfield, the president had already -- I mean, the lawyers for the president had already acknowledged that there was misleading -- there was something misleading going on here. Do today's events really change the public perception of him?

GREENFIELD: I think they en -- I was going to say enhance. Let's say they underline the public perception of him, because now the man has agreed to be suspended from the practice of law for five years. Nobody thought that was because he was going to go to Arkansas and start doing real estate closings, but it was a way to put on the record -- and I think this was the most important thing to the independent counsel -- that this was not -- what happened back in 1998 was not simply a private act, a private misdeed. It had public consequences.

And since the -- since the country didn't want him impeached -- and I don't think anybody wanted the president prosecuted criminally -- this is as close as you can get to an official declaration by an official body that what the president did had public deleterious consequences. And I think that's what this was about.

SHAW: Well, let's move on. There's still one other story: a postscript to this Clinton-Lewinsky saga. Linda Tripp was fired from her Pentagon job today by the Clinton administration. The White House says Tripp was asked to resign, like all political appointees, to make way for the Bush administration. But she refused. The woman whose secret tape recordings led to Mr. Clinton's impeachment is out of the country. But her lawyer charged that Tripp's termination was mean- spirited. And he accused Mr. Clinton of ending his presidency on a -- quote -- "vengeful note."

The ending of the Clinton era and the dawn of the second Bush administration are evident all over this great Capital City. At the White House, officials and staffers are packing up and moving out. The Clinton team may have to pull an all-nighter to get the job done. Meantime, president-elect Bush has been taking part in preinaugural activities, including this salute to veterans and a celebration of authors, hosted by his Laura Bush.

WOODRUFF: Earlier today, I spoke with a key player in the Bush transition: White House chief of staff-designate Andrew Card. I began by asking him about President Clinton's deal today with the independent counsel, Robert Ray, and whether Mr. Clinton's admission that he gave misleading testimony tarnished his reputation.


ANDREW CARD, WHITE HOUSE CHIEF OF STAFF-DESIGNATE: Well, I think I'll let history decide that. The chapter on the Clinton presidency will be closed this Saturday at 11:59. And, you know, this will be the last page in that chapter. But we're looking forward to the future.

And president-elect Bush, when he takes the oath of office to become our president on Saturday, it will be a new beginning for America. And I think we will be excited.

WOODRUFF: You were the one who gave the president-elect this news last evening. What was the reaction?

CARD: Well, he was surprised. He didn't expect it to happen. I think that he thought that the independent counsel might offer a report later on. But he was surprised. But we only have one president at a time in this country. And the president today is Bill Clinton. On Saturday afternoon, it will be George W. Bush. And we're not going to look back. We're looking forward.

WOODRUFF: Talk about the inaugural address. What do you want? What does Mr. Bush want the American people to take away from it?

CARD: Well, first of all, he's going to deliver a short address. And I hope America listens to it. It's a wonderful address. He'll talk about the need for courage and compassion and character in America. It will be a lofty speech. It won't be a laundry list of issues and policies that he wants to bring to the table. Instead, he'll talk about the challenges that we have as Americans and as citizens.

So I think it will be a good speech. It will be a rallying cry for America to come together to unite. And I hope America does pay attention.

WOODRUFF: People are looking in the first days of the new administration, Andy Card, for a difference with this president. What will they see? What will be different? CARD: Well, we have a president who is optimistic. And he is full of hope. And he'll work hard to bring America together. He'll work hard with Democrats and Republicans on Capitol Hill. He'll try to demonstrate that he'll be president of all of the people of this country. He did that as governor of Texas, where he worked well to bring a lot of meaningful reforms to Texas. And he worked with Democrats there to make it happen.

I think you will find him reaching across the aisle here in Washington, D.C. to work with Democrats in Congress. And I hope they'll extend their hand as well, because this has got to be a partnership.

WOODRUFF: Are there specific steps that he's going to take in the first few days, specific actions he's going to take that will send these signals that you are describing?

CARD: Well, the first week of the administration, we'll be talking about education reform. And that will be a bipartisan effort. We'll call for more accountability in our education system. And he'll be meeting with congressional leaders, both Republicans and Democrats, to bring the education-reform debate to the floor of the Congress.

WOODRUFF: Well, let me ask you, beyond that, you've been through inaugurations before. You were part of the previous Bush administration. Does this feel any different, do you think, because of the circumstances of the election?

CARD: Well, this is truly a historic time. You know, it's a very, very special election because we have a president that will be watching his son become president. And we also have a situation where the Republicans are controlling the White House. They control both houses of Congress. That hasn't happened in a very, very long time.

They may not control by many votes. But when the vice president is sworn in, they will control both branches of Congress. We also know that this is a challenging time because Congress is so divided. But I think President Bush is the right person to demonstrate to America that we can make things happen by working together. And he'll demonstrate that by working so hard with the members of Congress on both sides of the aisle.

WOODRUFF: What do you say to people who will be looking at father and son, not just tomorrow, but in weeks and months ahead? What is different about the governing styles of these two men?

CARD: Well, they are very different. President George Herbert Walker Bush had a style. And George W. Bush has a style. George W. Bush is a little more quick with some of his decisions. He's a great listener, very, very good student. He does his homework. President Bush was more of a gentleman, kind of a New England gentleman, where George W. Bush is West Texas. And you will see the difference.

WOODRUFF: Finally, Andy Card, whatever the weather is tomorrow, is it in any way going to put a damper on all the festivities have you planned? CARD: Well, I don't know what the weather forecast really is for tomorrow. But it's my understanding the events will still take place outside. And we'll have a great time. And, you know, it's less about the weather and more about the change in administrations. We're going to have a new day dawning at noontime on Saturday.

WOODRUFF: All right, Andy Card, we look forward to working with you to covering your administration. And thanks for joining us today.

CARD: Thank you, Judy. Have a great day.


