HRC: State Secrets and the Rebirth of Hillary Clinton (15 page)

That was reason enough for her to focus on her rebuilding effort at State: to quietly and steadily reinforce her standing with the American public. It also meant that the burden of maintaining relationships and settling scores from the primary fell disproportionately to Bill. “He has to do all the politics for the entire family now,” a source close to Bill said, while Hillary was at State. As part of the State deal, Bill had agreed to restrict his overseas activities with the Clinton Global Initiative. That left him more time to pepper his schedule with political events, some of which were helpful to Obama’s cause while others were at odds with it. All of them were good for Team Clinton.

Bill was eager to get back to politics. Around Thanksgiving, he had stared down Jason Altmire at the Luke Ravenstahl fund-raising reception in Pittsburgh. But the time for retribution would come later. He focused first on repaying debts to tried-and-true friends like Terry McAuliffe, whose closeness to the Clintons obviated the need to keep track of the many ways in which he had helped them over the years.

Known as “the Macker” in Clintonworld, McAuliffe got his start chasing money as a fourteen-year-old in Syracuse, New York, where he created a driveway-sealing business. He ultimately became a big-time party moneyman and wrote in his own memoir of leaving his newborn child and wife in a car so that he could duck into a fundraiser on the way home from the hospital. Over the years, his job titles included finance director for Jimmy Carter’s presidential campaign, Democratic National Committee chairman, and cochairman of Hillary’s 2008 campaign. But McAuliffe, who could sell a yacht
to a camel, is mostly the Clintons’ chief money guy. He even
guaranteed a $1.3 million loan so that they could buy their home in Chappaqua.

Sometimes Bill’s loyalty meant putting himself out there for someone who was destined to lose, and no one deserved that kind of support more than McAuliffe. Back in August 2008, during the Democratic National Convention, McAuliffe had approached Bill and Hillary to tell them he was thinking of running for governor of Virginia. He brought with him clips of local stories about a possible bid. “Do it,” they said. Months later, as Hillary was interviewing job candidates at the posh apartment on Central Park South, Bill summoned McAuliffe to Harlem to talk shop. I’m a former governor, I know about the sets of issues that governors deal with, so why don’t you bring your people up here? Bill had said. McAuliffe arrived in Harlem with half a dozen advisers. “Bill Clinton was fired up, and Terry was diligently taking notes,” a McAuliffe aide said. The old Arkansas governor began rattling off policy prescriptions, supplementing McAuliffe’s knowledge of campaign operations with substance. He was talking “nitty-gritty policy stuff, like turning chicken waste into alternative energy,” the source said. After getting locked out of the early stages of Hillary’s run, Bill was getting in on the ground floor of McAuliffe’s race. The former president relished the roles of political consultant, fund-raiser, and campaign-trail surrogate. In February he headlined the state Democratic Party’s annual fund-raising dinner, even though Virginia Democrats had given their primary vote to Obama. He barnstormed through the state, campaigning for McAuliffe in Richmond, Norfolk, and Roanoke through the spring.

Hillary kept her distance but checked in on McAuliffe’s progress. At a March event for Vital Voices, she asked Mo Elleithee, a spokesman for her presidential campaign, how McAuliffe’s race was going. When Philippe Reines was questioned over whether Hillary had talked to McAuliffe about it directly, he replied that any such conversations would remain private—
a tacit acknowledgment that she had kept tabs on the race even while remaining publicly uninvolved.

Getting McAuliffe elected proved a tall order. Even in his home base, Washington’s refined northern Virginia suburbs, he was looked on as a carpetbagger, more Clintonian than Virginian. Capricia Marshall, who had by that time been nominated by the White House for the protocol job, showed up at McAuliffe’s election night party, representing Hillaryland. There was little to celebrate; McAuliffe had lost the primary.

