Hell To Pay Part 8

By 1984 Madison was warned by federal regulators to tighten its practices, strengthen its management, and add $3 million to its capital base. McDougal did strengthen management--by hiring the federal regulator as Madison's vice president.*72 Still, McDougal found himself in an increasingly tight spot. Like all managers of a pyramid scheme, he convinced himself that if he could just get a reprieve, everything would balance out in the end.

A momentary break came in January 1985, when Governor Clinton replaced the state securities commissioner with Fayetteville friend and longtime supporter Beverly Ba.s.sett. As a lawyer for a Little Rock firm, she had done work in the past for Madison. In March the governor squared the circle by appointing Madison's chief executive officer to the state S&L board.

In April, Hillary became the official representative of Madison before the state securities commission. By now, the Clintons had managed to create a parade of friendly faces all along the way for their business partners. Six days later, Hillary contacted Ba.s.sett on behalf of Madison.

Around this time, McDougal wrote an overdraft in the form of $30,000 from a Whitewater account at Madison. Then he raised a like amount of money--$35,000--to "retire the deficit," as the young governor put it. The deficit in this case was a $50,000 loan Clinton had taken out from the Bank of Cherry Valley to buy a battery of television ads to fend off a challenge in the 1984 election. McDougal generously held a fund-raiser in the Art Deco lobby of Madison Guaranty.

McDougal later paid himself a similar amount as a "bonus" from Madison. Given the spotty records from the fund-raiser, and conflicting accounts (Fulbright's signature was on one check, but he said he never attended), it is likely that McDougal simply made most of Clinton's contributions himself, repaying his overdrawn account from the Madison coffers.*73 This was one of several enormous favors, saving the governor from having to pay the Cherry Valley loan he had personally guaranteed.

In May, Ba.s.sett informed Madison's attorney in a "Dear Hillary"

letter that the legal opinion she had written on a McDougal proposal to recapitalize Madison by issuing preferred stock was acceptable.

The recapitalization plan, selling stock that was essentially worthless, was approved. McDougal was cleared to add another layer to his pyramid.

Another part of this tangle of needs and interests was Hillary's need not just for money, but to show her Rose partners that she could bring in clients. In one 1993 account to the Los Angeles Times, McDougal said the governor jogged by his office one humid morning in August 1984 and asked McDougal to send business to Hillary. This story rings true, complete with a novelistic detail about a quietly seething McDougal listening while the governor's sweat-stained thighs ruined an expensive leather chair. By another account, Hillary came to the McDougals in April 1985 and asked for their business. It is likely that Hillary had sent Bill. When he did not succeed, she made the appeal herself. "One lawyer's as good as another," McDougal concluded, and started paying Hillary and Rose $2,000 a month.

By 1986 the fact that Madison was a house of cards could no longer be disguised. Federal regulators acted to remove McDougal. Madison ultimately collapsed, costing U.S. taxpayers $60 million.

Given such a record, one would think that Madison and related work would have been considered radioactive by Hillary and her partners.

In fact, Vince Foster solicited business from the Federal Deposit Insurance Corporation (FDIC) for S&L work, including Madison. The work was only secured after Foster (or perhaps someone close to him) wrote a letter denying conflicts of interest to the FDIC. "The firm does not represent any savings-and-loan a.s.sociation in state or federal regulatory matters," it said. Unstated was the fact that the firm had had such representations in the recent past.

In this way, Hubbell would earn $400,000 for Rose, leading the FDIC to sue Madison accountants. When they learned of the deception, federal regulators were astonished and outraged.*74 They had been duped by a simple semantic trick, like Bill Clinton's later denial of a s.e.xual relationship with a White House intern on the ground that the affair was no longer ongoing ("it depends on what the meaning of 'is' is").

Whitewater is often presented as an impenetrable mora.s.s. In truth, it is quite simple. Hillary's law career had been helped by McDougal's business, and Clinton had been personally rescued by McDougal's willingness to pay down a Clinton political debt. Once Hillary becane Madison's lawyer, she helped obtain approval of McDougal's own rescue plan--a recapitalization based on stock sales that were but another layer of McDougal's pyramid scheme. She represented McDougal before a state regulator who had, herself, done legal work for him. The only way the arrangement could have been tighter would have been for all partic.i.p.ants to have been cousins.