WOODRUFF: Andy Card, the incoming chief of staff in the Bush White House.

Still ahead on INSIDE POLITICS: The first lady-to-be answers questions on the issue of abortion. Plus, the hearings end with John Ashcroft's confirmation nearly certain. The question: How many senators will vote no?

But first: an "Inaugural Moment" from 1957.

(BEGIN VIDEO CLIP, January 20, 1957)

ANNOUNCER: President Eisenhower began his second term as leader, not only of America, but all free peoples. His inauguration address was a peace plea.

DWIGHT D. EISENHOWER, PRESIDENT OF THE UNITED STATES: May the turbulence of our age yield to the true time of peace, when men and nations shall share a life that honors the dignity of each.

ANNOUNCER: A hope devotedly echoed by all.



SHAW: The band "Nine Days" performing here in this celebration of American's youth. President-elect Bush is in the audience along with other dignitaries, as the pre-inauguration festivities continue.


SHAW: They're doing the number-one hit from their album, "Madding Crowd." The song: "Absolutely (Story of a Girl)," one of the most requested videos.

On the eve of her husband's inauguration, Laura Bush disclosed some of her personal views on the controversial issue of abortion. In the television interview, Mrs. Bush said more on the topic than at any time during the campaign.

Kelly Wallace reports.


KELLY WALLACE, CNN CORRESPONDENT (voice-over): Laura Bush makes her debut as first lady celebrating America's authors and stepping into the abortion debate, telling NBC's "Today Show" the 1973 Supreme Court ruling, Roe vs. Wade, legalizing abortion, should not be overturned.


KATIE COURIC, HOST: Should Roe vs. Wade, for example, be overturned?

LAURA BUSH, FUTURE FIRST LADY: No, I don't think it should be overturned.


WALLACE: Aides say that answer came only after the future first lady stressed twice that she, like her husband, believes more can be done to minimize abortions.


L. BUSH: And that is by talking about responsibility with girls and boys, by teaching abstinence.


WALLACE: During the presidential campaign, Mrs. Bush was mostly silent on the abortion issue, while Mr. Bush indicated he supported a constitutional ban on abortion -- with some exceptions -- but didn't think there support for such a measure.

GEORGE W. BUSH, PRESIDENT-ELECT OF THE UNITED STATES: We don't live in an ideal world right now.

WALLACE: The president-elect's aides say he is focusing his efforts on where he can be most effective.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY DESIGNEE: What he said is the same as he said throughout the campaign: that he is pro- life and he thought that the Roe vs. Wade decision was not based on a sound reading. And he is going to focus his attention on those areas where we can immediately make some differences.

WALLACE: And that could include reversing Clinton administration executive orders, further angering abortion-rights supporters after the appointment of social conservative John Ashcroft for attorney general.

KAE MCLAUGHLIN, TEXAS ABORTION RIGHTS ACTIVIST: We have seen nothing but anti-choice from the governor, as the governor of Texas. And we have no reason to believe that if there are pro-choice values in the household, that they have had any effect on him whatsoever.

WALLACE: Abortions-rights opponents shrugged off Laura Bush's comments. In a statement, the National Right to Life Committee said --- quote -- "George W. Bush is pro-life. And we think he will make a great pro-life president."

(on camera): Mrs. Bush's mother-in-law Barbara Bush did not talk about abortion while in the White House. But once she left, she revealed her support of a woman's right to choose. It's not clear if Laura Bush wanted to get her views out in the open or if she wishes she had ducked the question.

Kelly Wallace, CNN, Washington.


SHAW: On Capitol Hill, by a unanimous vote, the Senate Armed Services committee has approved president-elect Bush's choice for defense secretary. The Senate is expected to vote on the confirmation of Donald Rumsfeld tomorrow after the inauguration. The Senate will also vote on the confirmation of secretary of state nominee Colin Powell and treasury secretary nominee Paul O'Neill tomorrow. O'Neill is expected to receive Finance Committee approval before tomorrow's vote.

WOODRUFF: The fate of one other Bush nominee, attorney general choice John Ashcroft, is closer to resolution today. The confirmation hearing is over. And despite Democratic opposition, Republicans say they are confident that Ashcroft has enough Senate support to survive the vote.

Jonathan Karl takes a closer look at the controversy and the road ahead.


JONATHAN KARL, CNN CORRESPONDENT (voice-over): The hearings now over, the question seems to be no longer whether John Ashcroft will be confirmed, but how big his margin of victory will be.

SEN. ORRIN HATCH (R), UTAH: I have no doubt he will be confirmed.

KARL (on camera): How close do you think this is going to be?

HATCH: Well, that I wouldn't want to speculate on.

KARL (voice-over): Others, including Ashcroft's Democratic critics, are speculating, predicting between 60 and 65 senators will vote to confirm Ashcroft as attorney general. Ashcroft drew some harsh criticism during the four days of hearings, but in the end, provided measured answers, assuring his critics he would vigorously enforce laws he disagrees with on abortion, gun control and civil rights. Some Democrats say Ashcroft has undergone a confirmation conversion.

SEN PATRICK LEAHY (D-VT), JUDICIARY COMMITTEE: What we have seen over the past four days has, in many ways, been breathtaking. In Senator Ashcroft's mind, Roe vs. Wade is now settled law. Senator Ashcroft not only now endorses the assault-weapons ban, he will now lobby president-elect Bush to extend it.

KARL: Openly doubting Ashcroft's sincerity, Leahy questioned whether, despite his assurances, Ashcroft would use the Justice Department to pursue a conservative agenda.

LEAHY: At the time the Senate votes on Senator Ashcroft, will everything go back to what it was, where old policy positions become dominant, and where the John Ashcroft we have seen over the past few days perhaps reverts to the John Ashcroft we have watched vote all these years?