Since the final days of Bill’s presidency, Hillary had been the Clinton on the front lines of electoral politics, winning two Senate races and losing a presidential campaign. Under normal circumstances, she would have been right by McAuliffe’s side, raising money and campaigning for him. But her new job meant that she had to keep her distance from McAuliffe’s campaign and the rest of the electoral battlefield. Instead, she focused her attention on the international chessboard and Washington’s own peculiar executive branch politics.

Tim Geithner never stood a chance. Obama’s new treasury secretary came into office with the charge of saving America’s financial system—and a fresh $700 billion bailout from Congress to help him do it. He was Obama’s handpicked guy on the biggest issue facing the new president. But for all of Geithner’s influence, a very small symbol of Hillary’s clout—an ampersand—spoke to her status as the first among equals in the Obama cabinet.

At the beginning of any new administration, jockeying for power is fierce among high-ranking officials in the White House, the cabinet, and the upper echelons of each of the departments. There are countless signals, big and small, of who has power and who doesn’t, from which officials get the most face time with the president to who wins early interagency turf battles. Aside from her formidable reputation, Hillary enjoyed the advantage of knowing the federal government inside and out. Between her stints as a staffer during the Watergate hearings, chairwoman of the federal Legal Services Corporation, first lady, and senator, she had acquired a lot of experience and insight into how the executive branch works. Many of her peers in the Obama cabinet had never served at a high level in the executive branch, having made their careers as governors, members of Congress, or academics. For those who had worked in an administration, they mostly had been at much lower levels. Almost all of them had more to learn than Hillary, both about their own agencies and about the ways and customs of the executive branch.

Geithner was an exception. As a former undersecretary for international affairs at Treasury, he had served at a high level and knew his new building well. He was poised to be the big dog on China, through a series of talks called the Strategic Economic Dialogue. Under President George W. Bush and Treasury Secretary Hank Paulson, basic diplomatic matters had taken a backseat to the complex economic issues that made the world’s two biggest powers either partners or adversaries on a wide range of topics with global consequences. Geithner, who had studied China at Dartmouth and spoke Mandarin, was positioned well to take over as the lead American negotiator with America’s counterweight on the other side of the globe.

But Hillary already had set her sights on Geithner’s turf. During the transition, she had talked extensively with Jim Steinberg and Bob Hormats, who later became an undersecretary for economic affairs, about the opportunities Asia presented for America to expand its influence. If Hillary could snatch a piece of the Strategic Economic Dialogue, she would give State new entrée into the most sensitive negotiations between any two countries in the world. Her decision to elbow her way into the dialogue pointed to Hillary’s larger strategy of turning State into the lead agency on all foreign policy matters, except where an active war necessitated the Pentagon having the primary role. Many agencies, from Treasury to Commerce, had business overseas, but Hillary, who made “economic statecraft” one of the pillars of her agenda, wanted her ambassadors to function as America’s CEOs, coordinating federal activities and branding the United States in whichever countries they served. In State’s first-ever Quadrennial Defense and Diplomacy Review, published later, Hillary’s view was laid out in plain language. “Today, given the wide array of U.S. agencies and actors and the corresponding need for coordination and leadership, it is essential that all ambassadors are both empowered and held accountable as CEOs,” the report read. “They must be responsible for directing and coordinating coherent, comprehensive bilateral engagement that harnesses the work of all U.S. government actors in-country.” In other words, foreign policy shouldn’t be conducted by other agencies.

Geithner, the former head of the powerful New York Federal Reserve Bank, was hardly a pushover. But Hillary perceived that he had one hand tied behind his back because of the global economic crisis, and she used that to leverage her way into the discussion. “She knew that the Treasury Department, dealing with much more important things, was not in a position to fight over what, for most people, would seem like a smaller issue,” one Treasury official explained.

By the time Geithner and Hillary discussed the China relationship face-to-face in February, their conversation was, according to a source familiar with Geithner’s thinking, not about whether to make the change. It was, instead, about how to make the powersharing arrangement work.