The great irony is that much of the subsequent scandal and embarra.s.sment over Whitewater could have been avoided if Hillary had accepted a generous offer from McDougal in 1985. By then it had become clear to all that Whitewater was a failure. The Clintons, along with their partners, were liable for tens of thousands of dollars in interest payments on the original loan. And the inability of the development to pay property taxes had created a potential embarra.s.sment for the governor. The Clintons seethed over a newspaper listing of their names as citizens who were delinquent on their taxes.

McDougal, however, gallantly offered to a.s.sume all remaining obligations and pay all taxes if the Clintons would sign over to him their half of the investment. The governor recognized a good deal when he saw it. McDougal was offering to take a small fortune in debt in return for a piece of paper.

Such generosity was not understandable to Hillary. It triggered her greed, and then suspicions--then made her angry. After all, she was still counting on the proceeds from the Whitewater deal. According to James B. Stewart's account in Blood Sport, Hillary shouted, "Jim told me that this was going to pay for college for Chelsea. I still expect it to do that!"*75 In another account told to Time, Susan McDougal recalled Hillary's saying, "We own half of it, and we are not getting out of it. It's incredible that partners would be asked to sign over their stock."

"This is Jim McDougal's project, his idea, his money! Don't you understand that I don't want anything," Susan pleaded. "It's all going to Jim. It's morally wrong for you not to give it to him."

Susan broke down. "You're terrible people, after all he would and did do for you, that you wouldn't do this."

Hillary told Susan she would not be "blackmailed."*76 THE W FILES.

Hillary would also do everything she could to avoid being called to account when Whitewater became the subject of a Congressional investigation. Shortly after the Whitewater investigations had begun, two college students were hired to shred piles of materials from the Rose Law office of Vince Foster. Foster--then six months in his grave--had been in charge of the Clintons's personal legal affairs once they moved into the White House. His files could not conceivably have been shredded without the Clintons' consent.*77 Investigators cannot prove, but do not have any doubts, about who ultimately ordered the shredding of those files.

Then there were Hillary's own papers. In the move from Little Rock to Washington, Hillary took great care that her papers were personally guarded by someone she trusted.

This collection of files had started as part of the "Betsey files,"

part of the vast compendium of private intelligence and personal papers held by Governor Clinton's chief of staff, Betsey Wright. For a while, Webb Hubbell kept them for safekeeping in the bas.e.m.e.nt of his house. Later they would be transferred to private attorney David Kendall.

Some papers, whether from the Betsey files or somewhere else, years after they had been subpoened, made a mysterious appearance in the White House in January 1996. Carolyn Huber, who had worked as a clerk for Hillary at Rose, and then came to Washington with her to handle correspondence, suddenly discovered the records in a White House residence "book room."

I deposed Huber during congressional investigations into the White House Travel Office firings. Huber testified that in the course of transferring correspondence between her office and the first lady's, Huber took a stack of papers from the third-floor living quarters of the White House, just off from Hillary's office,*78 and returned them to her East Wing office. Huber didn't look at them again until several weeks later. What she saw forced her to call Hillary's lawyer, then her own lawyer.*79 They were Hillary's itemized legal work for Madison Guaranty, under subpoena for several years, the existence of which had been repeatedly denied by the White House.

Hillary had told investigators that she had ordered all Whitewater records and Madison records shredded in the mid-eighties. This had been done "to save money by reducing the number of closed, stored files," Hillary had written to Whitewater investigators.*80 Now, like the ghost of Christmas past, these records had reappeared, almost at the foot of her bed, to accuse her.

Moreover, Huber said she was certain the papers had been placed there recently--which suggested that Hillary had been reviewing the papers all the while she had been denying their existence.

Hillary told investigators that she had done virtually no legal work on the Madison account. Now the billing records showed that she had performed sixty billable hours for Madison with state regulators.