KARL: For their part, Republicans took offense at the suggestion Ashcroft wouldn't keep his word once confirmed.

HATCH: I don't know of one senator in the whole United States Senate who would disagree with a statement that this is an honorable man of integrity, that when he says he'll do something, he will do it.

KARL: Republicans also complained that liberal interest groups, including some of those who testified before the hearings, had unfairly maligned Ashcroft's record. But they said Ashcroft emerged unscathed.

SEN. JEFF SESSIONS (R-AL), JUDICIARY COMMITTEE: I thought, basically, the case against John Ashcroft collapsed, totally collapsed. And I believe he'll be confirmed, and I'm hoping with quite a number of Democrats to vote with him.


KARL: Republicans, who will once again be in control the Senate tomorrow after Dick Cheney is sworn in, are hoping to schedule a Judiciary Committee vote on Ashcroft's nomination on Wednesday, paving the way for a vote of the full Senate shortly after that -- Judy.

WOODRUFF: Jon, separately, I understand there was a development today with regard to campaign-finance reform?

KARL: Yes, another development: President -- or soon-to-be President Bush has invited John McCain to discuss his approach to campaign-finance reform. We assume -- I say assume because McCain had not even known of the invitation until it was announced today at Ari Fleischer's briefing. In fact, McCain's staff said they had no idea that they would be headed to the White House. But they are going on Wednesday, supposedly to discuss the status of campaign-finance reform.

And that status, Judy, is one of great controversy here in the Senate. McCain has been clashing with Trent Lott, the majority -- soon-to-be majority leader here in the Senate. McCain is saying that on Monday he will hold a press conference here with his co-sponsors of campaign-finance reform, saying that he is going to go ahead right away on the Senate floor with his campaign-finance reform measures, something that Republican leadership members like Trent Lott have been urging him not to do. They have been trying to get him to wait until at least a few months down the road, giving George W. Bush a chance to pursue his agenda first, but McCain saying he's not ready for compromise on the issue.

WOODRUFF: All right, McCain: Monday press conference and Wednesday evening at the White House to talk to then-President Bush.

Jon Karl, thanks very much.

There is much more ahead on this edition of INSIDE POLITICS. Still to come: Less than 20 hours until the inauguration, is there friction in the Bush camp? -- Bob Novak on concerns over the festivities and the confirmation hearings.



KING: The world stage offered this president some unforgettable moments -- and some moments he will never be able to forget.


WOODRUFF: John King on President Clinton's international ups and downs, as we take an inauguration eve look back at the Clinton years.


SHAW: She's from Jacksonville, Texas; a true star contemporary country music: Lee Ann Womack performing at this concert in celebration of America's youth as the festivities continue here in Washington on the eve of the inauguration of George Walker Bush.


SHAW: Clearly, she is performing indoors. Look at this beautiful view of the west front of the United States Capitol building. It's been a day of high level discussions in this Capitol. Not about international conflict or economic strategy, but about the weather. Officials have been debating whether they should move should move tomorrow's presidential inauguration inside if the weather gets any worse. It's cold right now.


SHAW: We appreciate your candor, but whatever the weather, CNN will be here to cover this very historic day tomorrow. Thanks very much, Karen McGinnis.

And coming up, Bob Novak offering his thoughts on the inauguration and how the Cabinet nominees have been doing on the Hill.


WOODRUFF: Well, joining me now with his "Reporter's Notebook": A veteran of many presidential inaugurations, Bob Novak of "The Chicago Sun-Times."

Hello, Bob.

ROBERT NOVAK, "THE CHICAGO SUN-TIMES": Hi, it's my 11th inauguration.

WOODRUFF: Oh, my goodness. That must be a record. We'll have to find somebody who can top it. I don't think we'll be able to.

First of all, Bob, what are you hearing about the decision whether or move tomorrow's ceremonies indoors?

NOVAK: Well, it's not a sure thing that's going to be held outdoors. The Air Force, which seems to handle the weather for these political events, wanted a decision by 2:00. They said the inauguration officials said, we couldn't do that. They set the deadline back to 9:00 tonight Eastern time. Now, it's back to midnight.

The problem, Judy, is that there is an inch of water on the platform out there, and they can't lay down the carpet. They've got to lay down the carpet. So, it's just a messy little logistical problem. But I'm going to give you a clue: With the thousands and thousands of Republicans that have poured into Washington for this, I think they're going to have this even if it's messy.

WOODRUFF: And you may have heard in the interview I did with Andy Card a little while ago that we aired earlier on INSIDE POLITICS, he said he believed that ultimately it would end up outdoors.

NOVAK: It'll be messy, though.

WOODRUFF: Bob, we understand that some of the incoming Cabinet members were mingling with what you might call titans of industry last night at a dinner. Tell us about that.

NOVAK: Actually, there were three candlelight dinners last night for the big donors, and the way they worked it was a big corporate sponsor was assigned to each table for a Cabinet members -- and I don't know why that amusing so much. Each had their big money person. Now, the thing that really tickled me is in the candlelight dinner at the Capitol Hilton Hotel, the secretary of treasury, Paul O'Neill, was the guest of Merrill Lynch. How do you like that? Did anybody say campaign finance reform?

WOODRUFF: I think you just did. Let's look at the confirmation hearings, Bob. What are the people around George W. Bush saying about how the Cabinet nominees did on the Hill this week?

WOODRUFF: Well, of course, the line, Judy is they just did wonderful. But there's -- but the truth is that behind the scenes some of the people in the Bush operation were not entirely happy with John Ashcroft giving away so much on abortion. He tended to tie President-elect Bush's hands on what he's going do on the abortion. What he should have said, hey, that's the president's decision. But of course, Ashcroft's under tremendous pressure and he was trying to beat off the Democrats.

