W ithin a week of the election, I was hard at work again, as were the Republicans. On November 10, I named Patsy Fleming as national AIDS policy director, in recognition of her outstanding work in developing our AIDS policy, which included a 30 percent increase in overall AIDS funding, and I outlined a series of new initiatives to combat AIDS. The announcement was dedicated to the guiding light of the AIDS fight, Elizabeth Glaser, who was desperately ill with AIDS and would die in three weeks.
The same day, I announced that the United States would no longer enforce the arms embargo in Bosnia. The move had strong support in Congress and was necessary because the Serbs had resumed their aggression, with an assault on the town of Bihac; by late November, NATO was bombing Serb missile sites in the area. On the twelfth, I was en route to Indonesia for the annual APEC leaders meeting, where the eighteen Asian-Pacific nations committed themselves to creating an Asian free market by 2020, with the wealthier nations doing so by 2010.
On the home front, Newt Gingrich, basking in the afterglow of his big victory, kept up the withering personal attacks that had proved so successful in the campaign. Just before the election, he had taken a page from his pamphlet of smear words, calling me the enemy of normal Americans. On the day after the election, he called Hillary and me counterculture McGovernicks, his ultimate condemnation.
The epithet Gingrich hurled at us was correct in some respects. We had supported McGovern, and we werent part of the culture that Gingrich wanted to dominate America: the self-righteous, condemning, Absolute Truthclaiming dark side of white southern conservatism. I was a white Southern Baptist who was proud of my roots and confirmed in my faith. But I knew the dark side all too well. Since I was a boy, I had watched people assert their piety and moral superiority as justifications for claiming an entitlement to political power, and for demonizing those who begged to differ with them, usually over civil rights. I thought America was about building a more perfect union, widening the circle of freedom and opportunity, and strengthening the bonds of community across the lines that divide us.
Even though I was intrigued by Gingrich and impressed by his political skills, I didnt think much of his claim that his politics represented Americas best values. I had been raised not to look down on anyone and not to blame others for my own problems or shortcomings. Thats exactly what the New Right message did. But it had enormous political appeal because it offered both psychological certainty and escape from responsibility: they were always right, we were always wrong; we were responsible for all the problems, even though they had controlled the presidency for all but six of the last twenty-six years. All of us are vulnerable to arguments that let us off the hook, and in the 1994 election, in an America where hardworking middle-class families felt economic anxiety and were upset by the pervasiveness of crime, drugs, and family dysfunction, there was an audience for the Gingrich message, especially when we didnt offer a competing one.
Gingrich and the Republican right had brought us back to the 1960s again; Newt said that America had been a great country until the sixties, when the Democrats took over and replaced absolute notions of right and wrong with more relativistic values. He pledged to take us back to the morality of the 1950s, in order to renew American civilization.
Of course there were political and personal excesses in the 1960s, but the decade and the movements it spawned also produced advances in civil rights, womens rights, a clean environment, workplace safety, and opportunities for the poor. The Democrats believed in and worked for those things. So did a lot of traditional Republicans, including many of the governors Id served with in the late 1970s and 1980s. In focusing only on the excesses of the 1960s, the New Right reminded me a lot of the carping that white southerners did against Reconstruction for a century after the Civil War. When I was growing up, we were still being taught how mean the Northern forces were to us during Reconstruction, and how noble the South was, even in defeat. There was something to it, but the loudest complaints always overlooked the good done by Lincoln and the national Republicans in ending slavery and preserving the Union. On the big issues, slavery and the Union, the South was wrong.
Now it was happening again, as the right wing used the excesses of the sixties to obscure the good done in civil rights and other areas. Their blanket condemnation reminded me of a story Senator David Pryor used to tell about a conversation hed had with an eighty-five-year-old man who told him he had lived through two world wars, the Depression, Vietnam, the civil rights movement, and all the other upheavals of the twentieth century. Pryor said, You sure have seen a lot of changes. Yeah, the old man replied, and I was against every one of them
Still, I didnt want to demonize Gingrich and his crowd as they had done to us. He had some interesting ideas, especially in the areas of science, technology, and entrepreneurialism, and he was a committed internationalist in foreign policy. Also, I had thought for years that the Democratic Party needed to modernize its approach, to focus less on preserving the partys industrial-age achievements and more on meeting the challenges of the information age, and to clarify our commitment to middle-class values and concerns. I welcomed the chance to compare our New Democrat ideas on economic and social problems with those embodied in the Contract with America. Politics at its best is about the competition of ideas and policy.
But Gingrich didnt stop there. The core of his argument was not just that his ideas were better than ours; he said his values were better than ours, because Democrats were weak on family, work, welfare, crime, and defense, and because, being crippled by the self-indulgent sixties, we couldnt draw distinctions between right and wrong.