She had discussed legal matters with Madison executives on sixteen occasions, holding twenty-eight conferences or phone calls with Rose lawyers on Madison accounts. Also included in the billing records were details of her involvement with Castle Grande, a failed development that wound up costing taxpayers $4 million.

Castle Grande had been structured in such a way as to encourage low-income customers to buy swamp land with Madison loans, with no cash down. Most buyers would eventually have to default, something all partic.i.p.ants were in a position to foresee. These defaults, in turn, would take almost $4 million from the taxpayers who were the ultimate guarantors of the S&L. Hillary played a role in Castle Grande, arranging a complicated payoff deal to Webb Hubbell's obstreperous father-in-law, Seth Ward.

"I don't believe I knew anything about [Castle Grande]," Hillary said in 1994 to federal investigators from the Resolution Trust Corporation. Now her own billing records showed that she had done thirty hours of legal work on that very development.

Harold Ickes, tough New York lawyer and iron-fisted warrior for the Clintons, sought to get the word to Arkansas securities commissioner and FOB Beverly Ba.s.sett Schaffer to stay on the same page as the White House. "If we f.u.c.k this up, we're done," he said.*81 Hillary had sworn that she had done no work on Castle Grande. When presented with irrefutable evidence, she said that she had known the project under a different name, IDC. She was refuted again when David Hale, a munic.i.p.al judge who had loaned $300,000 to Susan McDougal, swore that he had spoken to Hillary about Castle Grande.

The burst of revelations left the White House reeling, the staff anxious to learn from the Clintons what land mines were on the path ahead. But the Clintons told their own defenders as little as necessary, leaving the White House staff on the defensive. The White House spin strategy quickly became to dismiss as "old, recycled, rehashed news" on a "failed land deal" all the new exposes of Hillary's denials. The records, even with Hillary's fingerprints on them, ultimately proved nothing, the spin doctors said. David Hale was a felon and a proven liar. It was his word against the first lady's.

"Perjury takes intent," said White House spokesman George Stephanopoulos. "Simply describing plots of land by a different name when both names were in common usage is not perjury by any stretch."*82 The idea of sending a first lady to prison on obstruction of justice charges was so distasteful that it proved the final defense against federal investigators.

The matter was dropped. Hillary won the day, and the story of the mysterious records became a part of White House lore.

HILLARY'S SECRET POLICE.

In the tangle of Arkansas business and political interests, if one pulls at a thread, even the unlikeliest string, it can unravel much of the whole ball. One of these threads is Larry Nichols, the father slighted by Hillary in a child custody case. Nichols is often characterized as disgruntled, an understatement akin to saying that Brutus was disaffected from Caesar. Like so many other Clinton critics, his claims were undermined by a scandal of his own--the more than six hundred "contra calls" he made on a state line. Even in his disgrace, however, there is something to learn about the power of the Clinton machine and what ex-Clinton confidant d.i.c.k Morris calls its "secret police."

What is remarkable is not that Clinton accusers themselves have feet of clay. It is that they are so swiftly exposed and attacked the moment they speak out against Bill or Hillary Clinton. In this respect, the fate of Nichols greatly resembled that of Steve Clark, who followed Clinton into office as attorney general and attempted to follow him as governor. Clark, tired of waiting for Clinton to leave office, prepared to challenge Clinton's hold on the governor's mansion, charging that members of the Arkansas Development Finance Authority. (ADFA) were being offered six-figure bribes. His accusations threatened to throw a spotlight on a sweetheart deal many in the capital preferred to only whisper about--how William Kennedy III at Rose had brokered an ADFA deal in which this public ent.i.ty financed the sale by Stephens, Inc., of thirty-two nursing homes with an $81 million tax-exempt bond.

Clark alleged that the nursing home chain had been sold for an inflated price, which resulted in higher costs eventually being pa.s.sed on to aged residents.*83 Not long after launching his attack, Clark himself came under a.s.sault. It was revealed that he had made personal charges on his state charge card, a scandal that led to his arrest and disgrace.