They are also worried about Treasury Secretary-designate O'Neill, who was interpreted -- this is not clear -- as having said that a tax cut would do nothing to speed up the slowing down economy. And that is not -- that is at a time when tax cut sentiment was rising because of the bad economy. Now, to some people in very high places in the transition who feel that the -- actually "The New York Times" got the story wrong. But the impression given to this town is that Paul O'Neill is not singing George Bush's tune on tax cuts, and he's going to have to change that very quickly.

WOODRUFF: And following up on that, today, Mitch Daniels, who is the nominee to be the budget director, pretty much agreed with what Paul O'Neill said. So, it gets more interesting.

Last but not least, Bob, we understand there was a little confusion about arranging the coffee at the White House tomorrow morning for President Clinton and the president-elect. Tell us about that.

NOVAK: You know, the president and the president-elect -- there's is a tradition. The new president stops at the White House, if there is an -- with the incumbent president. They have coffee, they and their wives. Then they get in the car and drive up to Capitol Hill. This was a very nasty situation.

WOODRUFF: Bob, I'm going to interrupt you just a second because we understand that at the youth concert here the president-elect has just been introduced by Colin Powell.

We're going to listen in.



BUSH: Thank you all very much. Thanks for coming.


BUSH: I hope you're having fun today. Thanks for being here. I first want to thank all of the entertainers who came. It's a pretty darn good set of entertainers, isn't it?


BUSH: I want to tell you all a couple things, then I'm going to let the music begin. I first want to -- start over, I want tell you this is a good man here who's going to be the secretary of state.


BUSH: It could very well be that out there, if people make the right decisions in life, there is another secretary of state. One of the things that -- one of the things that General Powell and I are going to do is work hard to keep the peace. We're going to work -- do everything we can to make the world more peaceful. We're also here, though, to remind you about something else.

In order -- it's one thing to have the world peaceful; it's another thing to have our own country realize its potential. One of the things we want to do is to remind each of you to be good citizens. A good citizen is somebody who helps a neighbor in need. A good citizen is when he finds somebody crying out for help, says, what can I do, brother or sister? What can I do to make your life better. A good citizen is somebody who participates in the political process. A good citizen is somebody who works to make the community in which he or she lives a better place.

Now, we're going to work hard to make sure that the world is more peaceful, but we're also going to work hard to make sure the great potential and promise of America reaches through every single neighborhood in every state all across this great land.

Thank you for coming. God bless you all.


BUSH: God bless America.


WOODRUFF: That is, as you can see, the president-elect over at what they're calling the Concert Celebrating America's Youth. Colin Powell in a turtle neck, and the president-elect.

More INSIDE POLITICS right after this.



JOHN F. KENNEDY, PRESIDENT OF THE UNITED STATES: And so my fellow Americans, ask not what your country can do for you; ask you what you can do for your country.


KENNEDY: My fellow citizens of the world, ask not what America will do for you, but what together we can do for the freedom of man.


WOODRUFF: Over the years, President Clinton has talked about thinking about the effect President John F. Kennedy, one of his boyhood heroes, had on the world.

For a look now at President Clinton's own effect, we turn to our senior White House correspondent John King for the final piece in his week-long look at the Clinton legacy.

(BEGIN VIDEOTAPE) ANNOUNCER: The president and the first lady of the United States of America, Bill and Hillary Clinton.

KING (voice-over): The world stage offered this president some unforgettable moments. And some moments he will never be able to forget. Somalia scarred him earlier on, but he did not shy away from use of force. He reversed a coup in Haiti.

To enforce the Gulf War sanctions against Saddam Hussein; to keep the peace in Bosnia, and most notably, to drive the Serbs from Kosovo.

President Milosevic was voted out of office, and Mr. Clinton counts that as part of his international legacy.

GEN. WESLEY CLARK, FORMER COMMANDER,, EUROPEAN COMMAND: Last year in Albania and in Kosovo, I looked at the Albanian calendars for the new year. They all had a picture of President Clinton at the top of that calendar. He's the one who gave them a chance for democracy in Kosovo. They won't forget it.

KING: The Kosovo campaign was a new mission for a NATO formed as a defensive alliance. Mr. Clinton led the push for new NATO members: Poland, Hungary and the Czech Republic; and he told Romania and others initially passed over to be patient.

CLINTON: I reaffirm from this plaza freedom, the door to NATO is open. It will stay open and we will help you all to walk through it.

KING: He was criticized for investing too much faith in Boris Yeltsin; too much aid in a Russia ripe with corruption. But U.S. help meant nuclear warheads were dismantled by the dozens and Clinton allies prefer to view the glass as half full.

SAMUEL BERGER, NATIONAL SECURITY ADVISER: Just last year, Russians stood in long lines, not bread lines like in 1992 when we arrived, but line for an election that brought about the Democratic transition in the thousands of years of Russian history.

KING: He was, in many ways, a traveling salesman. One trademark of this president was his belief that trade was the path to understanding, and perhaps even democracy.

CLINTON: In the world we live in, this global information age, constant improvement and change is necessary to economic opportunity and to national strength. Therefore, the freest possible flow of information, ideas and opinions, and a greater respect for divergent political and religious convictions will actually breed strength and stability going forward.

KING: China's communist leader begged to differ, but the Clinton team viewed the polite public debate as a step in the right direction.

The Mid-East was a constant focus, and a constant source of frustration. An assassin's bullet took Israel's Rabin; cancer claimed Jordan's Hussein -- both Clinton allies in a tenacious but ultimately unsuccessful search for comprehensive peace in the Middle East. BERGER: My own view is that sooner or later the parties are going to have to come back to those same issues. They're not going to get any easier, and the kinds of solutions that we've been talking about over the last six months are going to be relevant for some time.

KING: Some critics say a legacy-minded president pushed too hard.

BRENT SCOWCROFT, FORMER NATIONAL SECURITY ADVISER: President Clinton took too active a role in the last few months, and tried to force the process, with catastrophic results. I think that we cannot force an agreement on the parties.