Geithner himself, the source said, supported elevating Hillary in the talks with the Chinese. But Team Geithner was incensed. Treasury officials thought Hillary was bulldozing her way in. At the staff level, they had spent years building up this structure to engage with China, even before the Bush administration, and now that it was under way, State was going to steal part of it. Geithner’s inner circle grumbled about it, but there was little he could do. The view from Treasury: Obama didn’t care much for turf wars, and Hillary was trying to take advantage of the president’s desire to placate her.

“It did upset some people at Treasury,” said a bemused senior State Department official who recalled Hillary’s approach. “We’re dealing with China here, and to have everything funneled—or to have the major dialogue with China focused only on finance and economics—was not considered a very strategic way of looking at things. That was one of the big changes she made. Paulson started this and it focused on economics, and then, from the get-go, she understood that this couldn’t just be about economics, it had to be about foreign policy. So then she had this sort of tug-of-war—that’s probably the wrong way—sort of a dialogue with Treasury and the White House. She insisted on it. She was not going to be denied.”

Hillary spoke to Obama about it personally. “I’m working on a new concept to combine all these dialogues into one,” she said.

“I’ve talked to Tim Geithner. He’s fine. So this is what I want to do.” Obama gave his blessing.

The White House renamed the talks. The Strategic Economic Dialogue was recast as the “Strategic & Economic Dialogue,” changing the word
strategic
from a descriptor of the type of economic dialogue the United States had with China to a term that gave foreign policy strategy parity with, if not primacy over, the economic side of the talks. Treasury aides say it was a bitter early pill to swallow, but Geithner and Clinton enjoyed a good personal rapport, and it wasn’t worth a throwdown that the new treasury secretary was bound to lose.

The move gave Hillary’s team bragging rights abroad and in at least one home. When the State Department’s plane arrived for the first Strategic & Economic Dialogue in China in 2010, Hillary’s aides wore fitted wool baseball caps with a gigantic white ampersand logo on the front. Kurt Campbell, the assistant secretary of state for the region and the husband of treasury undersecretary for international affairs Lael Brainard, had distributed them as a reminder of State’s new prominence in America’s relationship with China. Reines, who like Hillary and Campbell loves an inside joke, could be seen wearing his ampersand hat in Washington years later.

Geithner’s decision to acquiesce meant there would be no real blowback from Treasury, but years later aides still fumed privately about the episode. The quiet turf theft served as a marker for Washington insiders that Obama had Hillary’s back. “That was kind of an early sign to everyone in the administration that Hillary Clinton was not your average cabinet official and was going to get her way on a lot of things, and it was probably best to accommodate and play nice [rather] than to try to pick fights, because you were probably not going to win,” the Treasury official said. “There was this overriding sense that ‘yes, we’ve given her the job, but we want her to be happy in the job.’ ”

Hillary’s star power gave her a leg up in the art of persuasion. The simple truth is that others are more likely to say yes to someone
they admire, respect, or fear—and Hillary evoked all those feelings. And her moves inside the cabinet and within her own building demonstrated a rare skill in manipulating Washington’s levers of power. Taken together, they represented an aggressive push to empower the State Department. Sometimes, as in the case with Geithner, that meant seizing turf. In other instances, she leaned on the president to get her more money, created alliances with other power brokers in the White House Situation Room, and found creative ways to bolster the beleaguered corps within the State Department.

Usually the people she dealt with, from low-level staff aides in her own building all the way up to the president of the United States, walked away with newfound respect for her. Often they found themselves liking her more with each interaction, even if they had been worked over. In that way, she proved herself to be the ultimate politician, a strategic power player whose hard work, command of politics and policy, and deft calculation produced more admiration than animosity. She was definitely someone other politicians wanted on their side.

“I sort of describe it as ‘stages of Hillary,’ ” one member of Defense Secretary Robert Gates’s inner circle said. “You know, you first dread the prospect of working with her, then you sort of begrudgingly begin to respect her, then you outright respect her and her incredible work ethic. You know, she’s inexhaustible, she’s tough-minded, and then you come to actually start to like her, and you just can’t believe it but you actually like this person, and she’s charming and she’s funny and she’s interesting and she’s inquisitive and she’s engaging.”