The political power of his theory was that it forcefully and clearly confirmed the negative stereotypes of Democrats that Republicans had been working to embed in the nations consciousness since 1968. Nixon had done it; Reagan had done it; and George Bush had done it, too, when he turned the 1988 election into a referendum on Willie Horton and the Pledge of Allegiance. Now Newt had taken the art of reverse plastic surgery to a whole new level of sophistication and harshness.
The problem with his theory was that it didnt fit the facts. Most Democrats were tough on crime, supported welfare reform and a strong national defense, and had been much more fiscally responsible than the New Right Republicans. Most were also hardworking, law-abiding Americans who loved their country, worked in their communities, and tried to raise their children well. Never mind the facts; Gingrich had his story line down pat, and he applied it every chance he got.
Soon he would charge, without a shred of evidence, that 25 percent of my White House aides were recent drug users. Then he said that Democratic values were responsible for the large number of out-of-wedlock births to teen mothers, whose babies should be taken away from them and put into orphanages. When Hillary questioned whether infants separated from their mothers would really be better off, he said she should watch the 1938 movie Boys Town, in which poor boys are raised in a Catholic orphanage, well before the dreaded 1960s ruined us all.
Gingrich even blamed the Democrats and their permissive values for creating a moral climate that encouraged a troubled South Carolina woman, Susan Smith, to drown her two young sons in October 1994. When it came out that Smith might have been unbalanced because she had been sexually abused as a child by her ultra-conservative stepfather, who was on the board of his local chapter of the Christian Coalition, Gingrich was unfazed. All sins, even those committed by conservatives, were caused by the moral relativism the Democrats had imposed on America since the 1960s.
I kept waiting for Gingrich to explain how the Democrats moral bankruptcy had corrupted the Nixon and Reagan administrations and led to the crimes of Watergate and Iran-Contra. Im sure he could have found a way. When he was on a roll, Newt was hard to stop.
As we headed into December, a little sanity crept back into political life when the House and the Senate passed the Global Agreement on Tariffs and Trade, GATT, with large bipartisan majorities. The agreement reduced tariffs worldwide by a whopping $740 billion, opening previously closed markets to American products and services, giving poor countries a chance to sell products to consumers beyond their borders, and providing for the establishment of the World Trade Organization to create uniform trade rules and adjudicate disputes. Ralph Nader and Ross Perot campaigned hard against the pact, claiming it would have horrible consequences, from a loss of American sovereignty to an increase in abusive child labor. Their vocal opposition had little effect; the labor movement was less intensely opposed to GATT than it had been to NAFTA, and Mickey Kantor had done a good job in making the case for GATT to Congress.
Almost unnoticed in the comprehensive legislation that included GATT was the Retirement Protection Act of 1994. The problem of underfunded pensions was first brought to my attention by a citizen at the Richmond debate during the campaign. The bill required corporations with large underfunded plans to increase their contributions, and it stabilized the national pension insurance system and provided better protection to forty million Americans. The Retirement Protection Act and GATT were the last in a long line of major legislative achievements in my first two years, and, given the election results, bittersweet ones.
In early December, Lloyd Bentsen resigned as secretary of Treasury, and I appointed Bob Rubin to succeed him. Bentsen had done a remarkable job, and I didnt want him to leave, but he and his wife, B.A., wanted to return to private life. The choice of a successor was easy: Bob Rubin had built the National Economic Council into the most important innovation in White House decision making in decades, was respected on Wall Street, and wanted the economy to work for all Americans. Soon afterward, I named Laura Tyson to succeed Bob at the National Economic Council.
After hosting a state dinner for the new president of Ukraine, Leonid Kuchma, I flew to Budapest, Hungary, for only eight hours, to attend the meeting of the Conference on Security and Cooperation in Europe and sign a series of denuclearization agreements with President Yeltsin, Prime Minister Major, and the presidents of Ukraine, Kazakhstan, and Belarus. It should have produced good news coverage about our shared determination to reduce our arsenals by several thousand warheads and to prevent the spread of nuclear weapons to other nations. Instead, the story coming out of Budapest was Yeltsins speech criticizing me for trading in the Cold War for a cold peace by rushing NATO enlargement to include the Central European nations. In fact, I had done the reverse, by establishing the Partnership for Peace as an interim step to include a much larger number of countries; by setting up a deliberate process for adding new NATO members; and by working hard to establish a NATO-Russian partnership.