KING: He traveled extensively, 72 countries in all, and often his problems back home traveled with him.


UNIDENTIFIED FEMALE (through translator): I have a question regarding Ms. Monica Lewinsky.


KING: Mr. Clinton came to office with little international experience, but came to love this part of the job. He viewed Britain's Blair as a first among equals, a friend as well as a colleague.

TONY BLAIR, BRITISH PRIME MINISTER: People really feel that President Clinton both understand, knows and people -- they can also feel his -- his willing them to do well.

KING: Persistence paid off in Northern Ireland, where he proudly wore the label peacemaker. Mr. Clinton believed Africa deserved more trade and more attention, and that the continent's AIDS epidemic rates as a major national security concern.

Critics said Mr. Clinton bounced from meeting to meeting, from country to country, with no overarching philosophy, but boosters say once the Berlin Wall fell, there could be no one-size-fits-all U.S. approach to the world.

SEN. JOSEPH BIDEN (D-DE), FOREIGN RELATIONS COMMITTEE: I think historians will go back, look, and say, let's look at every other leader in the world at this moment. Name me one, name me one in any country in the entire world that was so sure-footed that they knew how the world had changed, and what new policies should be in place.

KING: India and Pakistan escalated nuclear tensions on Mr. Clinton's watch. He visited both to urge restraint. Careful conciliatory gestures to Tehran brought no breakthrough. This was a breakthrough: A landmark diplomatic visit to North Korea. But Mr. Clinton's efforts to negotiate an end to the North Korean missile program came up short in his final weeks.

And so, for all the changes in eight tumultuous years, as Mr. Clinton leaves office this remains the same: 37,000 Americans still stand nervous watch at the Cold War's last frontier.

John King, CNN, the White House.


WOODRUFF: Just ahead, our focus becomes the last four years in the White House. From inauguration to scandal to farewell: A look at the highlights of Mr. Clinton's second term.

And as we take a break, back to the Inaugural Concert for Youth; the popular group, 98 degrees.



SHAW: President Clinton continues to make news, even on his final full day in office. As we reported, his agreement with the independent counsel to avoid the indictment ends an investigation that dominated much of the last four years of his presidency.

Now, the second installment of our series looking back over Bill Clinton's tumultuous second term.



CLINTON: Let us go forth. Let us shape the hope of this day into the noblest chapter in our history. Yes, let us build our bridge.



CLINTON: The first balanced budget in 30 years; one that will truly strengthen our nation for the 21st century. This budget marks the end of an era, an end of decades of deficits that have shackled our economy, paralyzed our politics, and held our people back.



CLINTON: I want you to listen to me. I am going to say this again. I did not have sexual relations with that woman, Miss Lewinsky. These allegations are false, and I need to go back to work for the American people.



CLINTON: It depends upon what the meaning of the world is is.



CLINTON: Indeed, I did have a relationship with Miss Lewinsky that was not appropriate. In fact, it was wrong. It constituted a critical lapse in judgment, and a personal failure on my part for which I am solely and completely responsible.



UNIDENTIFIED MALE: Do you swear that the testimony you are about to give the before this committee will be the truth, the whole nothing but truth, so help you God?




KENNETH STARR, WHITEWATER SPECIAL PROSECUTOR: The evidence suggests that president made false statements under oath and thwarted the search for truth in Jones versus Clinton.



UNIDENTIFIED MALE: Article I is adopted. Article II is not adopted. Article III is adopted. Article IV is not agreed to.



CLINTON: I have invited members of Congress to work with us to find a reasonable, bipartisan and proportionate response. That approach was rejected today by Republicans in the House. But I hope it will be embraced by the Senate.



CLINTON: Now that the Senate has fulfilled its constitutional responsibility, bringing this process to a conclusion, I want to say, again, to the American people how profoundly sorry I am for what I said and did to trigger these events and the great burden they have imposed on the Congress and on the American people.



CLINTON: After a 30-year winter of sectarian violence, Northern Ireland today has the promise a springtime of peace.



CLINTON: I strongly believe that the investments we make here are investments in America's future as well, because stronger and more dynamic African communities and African nations will be better partners for Americans in meeting the challenges and reaping the opportunities of this great new century that is just before us.



CLINTON: I am trying to have a dialogue here that will enable both of us to move forward. Which is the better gamble? If you have a lot of personal freedom, some people may abuse it. But if you are so afraid of personal freedom because of the abuse that you limit people's freedom too much, then you pay, I believe, an even greater price.



CLINTON: Their mission is to attack Iraq's nuclear, chemical and biological weapons programs, and its military capacity to threaten its neighbors.



CLINTON: Kosovo's crisis now is full-blown, and if we do not act, clearly, it will get even worse.



CLINTON: There should be no illusion about the difficult task ahead, but there should be no limit to the effort we're prepared to make.



CLINTON: The histories of our two nations are deeply intertwined in ways that are both a source of pain for generations that came before, and the source of promise for generations yet to come.


(BEGIN VIDEO CLIP) CLINTON: I come here tonight, above all, to say a heartfelt thank you. Thank you. Thank you for giving me the chance to serve.



UNIDENTIFIED MALE: Ladies and gentlemen, the president of the United States.



CLINTON: In the years ahead, I will never hold a position higher or a covenant more sacred than that of the president of the United States, but there is no title I will wear more proudly than that of citizens.

Thank you. God bless you, and God bless America.



WOODRUFF: Some four years. There's much more ahead on INSIDE POLITICS, including the specifics on the deal President Clinton reached with the independent counsel's office.


SHAW: A new page for the Clinton legacy: The president admits he gave misleading testimony about his affair with Monica Lewinsky.

WOODRUFF: Also ahead, George W. Bush: less than a day away from becoming president. What challenge will he face at the podium tomorrow?

