HRC: State Secrets and the Rebirth of Hillary Clinton (16 page)

Like Geithner, new budget director Peter Orszag was no match for Hillary. A wonk with a rap mogul’s private life,
Orszag had children by three different women and is now married to ABC television anchor Bianna Golodryga. The sleepy official name of his agency, the Office of Management and Budget (OMB), belies its power in the executive branch. Orszag held the key to every account at every federal agency; it is through OMB that the White House issues veto
threats and federal regulations. He was considered a wunderkind in the Clinton administration, where he was a top economic aide in his early thirties.

With his short black hair and thick glasses, Orszag bore more than a passing resemblance to Lewis Skolnick, the lead character Robert Carradine played in the 1984 film
Revenge of the Nerds
. When OMB’s staff held its annual variety show on the day of the public release of the budget in 2010, his minions serenaded him with a parody of the Rick James classic “Superfreak” retitled “Supergeek.” When he put a framed picture of his new girlfriend Golodryga in a prominent spot in his office, OMB staff privately joked that he was bringing geeky back. At least one aide recommended that he take down the glam shot of Golodryga in favor of something a little more staid. The picture stayed. He was a nerd with a big ego and a lot of power.

Charged with putting together Obama’s first real budget in 2009 and early 2010, Orszag had a great deal of autonomy in articulating the president’s philosophy and policy through the thousands of pages of text and tables that constitute each year’s federal budget proposal from OMB. He held the rank of a member of the president’s cabinet, which technically made him a peer of Hillary and the rest of the top department heads. But his hold on the budget meant those peers had to beg him for cash.

Hillary knew, coming into the job, that she would have to fight for every dollar that came her way—and that she had to be creative to maximize what she did get. After all, the United States was fully engaged in two wars, the domestic economy had collapsed, and Obama had been plunged into an ocean of red ink from which dry land might not be visible for a decade or more. Even under the best of budget circumstances, it’s hard to sell foreign aid funding to the American public. The basic question that members of Congress always hear from their constituents—and repeat to administration officials—is, why would the United States build a school in Baghdad when it could build one in Boston?

For most agencies, the funding request process was pretty simple. The department’s staff spent months assembling a budget proposal
and then in the fall submitted it to OMB. Ultimately, Congress had final decision-making power over the president’s budget request for all the agencies, but the final request was a forceful statement of White House priorities. By late November, OMB would deliver its judgment on each department’s initial request, often cutting back from an agency’s desired funding level. An appeals period followed between Thanksgiving and Christmas, when minor adjustments might be made to placate a secretary or an administrator. But by the end of the year, all Orszag and his aides had to do was dot the i’s and cross the t’s. In early February of the following year, the budget was sent to Congress.

Few cabinet secretaries thought they could win a fight with OMB, mostly because the director was himself a cabinet-level aide to the president and because he typically had strong relationships with other senior advisers in the West Wing. That was certainly true of Orszag, at least at the start of the administration. Though Energy Secretary Stephen Chu and Commerce Secretary Gary Locke were known as frequent callers within the marble hallways of the Old Executive Office Building, the cavernous relic that houses OMB and other White House–run agencies, most didn’t waste much time appealing to Orszag.

But Hillary Clinton had a lot more firepower in reserve than other Obama cabinet secretaries, as Orszag would come to find out. In late November or early December 2009, when OMB sent its first “passback” of State’s budget to Foggy Bottom, the bottom line was a small cut in funding, according to a State Department source familiar with the numbers. Hillary, who was looking for a double-digit percentage increase, pulled out her “secret weapon” in response. Deputy secretary of state Jack Lew, the old Clinton budget director, told Orszag his number was unacceptable.

“Only a former budget director could get away with this,” said one State Department source, who admired Lew’s moxie. Orszag technically outranked Lew, but Lew’s experience and credibility at the highest levels of government exceeded that of most of the cabinet. Hillary had recruited him for such missions.

Orszag and his bean counters made some minor concessions and came back with an upward revision that would have pleased most bureaucrats, taking Hillary from a cut to a small increase, maybe a little more than 1 percent. But from Hillary’s perspective, Orszag hadn’t gotten the message. It was time to go over his head. Now Lew went straight to Rahm Emanuel, one of many of Obama’s new aides who had gotten their big political break from the Clintons. We can’t live with this, Lew told Emanuel.

Again, Orszag came back with another number—one that Hillary found still too paltry. “We’ll take it to the president,” Lew assured her.

The budget request for the government’s security functions, which included the State Department’s funding, would ultimately be decided at a meeting of the National Security Council, where Orszag would have to argue against increasing Hillary’s bottom line in a room full of people who dealt with her regularly and had reason to cultivate her as an ally. By the time the budget made it to the top level, the other members of the National Security Council—the heads of security agencies—had been working together on a strategy for Afghanistan and Pakistan for a year, and the Defense Department supported more funding for State. Gates lobbied appropriators on Capitol Hill to boost Hillary’s budget, and he battled on her behalf within the administration. He once remarked to an aide that OMB was one constant from administration to administration: a Flat Earth society.