Since I had no advance warning about Yeltsins speech, and he spoke after I did, I was stunned and angry, because I didnt know what had set him off and because I had no opportunity to respond. Apparently, Yeltsins advisors had convinced him that NATO would admit Poland, Hungary, and the Czech Republic in 1996, just when he would be running for reelection against the ultra-nationalists, who hated NATO expansion, and I would be running against the Republicans, who supported it.
Budapest was embarrassing, a rare moment when people on both sides dropped the ball, but I knew it would pass. A few days later, Al Gore went to see Yeltsin when he was in Moscow for the fourth meeting of the Gore-Chernomyrdin Commission for Economic, Scientific and Technical Cooperation. Boris told him that he and I were still partners, and Al assured Yeltsin that our NATO policy hadnt changed. I wasnt about to jam him for domestic political reasons, any more than I would let him keep NATOs doors closed indefinitely.
On December 9, I was in Miami to open the Summit of the Americas, the first meeting of all the hemispheres leaders since 1967. The thirty-three democratically elected leaders of Canada, Central and South America, and the Caribbean were there, including forty-one-year-old President Aristide of Haiti and his neighbor, President Joaqun Balaguer of the Dominican Republic, who was eighty-eight years old, blind, and infirm, but mentally still sharp as a tack.
I had initiated the summit to promote a free trade area in all the Americas, from the Arctic Circle to Tierra del Fuego; to strengthen democracy and effective government throughout the region; and to show that America was determined to be a good neighbor. The gathering was a big success. We committed ourselves to establishing a free trade area of the Americas by 2005, and left feeling that we were going into the future together, a future where, in the words of the great Chilean poet Pablo Neruda, There is no such thing as a lone struggle, no such thing as a lone hope.
On December 15, I gave a televised address to outline my proposals for middle-class tax cuts in the coming budgets. The move was opposed by some people in the administration and criticized by some in the media as an attempt to copy the Republicans, or as a belated attempt to return to a 1993 campaign promise the voters had punished me for not keeping. For both policy and political reasons, I was trying to get back in the tax-cut hunt with the Republicans before the new Congress convened. The GOP contract contained tax proposals that I thought were unaffordable and too heavily tilted to upper-income Americans. On the other hand, the United States was still suffering from two decades of middle-class income stagnation, the main reason people hadnt felt the economy improving. We had made a dent in the problem by doubling the Earned Income Tax Credit. Now the right kind of tax cuts could raise middle-class incomes without derailing deficit reduction or our ability to invest in the future, and would fulfill my 1992 campaign commitment.
In the speech, I proposed a Middle-Class Bill of Rights, including a $500 child tax credit for families with incomes of $75,000 or less; tax deductibility for college tuition; expanded Individual Retirement Accounts (IRAs); and the conversion of the funds the government was spending on dozens of job-training programs into cash vouchers that would go directly to workers so they could choose their own training program. I told the American people that we could finance the tax package through further cost savings from Al Gores Reinventing Government initiative and still keep reducing the deficit.
Just before Christmas, Al Gore and I announced the designation of the first cities and rural communities as empowerment zones, making them eligible, under the 1993 economic plan, for tax incentives and federal funds to spur job development in places that had been left behind in previous recoveries.
December 22 was Dee Dee Myerss last day as press secretary. She had done a good job under difficult circumstances. Dee Dee had been with me in the snows of New Hampshire. Since then we had weathered a lot of storms and played countless games of hearts together. I knew she would do well when she left, and she did.
After our annual New Years trip to Renaissance Weekend, Hillary and I took a couple of extra days off to go home, so that we could see her mother and Dick Kelley, and I could go duck hunting with friends in eastern Arkansas. Every year, when the ducks fly south from Canada for the winter, one of the two main flyways is down the Mississippi River. Many of them land in the rice paddies and ponds of the Arkansas Delta, and over the last few years several farmers had established duck hunting camps on their land, both for their own enjoyment and to supplement their incomes.
Its wonderful seeing the ducks fly at morning light. We also saw large geese high overhead, flying in perfect V formation. Only two ducks came down within shooting range that cloudy morning, and the guys who were with me let me shoot them both. They had more days to hunt than I did. I pointed out to the reporters who were along that all our guns were protected by the crime bill and that we didnt need assault weapons to bag the ducks, including one I got with a lucky shot from about seventy yards.
The next day Hillary and I attended the dedication of William Jefferson Clinton Elementary Magnet School in Sherwood, just outside North Little Rock. It was a beautiful facility, with a multi-purpose room named for my mother and a library named for Hillary. I confess that I liked having my name on a new school; no one owed more to his teachers than I did.
I needed that trip home. I had worked like a dog for two years. I had gotten so much done, but often couldnt see the forest for the trees. The coming year was going to present a new set of challenges. To meet them, I needed more chances to recharge my batteries and water my roots.