This is a now familiar pattern for Bill and Hillary Clinton.

As president, when facing a trial in the Senate on impeachment charges, Clinton's accusers in Congress saw the full force of the Clinton counter-a.s.sault. s.e.xual secrets were revealed by a troika of private detectives, disseminated by professional smear artists (like Sidney Blumenthal), and paid for by p.o.r.nographers (like Larry Flynt).

The strategy has been replayed over and over--Nixon's "enemies list"

strategy played at a thermonuclear level, with no holds barred: Take on the Clintons, and you're in for a world of hurt.

In the case of Nichols, despite his damaged credibility, he did reveal unpleasant truths about the governor and his relationship to the ADFA.

The ADFA was conceived as an agent of regional industrial policy.

Using the pension money of state workers, it was intended to act as a development bank to bring businesses and jobs to Arkansas.

About a tenth of the fund was to be invested in the state, and this being Arkansas, it was often invested in dubious ways. Nichols's lawsuit alleged the governor used ADFA as way to launder money to bond kingpin--and convicted cocaine dealer and Clinton supporter--Dan Lasater and other high-rollers, as well as a personal slush fund to pay for fun-time pursuits with women, including Gennifer Flowers.

The money-laundering charge was potentially fatal to Clinton.

Lasater, who had made a fortune selling the Ponderosa steak house chain, was a one-man emblem of the excesses of the 1970s. Fast horses, fast women, and fast times were his hallmarks.

He won the admiration of Virginia Kelley, Bill's mother, for his thoroughbred races in Hot Springs. Not yet thirty, Lasater would back the right horse in the political arena as well.

THE COCAINE CARTEL.

The relationship between Bill Clinton and Dan Lasater began in earnest when Clinton was out of office and down on his luck. Losing to Republican Frank White in 1980, Bill visited Lasater at his Quapaw Towers apartment and forged a relationship that he would use to partially offset the indifference and outright opposition of the Stephenses (they had little use at the time for the boy governor and had supported White in his bid to oust him).

Bill had to have known that Lasater was a dealer of drugs as well as bonds. The very apartment he visited was widely known as the e-ticket to euphoria, the scene of legendary parties that rivaled the groupie rock scene for its outrageousness, with ashtrays br.i.m.m.i.n.g with cocaine, and young women and high school girls offering themselves as party favors. Lasater's private jet, which he had used to fly the Clintons to the Kentucky Derby, was another Arkansas legend, truly a place to get high in the sky. If Bill had not heard about this from the Little Rock rumor circuit--which alone is hard to believe--all he had to do was to ask his half-brother.

Roger Clinton had grown up, haunted by his late father's legacy of booze and wife beating, yet doomed by genetics to repeat some of his father's ways for at least part of his life. A poor student, Roger was moody and wild, a braggart who was not shy about telling near-strangers about how he could use his brother's connections.

By the 1980s, Roger was in the grips of a heavy addiction to cocaine.

By his own account, Roger c.o.ked Up many times in the bathrooms of the governor's mansion, and even threw c.o.ke parties for his friends in the mansion during Hillary's absences. Presumably the governor knew nothing of these parties, or if he did, maintained an uncharacteristic stoic ability to stay away from a good time. (Roger had been caught on tape by a Hot Springs narcotics officer. After snorting c.o.ke for a buy, he said, "I've got to get some for my'