SHAW: And it's all in the moves: remarkable talent merits a special "Political Play of the Week."

ANNOUNCER: This is a special edition of INSIDE POLITICS, with Judy Woodruff and Bernard Shaw in Washington, and analyst Jeff Greenfield and Bill Schneider.


When William Jefferson Clinton becomes a private citizen just after noon tomorrow, he now is assured that he will not be indicted. The independent counsel, Robert Ray, agreed today to drop his investigation of Mr. Clinton as part of a deal he reached with the president. In exchange, Mr. Clinton admitted that he knowingly gave misleading testimony about his affair with Monica Lewinsky during his sworn deposition in the Paula Jones case.

Clinton attorney David Kendall denies that that amounts to an admission of obstruction of justice.


DAVID KENDALL, ATTORNEY FOR PRESIDENT CLINTON: He has from the beginning, at least from the grand jury, conceded that he tried to conceal the relationship with Monica Lewinsky. He tried to concealed that, and we have acknowledged that that was evasive and misleading. But it's not obstruction of justice. It's not intentional falsification.


WOODRUFF: Mr. Clinton also agreed to a five-year suspension of his law license in Arkansas as a way to avoid disbarment. And he agreed to pay a $25,000 fine.

The independent counsel, Ray, says the deal -- quote -- "justly" concludes a seven-year investigation that originally stemmed from the Whitewater land deal and eventually led to Mr. Clinton's impeachment.


ROBERT RAY, INDEPENDENT COUNSEL: I trust that the decision made today meets the expectations of the American people, who deserve a resolution that acknowledges the president's contact, respects America's institutions and demonstrates sensitivity to our constitutional system of government.


WOODRUFF: Our senior White House correspondent, John King, is back with us now.

John, why is this happening at the very last minute? Why wasn't this worked out sooner?

KING: Well, it wasn't worked out sooner because it couldn't be worked out sooner, we're told. But finally, in the end, Mr. Clinton authorized his attorneys to push for a deal. They first negotiated that plea agreement down in Pulaski County, Arkansas, Little Rock, Arkansas with the disbarment committee. And then in an exchange of letters, David Kendall, the president's lawyer, said we are prepared to end this as long as we know you will sign off and agree that there will be no prosecution, that you will close down shop.

Mr. Ray, once he know the understanding and the exact language, he agreed to go ahead. Most significantly to the prosecution team, we're told, is this language: that in those court papers filed in Arkansas the president acknowledged -- quote -- "He engaged in conduct that is prejudicial to the administration of justice." That a pretty damning statement, an admission from the president to the United States and a member of the bar in Arkansas, now suspended. That's a pretty damming admission in the view of the prosecution team from the president of the United States.

John, what were the negotiations like between Kendall, the president himself and the people representing Ray and Ray?

KING: Well, we don't know much of the back-and-forth. Both sides declining to comment on the specifics back and forth. One interesting remark, though, from Mr. Kendall at that White House stakeout we saw a bit earlier: He had very contentious relationships with the independent counsel, Ken Starr: Mr. Ray's predecessor and the Starr team. And he was asked about the negotiations, and he said he did not want to get into the details but that he considered Mr. Ray to be a -- quote -- "real prosecutor" and that he had conducted himself professionally. That there one last shot by Mr. Kendall as this investigation winds down at his arch-nemesis and certainly the president's nemesis, Ken Starr.

WOODRUFF: So, John, is this absolutely and completely the end of Bill Clinton's legal problems?

KING: It seems to be, at least in the context of the Paula Jones case, the Monica Lewinsky case, the disbarment proceedings stemming from those, an end to any of the legal problems that we know of, any active investigations of the president. The independent counsel said he would close shop, the president leaves office with a clean slate, if you will.

Now that the independent counsel's investigation is winding down, he still has some legal fees to pay off, and he will for five years, at least, not have a law license.

WOODRUFF: All right, John King, we appreciate it. Thanks very much, Bernie.

SHAW: We're now joined now by Robert Pittman, who served as a deputy to former Independent Counsel Ken Starr.

Mr. Pittman, in your judgment, what displeases you about this agreement? Is it flawed?

ROBERT PITTMAN, FORMER DEPUTY INDEPENDENT COUNSEL: Oh, I don't know, Bernie. You know, there's an old saying that you know you have a good agreement when not everybody is happy about it. And sure, there are some things that I think the president just for the country's sake, if for no other reason, should admit to. But the fact is that this is a good agreement in that it brings closure finally to the matter and that the country can move on.

SHAW: In the Paula Jones deposition, did the president lie?

PITTMAN: Of course he did. He lied there and elsewhere, quite frankly.

SHAW: Where?

PITTMAN: In his grand jury testimony.

SHAW: Did you just hear the soundbite of the president's lawyer, David Kendall? He acknowledged that the president admitted he knowingly gave misleading testimony, but the president's lawyer denies that amounts to an admission of obstruction of justice. And Kendall went on to claim it's not intentional falsification. What's your view

PITTMAN: Well, look, you know, the attorneys, the president's attorneys have been, you know, following his instructions for years about this. Look, the facts speak for themselves.

Did -- the president has admitted that his primary goal throughout his affair with Monica Lewinsky was to hide it. And obviously, he took steps, especially after the office of independent counsel was involved, to do just that, to hide what was going on.

He lied to his Cabinet, who he knew, who he admitted were going to testify before the grand jury. He made that famous -- two famous contacts with his secretary, Betty Currie, and made false statements to her in an attempt to, as laid out in the referral to Congress, to get her to say some things that just simply were not true.

So you know, the hair-splitting, you know, let's -- let's put that behind us, let's put this matter behind us, let the country move on. The president has made admissions. He has suffered in some regard. He has been impeached. He's paid almost a million-dollar settlement in the Paula Jones case. He had -- he's been found guilty of contempt of court. And now, of course, he is surrendering his law license for a period of five years, paying a penalty in that case.