As I returned to Washington, I was looking forward to watching the Republicans try to keep their campaign promises, and to the battle to preserve and fully implement all the legislation enacted the previous two years. When Congress passes a new law, the work of the executive branch has just begun. For example, the crime bill provided funding for 100,000 new police in our communities. We had to set up an office in the Justice Department to distribute the funds, establish criteria for eligibility for them, create and administer an application process, and monitor how the money was spent, so that we could make progress reports to Congress and the American people.
On January 5, I had my first meeting with the new congressional leaders. Besides Bob Dole and Newt Gingrich, the Republican team included Senator Trent Lott of Mississippi, and two Texans, Congressman Dick Armey, the House majority leader, and Congressman Tom DeLay, the House majority whip. The new Democratic leaders were Senator Tom Daschle of South Dakota and Congressman Dick Gephardt, as well as the Senate Democratic whip, Wendell Ford of Kentucky, and his counterpart in the House, David Bonior of Michigan.
Though the meeting with the congressional leaders was cordial, and there were some areas of the GOP contract on which we could work together, I knew there was no way we could avoid several heated struggles over important matters about which we had honest differences. Clearly, I and my entire team would have to be very focused and disciplined, in both our actions and our communications strategy. When a reporter asked me whether our relations would be marked by compromise or combat, I responded, My answer to that is, Mr. Gingrich will whisper in your right ear and I will whisper in your left ear.
When the congressmen left, I went into the press room to announce that Mike McCurry would be the new press secretary. Until then, Mike had been Warren Christophers spokesman at State. During the presidential campaign, as press secretary for Senator Bob Kerrey, he had taken some pretty hard shots at me. I didnt care about that; he was supposed to be against me in the primary season, and he had done a good job at State explaining and defending our foreign policy.
We had some more new blood on our team. Erskine Bowles had come to the White House from the Small Business Administration as deputy chief of staff, switching jobs with Phil Lader. Erskine was especially well suited to the mixture of careful compromise and guerrilla war that would characterize our relations with the new Congress, because he was a gifted entrepreneur and world-class deal maker who knew when to hold and when to fold. He would support Panetta well and provide skills that complemented those of Leons other deputy, the hard-charging Harold Ickes.
Like so many months, January was filled with both good and bad news: Unemployment was down to 5.4 percent, with 5.6 million new jobs; Kenneth Starr showed his independence when, unbelievably, he said he was going to reinvestigate Vince Fosters death; Yitzhak Rabins government was threatened when nineteen Israelis were killed by two terrorist bombs, an act that weakened support for his peace efforts; and I signed the first bill of the new Congress, one I strongly supported, requiring the nations lawmakers to comply with all the requirements they imposed on other employers.
On January 24, I gave the State of the Union address to the first Republican Congress in forty years. It was a delicate moment; I had to be conciliatory without seeming weak, strong without looking hostile. I began by asking Congress to put aside partisanship and pettiness and pride and suggesting that we work together on welfare reform, not to punish the poor but to empower them. I then introduced perhaps the best example of the potential of Americas welfare recipients, Lynn Woolsey, a woman who had worked her way off welfare all the way to becoming a member of the House of Representatives from California.
Then I challenged the Republicans on several fronts. If they were going to vote for a balanced budget amendment, they should say how they proposed to balance the budget and whether they would cut Social Security. I asked them not to abolish AmeriCorps, as they had threatened to do. If they wanted to strengthen the crime bill, I would work with them, but I would oppose repealing proven prevention programs, the plan to put 100,000 more police on the streets, or the assault weapons ban. I said I would never do anything to infringe on legitimate firearms ownership and use, but a lot of people laid down their seats in Congress so that police officers and kids wouldnt have to lay down their lives under a hail of assault weapon attacks, and I will not let that be repealed.
I finished the speech with an outreach to the Republicans, pushing my middle-class tax cuts but saying I would work with them on the issue, admitting that on health care, We bit off more than we could chew, but asking them to work with me step by step, and to start by making sure people didnt lose their health insurance when they changed jobs or a family member was sick; and seeking their support for a bipartisan foreign policy agenda.
The State of the Union is not only the Presidents chance to speak for an unfiltered hour to the American people each year; it is also one of the most important rituals in American politics. How many times the President is interrupted by applause, especially standing ovations; what provokes the Democrats or Republicans to clap, and what they seem to agree on; the reactions of important senators and representatives; and the symbolic significance of the people chosen to sit in the First Ladys box are all noted by the press and witnessed by the American people on television. For this State of the Union, I had a speech designed to last fifty minutes, allowing ten minutes for applause. Because there was so much conciliation, as well as some meaty confrontation, the applause interruptions, more than ninety of them, took the speech to eighty-one minutes.