brother, he's got a nose like a Hoover vacuum cleaner!")*84 It was only natural that Bill would ask his friend and ally Lasater to look after his little brother. Roger had worked for Lasater as a driver and at a horse farm. But that was just his day job. His work for Lasater likely had more to do with "mules" than horses, a.s.sisting with his drug connections between Little Rock and New York. (Roger carted cocaine to the East Coast on at least one trip with his brother.) In a sense, Bill had offloaded the role of big brother and protector to Lasater. One day a terrified Roger Clinton came to Lasater saying that drug dealers to whom he owed money were threatening his life as well as threatening to kill his mother and brother. Lasater settled $8,000 of Roger's $20,000 drug debt and sent him to work at a stable in Florida where he could hide out. In short, there was a two-way street between Lasater and the governor, and it was becoming a major Little Rock thoroughfare. Lasater furnished Clinton with a list of possible appointees to the Arkansas Housing Development Authority, which chose underwriters for the state bond business. Between 1983 and 1986, Lasater's company was involved in $637 million worth of state bond offerings.*85 Bill knew that Lasater was under investigation for distribution of cocaine. After all, Lasater had been named in court testimony as a target of a police sting operation. Nevertheless, Clinton awarded a contract to handle a $30 million bond issue to Lasater to upgrade the Arkansas state police radio network. Aside from the obvious irony of buying police radios with laundered drug money, the deal was doubly unusual. Bonds are usually issued for major infrastructural projects, for schools or highways, not for police equipment. And it was rare, even in Little Rock, for a governor to personally lobby the legislature to steer a bond deal to a specified firm. Clinton's largesse allowed Lasater to rake in three-quarters of a million dollars in underwriting fees on that one deal alone.

Tommy Goodwin, lieutenant colonel in the state police, would later tell the Senate Whitewater committee how Clinton had come to him asking about the progress of the drug investigation against Lasater.

The committee reported: "Colonel Goodwin agreed that Governor Clinton's focus was not on Lasater's use of cocaine [which Clinton knew of]; rather it was directed toward determining whether he was going to be arrested for such use while his company was handling the police radio transaction."

Not long after Lasater collected the take on the police radio deal, he was sentenced to prison. So was Clinton's stepbrother.

Clinton himself would earn public esteem by seeming to sign off on the very sting operation that sent his brother to prison. The truth is, he was alerted to the sting by the state police and acted as the sting's apparent supporter in order to close off an investigation that could have led to the governor's mansion.

Bill and Hillary saw to it that Roger was well taken care of. His lawyer was William R. Wilson, a criminal defense attorney with whom Hillary had worked on several cases and who would later be appointed to a federal judgeship by Clinton. In the 1984 trial, Wilson put on a masterful defense of Roger Clinton that resulted in a remarkably light sentence for someone who possessed and sold cocaine by the pound. He would get out of prison within a year.

Of course, getting busted meant that Roger was forced to turn on his old patron, testifying about the drug debt Lasater had settled and adding other d.a.m.ning details. But governor Clinton repaid Lasater for his friendship, and took the steps necessary to see that a man who undoubtedly knew a whole lot too much would not take his anger out on his former patron. The last act of the Clinton-Lasater connection occurred in 1990 when the governor reached into his heart, saw all the greater good that Dan Lasater had done for the world, and found it necessary to pardon him. All debts had been paid in full.

In fact, Lasater's top aide--who actually ran his affairs while he was in prison--was Patsy Thoma.s.son, later to become the Clinton White House's Director of the Office of Administration. Ironically, she was put in charge of the White House's drug testing program.

STEPHENS, INC., AND THE EARLY CHINA CONNECTION.

Bill had thrown in his lot with the likes of Lasater because the big players in Arkansas, Witt and Jackson Stephens, were adamant in their dislike, even disgust, for Clinton. In time, however, their mutual needs and ambitions would bring them together.

Once again, the ADFA, whose charter had been drafted by Webb Hubbell, was the genesis of a major political relationship. In many states, such official bodies like the ADFA share appointment power with the governor and the legislature. In Arkansas, the governor had the power to appoint all ten of its board members. To make sure that his control would be total, Hubbell also saw to it that the bond proposals approved by the rubber stamp board also had to have the signed approval of the governor. (This was in keeping with the tenor of the times. Webb Hubbell had also drafted the state's ethics-in-government act, which exempted the governor and his appointees from having to report conflicts of interest.) Hubbell's influence over the ADFA paid handsome dividends. For example, ADFA bond issues provided almost $3 million in loans to Park-O-Meter, a parking meter company owned by Hubbell's irascible father-in-law, Seth Ward. (Hubbell, as the father of the Arkansas Ethics in Government Act, was never one to worry too much about appearances; he was both the certifying attorney for the ADFA and Park-O-Meter.) It was only natural and initially not suspicious that Stephens, Inc., a major off-Wall Street investment banker, would become a major ADFA underwriter. But eyebrows were raised when Governor Clinton appointed to the ADFA board two executives from Stephens-controlled concerns, one from the Worthen Bank and another from a Stephens-controlled nursing home chain.