And I think it's just time to move on, put this matter behind us.

SHAW: Well, let me flip the table and ask you as you reflect on this case, were there mistakes made by you and others in the independent counsel's office?

PITTMAN: Oh, I think so. I think, you know, always when you have...

SHAW: Which ones?

PITTMAN: ... something, an investigation of this sort you look back. And would you do things differently? Absolutely.

I think the biggest single mistake we made was not responding to the falsehoods that were made not only about our investigation and Ken Starr in particular, but about the other members of the staff, and that we should have met those.

We were -- we conducted our investigation pursuant to long- established Department of Justice policies, which all have been found to be true. We just did not have the public relations machine in place like the White House.

SHAW: Well, what did it cost you?

PITTMAN: Oh, it cost us, I think, certainly in the public eye. I think it cost us. It made us look like we were on some vengeful vendetta against the president, which we were not. We were collecting facts. We were acting as prosecutors.

We were being stonewalled, as you remember, Bernie, throughout the investigation by the White House, in particular by the president.

We had invited the president many, many times to testify before the grand jury. We had solicited testimony from his aides in the White House and others, whom he gave false statements to. So the grand jury was receiving false information indirectly through the president. So you know, we -- we would have done things differently. But you know, as I say, let's move on. The president has paid a price. And unfortunately, the country has paid a heavy price.

SHAW: Robert Pittman, my apology for mispronouncing your name when I introduced you. Served as deputy to former Independent counsel Ken Starr. Thanks very much.

PITTMAN: You're welcome.

SHAW: And coming up, we're going to check in on President-elect Bush and what he's been doing this day. INSIDE POLITICS will be right back.



G.W. BUSH: In less than 24 hours, I have the highest honor, and that's to become the commander in chief of the greatest nation in the world. I accept that honor with pride. I accept that honor with purpose.


SHAW: President-elect George W. Bush speaking at an event today honoring veterans. He went on to say that a good way to assure high morale in today's military is to honor commitments made to yesterday's military.

The tone was a bit lighter when Mr. Bush appeared at a concert saluting the youth of America. Among the bands performing were Destiny's Child, 98 degrees, and Jessica Simpson, who has just put down her microphone.

Tickets to this event at the MCI Center are very reasonable: $5 apiece.


WOODRUFF: And amidst all this fun and games, Jeff Greenfield, tomorrow the main event, swearing in and an inaugural address. And you've been doing some thinking about inaugural speeches.

GREENFIELD: Reading them and coming to this conclusion, which is that as a rule, an inaugural address turns out to be one of the least political speeches a president makes. Why? Because it's the first time he's speaking as the head of state, and for the nation, not a party or campaign.

Both this rule and the one recent exception tell us something about George W. Bush's challenge tomorrow.


GREENFIELD (voice-over): The "non-political" inaugural message is literally 200 years old. Thomas Jefferson won the 1800 presidential election only after a protracted battle in the House of Representatives. He declared in his inaugural that "not every political difference is a matter of principle." "We are all Republicans," he said, "We are all federalists."

Lincoln's second inaugural in 1865 came as the Civil War was winding down. In it, he made his classic pledge: "With malice toward none, with charity for all." Six weeks later, Lincoln was dead and the bitter post-Civil War period began.


GEORGE H.W. BUSH, PRESIDENT-ELECT OF THE UNITED STATES: I, George Herbert Walker Bush, do solemnly swear...


GREENFIELD: In our own time, a divided government has led to un- political inaugurals. In 1989, Bush the elder proclaimed "the age of the offered hand," and literally held out his hand to the Democratic speaker of the House. "The people," he said, "didn't send us here to bicker."

Bill Clinton used almost those exact same words four years ago, when he noted that the people had picked a president of one party and a Congress of the other.


WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES: Surely they did not do this to advance the politics of petty bickering and extreme partisanship they plainly deplore.



GREENFIELD: And here's the great exception: the great communicator himself, Ronald Reagan, 20 years ago. He'd won a landslide victory, brought in a Republican Senate, picked up 34 Republican seats in the House. He had a mandate and he knew it. He gave a speech that attacked inflation, taxation and big government. "Often not the solution to our problems," he said, "but the problem." And he promised to rein in the government's size and scope.


RONALD REAGAN, PRESIDENT OF THE UNITED STATES: It's not my intention to do away with government. It is rather to make it work: work with us, not over us; to stand by our side, not ride on our back.


GREENFIELD: He even moved the inaugural from the east to the west front to symbolize a new outlook.


GREENFIELD: Which brings us to George W. Bush, and he won even though the other guy got more votes under the strangest circumstances in 125 years, with much of the opposition still arguing it wasn't entirely kosher. His challenge: set a new course while somehow embracing the message he offered when his campaign began: "I'm a uniter, not a divider."

If history is any guide, George W. Bush is far more likely to emulate his father and his predecessor than turn to the Reagan exception.

We'll find out, I guess.

WOODRUFF: We will find out. Jeff Greenfield, thanks very much.

And when we return, Bill Schneider says goodbye to President Clinton with one more political play for the road.



JAKE SIEWERT, WHITE HOUSE PRESS SECRETARY: I do have this week ahead. Sunday, January 21st, 2001. 1:00 p.m.: Set up new e-mail account.



That will be closed to the press.

On Monday, January 22nd, 2001, from 9:00 a.m. to 4:00 p.m., the president will be awaiting the arrival of the Westchester County cable guy.


That is also closed to the press.

On Tuesday, January 23rd, 2001, from 9:00 a.m. to 4:00 p.m., he'll be awaiting the arrival of the Westchester County cable guy.



(BEGIN VIDEO CLIP) SIEWERT: And on Saturday, January 26th, 2001, the president at 10:06 a.m. will deliver -- 10:10 a.m. will deliver the Democratic response to President Bush's radio address.