By the time of the State of the Union, we were two weeks into one of the biggest crises of my first term. On the evening of January 10, after Bob Rubin was sworn in as secretary of Treasury in the Oval Office, he and Larry Summers stayed to meet with me and a few of my advisors about the financial crisis in Mexico. The value of the peso had been declining precipitously, undermining Mexicos ability to borrow money or to repay existing debts. The problem was exacerbated because, as Mexicos condition deteriorated, in order to raise money it had issued short-term debt instruments called tesobonos, which had to be repaid in dollars. As the value of the peso continued to decline, it took more and more of them to finance the dollar value of Mexicos short-term debt. Now, with only $6 billion in reserves, Mexico had $30 billion of payments due in 1995, $10 billion in the first three months of the year.
If Mexico defaulted on its obligations, the economic meltdown, as Bob Rubin tried to avoid calling it, could accelerate, with massive unemployment, inflation, and, very likely, a steep and prolonged recession because the international financial institutions, other governments, and private investors would all be unwilling to put more money at risk there.
As Rubin and Summers explained, the economic collapse of Mexico could have severe consequences for the United States. First, Mexico was our third-largest trading partner. If it couldnt buy our products, American companies and employees would be hurt. Second, economic dislocation in Mexico could lead to a 30 percent increase in illegal immigration, or half a million more people each year. Third, an impoverished Mexico would almost certainly become more vulnerable to increased activity by illegal drug cartels, which were already sending large quantities of narcotics across the border into the United States. Finally, a default by Mexico could have a damaging impact on other countries, by shaking investors confidence in emerging markets in the rest of Latin America, Central Europe, Russia, South Africa, and other countries we were trying to help modernize and prosper. Since about 40 percent of American exports went to developing countries, our economy could be hurt badly.
Rubin and Summers recommended that we ask the Congress to approve $25 billion in loans to allow Mexico to pay its debt on schedule and retain the confidence of creditors and investors, in return for Mexicos commitment to financial reforms and more timely reporting on its financial condition, in order to prevent this from happening again. They warned, however, that risks were attached to their recommendation. Mexico might fail anyway and we could lose whatever money we had extended. If the policy succeeded, it could create the problem economists call moral hazard. Mexico was on the brink of collapse not only because of flawed government policies and weak institutions, but also because investors had continued to finance its operations long past the point of prudence. By giving the money to Mexico to repay wealthy investors for unwise decisions, we might create an expectation that such decisions were risk free.
The risks were compounded by the fact that most Americans didnt understand the consequences to the American economy of a Mexican default. Most congressional Democrats would think the bailout proved that NAFTA was ill advised in the first place. And many of the newly elected Republicans, especially in the House, didnt share the Speakers enthusiasm for international affairs. A surprising number of them didnt even have passports. They wanted to restrict immigration from Mexico, not send billions of dollars there.
After I listened to the presentation, I asked a couple of questions, then said we had to go forward with the loan. I thought the decision was clear-cut, but not all my advisors agreed. Those who wanted to speed my political recovery after the crushing midterm defeat thought I was nuts, or, as we say in Arkansas, three bricks shy of a full load. When George Stephanopoulos heard Treasurys $25 billion figure for the loan, he thought Rubin and Summers must have meant $25 million; he thought I was about to shoot myself in the foot. Panetta favored the loan, but warned that if Mexico didnt repay us, it could cost me the election in 1996.
The risks were considerable, but I had confidence in Mexicos new president, Ernesto Zedillo, an economist with a doctorate from Yale who had stepped into the breach when his partys original candidate for president, Luis Colosio, was assassinated. If anybody could bring Mexico back, Zedillo could.
Besides, we simply couldnt stand aside and let Mexico fail without trying to help. In addition to the economic problems it would cause both for us and for the Mexicans, we would be sending a terrible signal of selfishness and shortsightedness throughout Latin America. There was a long history of Latin American resentment of America as arrogant and insensitive to their interests and problems. Whenever America reached out in genuine friendshipwith FDRs Good Neighbor Policy, JFKs Alliance for Progress, and President Carters return of the Panama Canalwe did better. During the Cold War, when we supported the overthrow of democratically elected leaders, backed dictators, and tolerated their human rights abuses, we got the reaction we deserved.