Bill Clinton's arduous courting of the Stephens brothers paid off when the Worthen Bank rescued Clinton's floundering presidential campaign in New Hampshire with a $3.5 million line of credit.

Clinton would return the favor again, making sure that his $55 million in federal campaign funds was deposited in Worthen.*86 What was Hillary's role in all of this? Rose handled much of the legal side of the ADFA business. She did not take payments or commissions, but Hillary was paid in a different currency. Doubts about her value to the Rose firm had disappeared. She had been elevated among her peers to the role of rainmaker. Bill Clinton was remunerated in other ways as well. When he ran for governor, beneficiaries of ADFA loans or business contributed $400,000 to his campaign. When he ran for president, they kicked in millions.*87 Perhaps the biggest favor of all did not take the form of active support of Bill Clinton, but the prevention of what could have been a major headache. This favor occurred in the mid-1980s, when Worthen lost $52 million in state pension money on a bad loan. Despite loopholes that could have spared Worthen the losses, Jack Stephens and another investor agreed to cover them, sparing Bill Clinton a major political embarra.s.sment.

The other major investor was Worthen kingpin James Riady, son of Mochtar Riady, owner of the LippoBank. A CIA report to the Senate investigation led by Senator Fred Thompson divulged that through their extensive holdings in China, the Riadys are intimately connected to elements in the Chinese military and likely act as agents of influence on behalf of Chinese intelligence services.

It was through the largesse of the Riadys that Bill Clinton was spared a setback, one that could have cost him his career. It was through the Riadys's good offices that a Riady executive named John Huang escorted Bill and Hillary around Hong Kong on a leg of their 1985 Asian trade mission.

John Huang later became a key figure in the Clinton Commerce Department--and in its lax oversight of technology transfers to Communist China. In fact, there is evidence that Huang himself was affiliated with Communist Chinese intelligence services.*88 Hillary had gone from Watergate to Whitewater in the span of twenty years, accomplishing feats of financial and political aggrandizement Richard Nixon would never have dared. And unlike Nixon, her opening to China was not the diplomatic coup of a world-cla.s.s statesman, but the beginning of a Communist Chinese penetration of the Clinton White House with campaign cash.

SEVEN.

THE CAMPAIGN MANAGER.

"Let nothing get you off your target."

-- SAUL ALINSKY, RULES FOR RADICALS.

"Hillary's keeping her own name," Bill Clinton informed his mother Virginia over coffee the morning before his marriage. Virginia wept, hurt that her soon-to-be daughter-in-law did not want to carry the Clinton name.*1 "The reaction of many of Hillary's legal colleagues was not much more measured. She explained that she needed to maintain the Rodham name to keep her own ident.i.ty distinct from the public ident.i.ty of her husband. In the South of the 1970s, older lawyers and judges regarded a "lady lawyer" as an oddity. The fact that she didn't want to use her husband's name struck many tradition-bound colleagues at the Rose Law Firm as the statement of a 1960s bra-burning feminist.

The public was not much more understanding, despite the approval of her husband. Bill Clinton patiently explained to the Arkansas Gazette that Hillary "had quite a career for herself as a lawyer,"

and was "nationally recognized as an authority on children's legal rights."*2 SERVING THE CANDIDATE.

The fourteen years between 1978 and 1992 witnessed an array of challenges and setbacks for Bill Clinton. His political career and personal life took on the qualities of a Perils of Pauline movie.

Bill and Hillary have always moved swiftly from success to disaster, from the heights of power to the edge of ruin and back again. He won the governorship in 1978 at age thirty-two, only to be soundly rejected by the voters two years later.