SHAW: And maybe take out the garbage.

Well, after tomorrow, Mr. Clinton's schedule will be considerably less busy, as White House spokesman Jake Siewert pointed out today. So as President Clinton prepares for his final night in the White House, our Bill Schneider has one last opportunity to consider the politics of the last eight years.

SCHNEIDER: Bernie, talent. Baryshnikov has it for dancing. Michael Jordan has it for basketball. Bernie Shaw has it for anchoring. And Bill Clinton has it for politics.

As he leaves the White House, let us commemorate eight years of stunning breakthroughs, deft maneuvers and dramatic reversals of fortune. Elvis had his greatest hits. Clinton has his greatest political plays.


SCHNEIDER (voice-over): February 1993: the newly-elected president takes a bold gamble. In the 1992 campaign, the deficit was not Bill Clinton's issue. But when he announced his plan to turn the economy around, President Clinton suddenly reversed course and made deficit reduction his top priority.

CLINTON: We have to cut the deficit, because the more we spend paying off the debt, the less tax dollars we have to invest in jobs and education and the future of this country.

SCHNEIDER: Clinton had campaigned on a tax cut. Now he was asking for a tax increase.

CLINTON: For the wealthiest, those earning more than $180,000 per year, I ask you all who are listening tonight to support a raise in the top rate for federal income taxes from 31 to 36 percent.

SCHNEIDER: President Clinton's budget passed Congress without a single Republican vote. The GOP predicted disaster for the economy. It was a disaster, for the Democrats, who paid a steep price in the 1994 midterm.

But Clinton got the last laugh. His plan sent a signal to financial markets that the federal government was finally getting serious about the deficit. Interest rates fell. The economy boomed. And the deficit is gone.

November 1993: President Clinton takes on powerful forces in his own party over the issue of free trade.

CLINTON: NAFTA will expand out exports, create new jobs and help us reassert America's leadership in the global economy.

SCHNEIDER: Congress ended up approving NAFTA over the opposition of most Democrats.

CLINTON: This debate over NAFTA was very profitable, very productive, but sometimes very painful, because some of the best friends I ever had were on the other side of that debate.

SCHNEIDER: At a time when Clinton was suffering endless setbacks, NAFTA made the president look like a winner.

November 1995: President Clinton takes on the Republican Congress when it shuts down the federal government -- twice.

CLINTON: The American people should not be held hostage anymore to the Republican budget priorities.

SCHNEIDER: The president endorsed the Republicans' goals, but he vetoed their budget because he said it went too far.

CLINTON: My message to Congress is simple: You say you want to balance the budget, so let's say yes to balancing the budget, but let us, together, say no to these deep and unwise cuts in education, technology, the environment, Medicare and Medicaid.

SCHNEIDER: It was an amazing act of political dexterity. President Clinton co-opted the Republicans' issues and stood up to them at the same time. Congress backed down and Clinton stood tall.

August 1996: President Clinton signs welfare reform and proves his credentials as a new Democrat.

CLINTON: Today we are taking a historic chance to make welfare what it was meant to be: a second chance, not a way of life.

SCHNEIDER: The president risked splitting the Democratic national convention a few days later, but even Democrats who disagreed with Clinton on welfare reform were not about to break ranks with him under the looming threat of Newt Gingrich and the Republican Congress.

First, fiscal responsibility, then free trade, then welfare reform. President Clinton has remade the Democratic Party.

January 1998: the Monica Lewinsky scandal has just broken. President Clinton goes before the nation to deliver his State of the Union address.

How will he respond? What will he say? Plenty, as it turned out. The president spoke for a solid hour and a quarter, undistracted by scandal...

CLINTON: Ladies and gentlemen, the state of our union is strong.

SCHNEIDER: ... but obsessed with policies for the future.

CLINTON: Tonight, I propose that we reserve 100 percent of the surplus -- that's every penny of any surplus -- until we have taken all the necessary measures to strengthen the Social Security system for the 21st century.

SCHNEIDER: Clinton's message: I'm doing my job. And sure enough, his job rating shot up and remained high through his impeachment and acquittal. It was a policy wonk's speech and a brilliant political move. It rallied the public to stand by their president.

In the end, President Clinton survived impeachment, but it destroyed Newt Gingrich and Bob Livingston and many of the president's tormentors.

And for his final play, he's made a deal to escape indictment and disbarment. The ultimate political play.


SCHNEIDER: President Clinton once vowed that he would hold on to power -- quote -- "until the last hour of the last day." Well,that hour is rapidly approaching. And guess what? He did.

SHAW: You know, you get around the country with a lot of consistency. What's the conversation among the people and you about this 42nd president?

SCHNEIDER: They loved to listen to Bill Clinton. He really connected with people. He was very effective. But when I asked them, as I often did, what is it that President Clinton ever said that you found most memorable, they would always be stymied for a minute and they would think, and then they would begin to laugh, and then they would say: "I did not have sexual relations with that woman," "I didn't inhale," "It depends on what the meaning of 'is' is." And now we have "I knowingly gave evasive and misleading testimony."

That's going to go into Bartlett's.

SHAW: Thank you, Bill Schneider. And that's all for this edition of INSIDE POLITICS. But of course, you can go online all the time at CNN's AOL keyword: CNN.

WOODRUFF: And these programming notes: Tonight on "WOLF BLITZER REPORTS," an interview with the new first lady, Laura Bush. That's at 8:00 p.m. Eastern. Vice President Dick Cheney and New York Mayor Rudy Giuliani will be among Larry King's guests at 9:00 p.m. Eastern. And then stay with CNN tomorrow. We'll be back with complete coverage of the presidential inauguration, starting at 7:00 a.m. Eastern.

I'm Judy Woodruff.

SHAW: I'm Bernard Shaw. The "MONEYLINE NEWS HOUR" is next.



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