I called the congressional leaders to the White House, explained the situation, and asked for their support. All of them pledged it, including Bob Dole and Newt Gingrich, who aptly described the Mexico problem as the first crisis of the twenty-first century. As Rubin and Summers made the rounds on Capitol Hill, we picked up support from Senator Paul Sarbanes of Maryland, Senator Chris Dodd, and Republican senator Bob Bennett of Utah, a highly intelligent, old-fashioned conservative who quickly grasped the consequences of inaction and would stick with us throughout the crisis. Several governors were also supportive, including Bill Weld of Massachusetts, who had a great interest in Mexico, and George W. Bush of Texas, whose state, along with California, would be hardest hit if the Mexican economy collapsed.
Despite the merits of the case and the support of Alan Greenspan, it became obvious by the end of the month that we werent doing well in Congress. Anti-NAFTA Democrats were sure the aid package was a step too far, and the new Republican members were in open revolt.
By the end of the month, Rubin and Summers had begun to con-sider acting unilaterally, by providing the money to Mexico out of the Exchange Stabilization Fund. The fund was created in 1934, when America took the dollar off the gold standard, and was used to minimize currency fluctuations; it had about $35 billion and could be used by the Treasury secretary with the Presidents approval. On the twenty-eighth, the need for American action took on even greater urgency when the Mexican finance minister called Rubin and told him default was imminent, with more than a billion dollars worth of tesobonos coming due the following week.
The matter came to a head on Monday night, January 30. Mexicos reserves were down to $2 billion, and the value of the peso had dropped another 10 percent during the day. That evening, Rubin and Summers came to the White House to see Leon Panetta and Sandy Berger, who was handling the issue for the National Security Council. In blunt terms, Rubin told them, Mexico has about forty-eight hours to live. Gingrich called to say he couldnt pass the aid package for another two weeks, if at all. Dole had already said the same thing. They had tried, as had Tom Daschle and Dick Gephardt, but the opposition was too strong.
I returned to the White House from a fund-raiser at about 11 p.m. and went to Leons office to hear the grim message. Rubin and Summers briefly restated the consequences of a Mexican default, then said we needed only $20 billion in loan guarantees, not $25 billion, because International Monetary Fund director Michel Camdessus had put together almost $18 billion in aid that the IMF would extend if the United States acted; combined with smaller contributions from other countries and the World Bank, that brought the total aid package to just under $40 billion.
Though they favored going forward, Sandy Berger and Bob Rubin again pointed out the risks. A newly published poll in the Los Angeles Times said the American people opposed helping Mexico by 79 percent to 18 percent. I replied, So a year from now, when we have another million illegal immigrants, were awash in drugs from Mexico, and lots of people on both sides of the Rio Grande are out of work, when they ask me, Why didnt you do something? what will I say? That there was a poll that said 80 percent of Americans were against it? This is something we have to do. The meeting lasted about ten minutes.
The next day, January 31, we announced the aid package with money from the Exchange Stabilization Fund. The loan agreement was signed a couple of weeks later at the Treasury Building, to howls of protest in Congress and grumbles among our G-7 allies, who were upset that the IMF director had made the $18 billion commitment to Mexico, and to us, without their prior approval. The first money was released in March, after which we continued to make regular disbursements, even though things didnt really get better in Mexico for several months. By the end of the year, however, investors had entered the Mexican markets again and foreign exchange reserves had begun to build up. Ernesto Zedillo had also instituted the reforms he had promised.
Though it was tough at first, the aid package worked. In 1982, when the Mexican economy collapsed, it had taken almost a decade for growth to return. This time, after a year of severe recession, the Mexican economy started to grow again. After 1982, it had taken seven years for Mexico to regain access to the capital markets. In 1995, it took only seven months. In January 1997, Mexico repaid its loan in full, with interest, more than three years ahead of schedule. Mexico had borrowed $10.5 billion of the $20 billion we made available, and it paid a total of $1.4 billion in interest, almost $600 million more than the money would have earned had it been invested in U.S. Treasury notes, as other Exchange Stabilization Fund monies were. The loan turned out to be not only good policy but also a good investment.
New York Times columnist Tom Friedman called the Mexican loan guarantee the least popular, least understood, but most important foreign policy decision of the Clinton Presidency. He may have been right. As for popular opposition, 75 percent of the people had also opposed the Russian aid package; my decision to restore Aristide in Haiti was unpopular; and my subsequent actions in Bosnia and Kosovo met with initial popular resistance. Polls can be helpful in telling a President what the American people think, and which arguments may be most persuasive at a particular time, but they cannot dictate a decision that requires looking down the road and around the corner. The American people hire a President to do the right thing for our country over the long run. Helping Mexico was the right thing for America. It was the only sensible economic course, and by taking it, we proved ourselves to be, once again, a good neighbor.