Even before the Clintons were evicted from the governor's mansion, Hillary took control of his reelection campaign and planned his comeback. As Bill then held onto the governorship for a decade, Hillary remained ever ready to take a leave from the Rose Law Firm, to step away from her work with liberal lobbies, to keep alive Bill Clinton's shot at the presidency.

Campaign managers and political operatives came and went. But it was Hillary who managed the perpetual campaign. This achievement, however, had a price. A very stiff price.

In order to keep her husband's chances alive, Hillary had to sublimate her ambitions, even her ident.i.ty, to his. In time, she could no longer be Hillary Rodham, activist and attorney-at-law. She became what she said that she despised and sought to avoid at all costs: Mrs. Clinton, the cookie baker and supportive wife.

GETTING STARTED.

Bill Clinton has run in every race like a prime marathoner with a thirty-pound pack on his back. From his very first race, a third of the electorate always had an immediate, visceral reaction against him. Bill Clinton has always excited the greatest pa.s.sion not among his supporters, but among his detractors. His casual way with the truth, his ability to transform his scandals into badges of honor and his setbacks into victories, and his cavalier approach to morals and principles infuriate opponents.

When Clinton ran against John Paul Hammerschmidt, a story circulated around Arkansas that a longhaired protestor at the university who outraged many in the state with his antics while sitting in a tree had, in fact, been Bill Clinton. Twenty years later, a story in the Star tabloid magazine alleged that he had fathered an illegitimate son with a prost.i.tute. Other stories described s.e.xually transmitted diseases hidden in his medical records.

A check on Bill's whereabouts showed he had been at Oxford when the protestor in the tree was arrested. A DNA test ruled out Clinton's paternity of the prost.i.tute's son. And his medical records remain sealed. Hillary refers often to such incidents, especially the tree incident, relishing the false attacks because they give her the chance to suggest that everything said about her husband is equally false, the imaginings of jealous detractors.

The truth is somewhat more problematic.

Bill Clinton, from his very first race, had to hide the deceitful way he dealt with the draft board and hoped that the maudlin, desperate, and self-congratulatory letter he wrote about maintaining his "political viability" would never surface. Bill Clinton may or may not have had s.e.x with the mother of the illegitimate child, a prost.i.tute who lived in a run-down complex a few blocks from the governor's mansion. His neighbors, however, had seen the young governor's digressions on his morning jogs, which were characterized as more like the prowlings of a predator than the outings of a fitness enthusiast. As a result, few were able to dismiss the paternity story as categorically untrue.

With Bill Clinton, rumor is the penumbra of fact; the boundary between the two is indistinct. This is the continuing threat that constantly must be managed by his campaign advisors, from Paul Fray to Paul Begala. When the Star's prost.i.tute story hit the headlines, the White House was notably muted in its denials. No one on President Clinton's or Hillary's staff wanted to go out on that limb.

For most campaign aides, treading this line between trusting the candidate and checking up on him is a difficult enough task. For Hillary, the manager of the perpetual Clinton campaign, explaining Bill has been more than a cross to bear. It must seem like a perpetual purgatory. But it is the price that she has willingly a.s.sumed to affix herself to the Clinton roller-coaster. She must have decided that it is worth it.

THE WAKE-UP CALL.

Bill Clinton handily won the governorship in 1978, arriving to take the oath of office with ink-stained hands from the final edits he had made on his inaugural speech in the car. The inaugural party that evening had a 1970s mock-elegant, mock-country theme, "Diamonds and Denim." Planeloads of friends came from the East, luminaries from the days of Oxford, Wellesley, and Yale.

It had been a rapid ascent in five years--from being a law student to being the chief executive of a state. It happened because Bill Clinton had shrewdly chosen a path that others had ignored in their quest for federal office. But it was an ascent that came too fast for Bill and Hillary's own good.

From his perspective, it must have seemed more like a coronation of charm and intellect than an election. Bill Clinton arrived in the governor's office with sweeping ambitions to remake the state in his own image, with little appreciation of the obduracy of the bureaucracy, the legislature's appet.i.te for flattery, and the need always to listen to the people.