On February 9, Helmut Kohl came to see me. He had just been reelected, and he confidently predicted that I would be as well. He told me we were living in turbulent times, but the end would bring me out all right. At the press conference after our meeting, Kohl paid a moving tribute to Senator Fulbright, who had died shortly after midnight at the age of eighty-nine. Kohl said he came from a generation who, when they were students, wanted nothing more than to obtain a Fulbright scholarship, and that, across the world, Fulbrights name was associated with openness, with friendship, and with people striving together. At the time of his passing, more than 90,000 Americans and 120,000 students from other countries had been Fulbright scholars.
I had gone to Senator Fulbrights home to visit him not long before he died. He had had a stroke and his speech was somewhat impaired, but his eyes were bright, his mind was working, and we had a good last visit. Fulbright would loom large in American historyas I said at his memorial service, Always the teacher and always the student.
On February 13, Laura Tyson and the other members of the Council of Economic Advisers, Joe Stiglitz and Martin Baily, gave me a copy of the latest Economic Report of the President. It highlighted our progress since 1993, as well as the persistent problems of income stagnation and inequality. I used the occasion to push the Middle-Class Bill of Rights and my proposal to increase the minimum wage by 90 cents over two years, from $4.25 to $5.15 an hour. The raise would benefit 10 million workers, adding $1,800 a year to their incomes. Half the increase was necessary just to get the minimum wage (after inflation) back to what it had been in 1991, the last time it was raised.
The minimum wage was a favorite cause of most Democrats, but most Republicans opposed minimum wage increases, claiming that they cost jobs by increasing the cost of doing business. There was little evidentiary support for their position. Indeed, some young labor economists had recently found that a moderate minimum wage increase might lead to a modest increasenot decreasein employment. I had recently seen a television interview with a minimum wage worker in a factory in southwest Virginia. When asked about rumors that the increase might cause her employer to lay off her and other co-workers and do more work with machines, the woman smiled and told the interviewer, Honey, Ill take my chances.
In the fourth week of February, Hillary and I paid a two-day state visit to Canada, where we stayed at the American ambassadors residence with Ambassador Jim and Janet Blanchard. Jim and I had become friends in the 1980s, when he was governor of Michigan. Canada is our largest trading partner and closest ally. We share the longest unguarded border in the world. In 1995, we were working together on Haiti, on helping Mexico, and on NATO, NAFTA, the Summit of the Americas, and APEC. While we had occasional disputes over trade in wheat and timber and over salmon-fishing rights, our friendship was broad and deep.
We spent a lot of time with Prime Minister Jean Chrtien and his wife, Aline. Chrtien would become one of my best friends among world leaders, a strong ally, confidant, and frequent golfing partner.
I also spoke to the Canadian parliament, thanking them for our economic and security partnerships and the rich cultural contributions of Canadians to American life, including Oscar Peterson, my favorite jazz pianist; singer-songwriter Joni Mitchell, who wrote Chelsea Morning; and Yousuf Karsh, the great photographer who had become famous for his portrait of Churchill scowling after Karsh jerked the omnipresent cigar out of his hand, and who had photographed Hillary and me in less forbidding poses.
March got off to a good start, at least from my point of view, when the Senate failed, by only one vote, to get the two-thirds majority necessary to pass the balanced budget amendment. Though the amendment was popular, virtually every economist thought it was a bad idea because it restricted the ability of the government to run deficits under appropriate circumstances during a recession or a national emergency. Before 1981, America had not had much of a deficit problem; only after twelve years of trickle-down economics had quadrupled the national debt did politicians begin to argue that they would never make responsible economic decisions unless forced to do so by a constitutional amendment.
While the debate was going on, I urged the new Republican majority, who were pushing the amendment, to say exactly how they were going to balance the budget. I had produced a budget less than a month into my term; they had been in control of Congress for nearly two months and had still not presented one. They were finding it difficult to transform their campaign rhetoric into specific recommendations.
Soon, the Republicans offered a taste of the budget to come by proposing a package of cuts, called rescissions, in the current years budget. The cuts they chose proved that the Democrats had been right on target in their criticism of the contract during the campaign. The GOP rescissions included the elimination of 15,000 AmeriCorps positions, 1.2 million summer jobs for young people, and $1.7 billion in education funds, including nearly half of our drug-prevention funds, at a time when drug use among young people was still rising. Worst of all, they wanted to cut the school lunch program and WIC, the nutrition program for women, infants, and children under five, which, until then, had always had strong support from both Republicans and Democrats. The White House and the Democrats had a field day fighting those cuts.
Another GOP proposal that met stiff resistance was its move to eliminate the Department of Education, which, like the school lunch program, had always enjoyed strong bipartisan support. When Senator Dole said the department had done more harm than good, I joked that he might be right, because for most of the time since its inception, the department had been under the control of Republican secretaries of education. By contrast, Dick Riley was doing far more good than harm.
While pushing back on the Republican proposals, I was also promoting our agenda in ways that didnt require congressional approval and demonstrated that I had gotten the message from the last election. In the middle of March, I announced a regulatory reform effort developed by Al Gores Reinventing Government project that focused on improving our environmental protection efforts through providing market incentives to the private sector, rather than imposing detailed regulations; the 25 percent reduction in paperwork requirements would save them 20 million work hours per year.
The Rego effort was working. We had already reduced the federal workforce by more than 100,000 and eliminated 10,000 pages of federal personnel manuals; soon we would earn almost $8 billion by auctioning slices of the broadcast spectrum for the first time; and eventually we would scrap 16,000 pages of federal regulations with no harm to the public interest. All the Rego changes were developed according to a simple credo: protect people, not bureaucracy; promote results, not rules; get action, not rhetoric. Al Gores highly successful initiative confounded our adversaries, elated our allies, and escaped the notice of most of the public because it was neither sensational nor controversial.
By my third St. Patricks Day as President, the occasion had grown from a celebration into an annual opportunity for the United States to advance the peace process in Northern Ireland. That year, I was giving the traditional Irish greeting, cad mle filte, a hundred thousand welcomes, to a new Irish prime minister, John Bruton, who was continuing the peace policy of his predecessor. At noon, I met Gerry Adams for the first time at the Capitol, as Newt Gingrich hosted his first St. Patricks Day Speakers luncheon. I had given Adams a second visa after Sinn Fein had agreed to discuss with the British government the IRAs laying down of arms, and had invited him, along with John Hume and representatives of Northern Irelands other main political parties, both Unionist and Republican, to the St. Patricks Day reception at the White House that night.
When Adams showed up at the lunch, John Hume encouraged me to go over and shake hands with him, so I did. At the White House reception that night, the assembled crowd listened to a superb Irish tenor, Frank Patterson. Adams was having such a good time that he wound up singing a duet with Hume.
All this may sound routine now, but at the time it represented a sea change in American policy, one the British government and many in our own State Department still opposed. Now I was consorting not only with John Hume, the champion of peaceful change, but with Gerry Adams, whom the British still considered a terrorist. Physically, Adams was a striking contrast to the gentle, slightly rumpled, professorial Hume. He was bearded, taller, younger, and leaner, hardened by his years on the edge of destruction. But Adams and Hume shared some important traits. Behind their glasses were eyes that revealed intelligence, conviction, and that uniquely Irish mixture of sadness and humor born of hopes often dashed but never abandoned. Against all odds, they both were trying to free their people from the shackles of the past. Before long, David Trimble, who led the largest Unionist party, would join them at the White House on St. Patricks Day and in the quest for peace.
On March 25, Hillary began her first extended overseas trip without me, a twelve-day visit to Pakistan, India, Nepal, Bangladesh, and Sri Lanka. She took Chelsea along on what would be an important effort for the United States and a grand personal odyssey for them both. While the rest of my family was far away, I traveled closer to home, going to Haiti to visit the troops, meet with President Aristide, exhort the people of Haiti to embrace a peaceful democratic future, and participate in the handover of authority from our multinational force to the United Nations. In six months, forces from thirty nations had worked together under American leadership to remove more than 30,000 weapons and explosive devices from the streets and train a permanent police force. They had ended repressive violence; reversed the outmigration of Haitians, who were now coming home; and protected democracy in our hemisphere. Now the United Nations mission of more than 6,000 military personnel, 900 police officers, and dozens of economic, political, and legal advisors would take over for eleven months, until the election and inauguration of a new president. The United States would play a part, but our force levels and expenses would drop, as thirty-two other nations stepped forward to participate.
In 2004, after President Aristide resigned and flew into exile amidst renewed violence and strife, I thought back to what Hugh Shelton, the commander of the American forces, had told me: The Haitians are good people and they deserve a chance. Aristide certainly made mistakes and was often his own worst enemy, but the political opposition never really cooperated with him. Also, after the Republicans took over Congress in 1995, they were unwilling to give the financial assistance that might have made a difference.
Haiti will never develop into a stable democracy without more help from the United States. Still, our intervention saved lives and gave Haitians their first taste of the democracy they had voted for. Even with Aristides serious problems, the Haitians would have been far worse off under Cedras and his murderous coup. I remain glad that we gave Haiti a chance.
The Haitian intervention also provided strong evidence of the wisdom of multilateral responses in the worlds trouble spots. Nations working together, and through the UN, spread the responsibilities and costs of such operations, reduce resentment against the United States, and build invaluable habits of cooperation. In an increasingly interdependent world, we should work this way whenever we can.