Orszag, an invited guest at the NSC meeting, stood no chance of beating Hillary in that arena. “Yes, we made a budget request that was turned down from the OMB. Yes, she went to the president directly,” said a senior State official. “And yes, she got what she wanted.”

In Hillary’s first full fiscal year, the White House’s budget request for State and aid programs grew by 10.6 percent to $56.6 billion. Hillary also won a provision, originally rejected by OMB, that protected money for embassies and consulates in war zones—Afghanistan, Pakistan, and Iraq, specifically—by funding them through a war-spending account. Congress wasn’t likely to mess around with
the new president’s request to fund two wars started by his predecessor, though it did pare State’s ask after Republicans took power in the House. But the new secretary understood that her budget figure was a representation of her clout within the new administration, and it reflected the latitude she would have to pursue her agenda.

She must also have understood that a roughly $50 billion budget for State and international aid programs didn’t exactly give her the keys to the federal treasury. More important, it didn’t make her the secretary of defense, who had almost $700 billion at his disposal. She wanted to be a player, not just a check-signer for do-gooder organizations in remote countries. That required forming strategic partnerships with other government agencies and private entities to amplify the State Department’s resources.

Hillary’s command of the levers of power, and her ability to seize unclaimed turf and resources, proved invaluable as she made the most out of the limited federal money available to State. As she had done with Geithner, she used her informal power as the first among equals in Obama’s cabinet to assert herself and her department, maneuvering around her colleagues, straight through them, and preferably in coordination with them, to get what she wanted.

In the informal cabinet pecking order, the defense secretary is typically at the top because he controls an annual budget the size of all the other departments combined, commands American military forces, and comes from a massive agency that’s been around a long time. But it is the secretary of state, because of the seniority of her department, who sits closest in line to the presidency and who is given the first chance to make her case to the president in meetings.

Other than Defense Secretary Bob Gates, who had served eight presidents, Hillary was by far the most experienced presidential adviser on the National Security Council by dint of the eight years she had spent informally counseling her husband. Her seat, either directly to the president’s left or one seat down, depending on the list of attendees, spoke to the prominence of her post. Gates sat across the table from her, and the two made for an imposing pair for other members of the national security apparatus.

Even Tom Donilon, a longtime party operator who served as the president’s deputy national security adviser and later as his national security adviser, was visibly unnerved by her presence. Donilon had a foot in each camp, having worked in political roles at the State Department during the Clinton administration and having helped Obama prepare for debates against John McCain and by serving as a cochair of Obama’s State Department transition team. Along with fellow Clinton administration veteran Rahm Emanuel, Donilon was an important ally for Hillary, particularly early on in the administration when her connections in Obama’s inner circle were limited.

Donilon had a little bit of a crush on Hillary—one he confessed to her and others privately. They were friends, but the intimidation factor went beyond the weak knees of a love-struck schoolboy. He described to others the way she would call on a Saturday morning at 7 a.m. and run through as many as ten different issues in taskmaster-like fashion. “Tom Donilon is scared shitless of her,” said one official who worked on the National Security Council staff. “People would debate a certain issue, and he would kind of poke at them or probe them further or disagree, but he never did it with her because he was scared to death of her.”

Donilon and Obama’s first national security adviser, Jim Jones, ran Situation Room meetings from the same end of the table at which Gates and Clinton sat. From there, power dissipated quickly from seat to seat. “The national security adviser is there. Hillary is there. Gates is there. And then there’s like all the other schmucks,” said one aide who sat in from time to time. “Everyone else is like they’re not there.”

Depending on the president and the occupant of the office, the secretary of state can be a big-time player or an afterthought. Her budget is small, but she has a voice in the president’s war council. That voice can be amplified if she makes sound arguments and has allies in the room.

But it can be easily diminished by the ever-growing National Security Staff, which is often mistakenly referred to as the National Security Council—a telling misconception because it points to the
power that the legion of staff advisers have gained over the years. Technically, the national security adviser and his or her staff exist to coordinate policy among the various agencies and present the president with options for major decisions. In reality, they often guide the process and at times have even become policy makers on their own. “The National Security [Staff] has the gates to the kingdom in terms of getting information to the president,” said former secretary of state Madeleine Albright, who worked on the National Security Staff during the Carter administration.
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Albright counseled Hillary about how to work the NSC process. “If you see it from the perspective of the secretary of state, you have to make sure that your voice is heard along with the others.” That requires “finding allies and then making sure that the president gets your views, because what happens is the national security adviser is the one that puts the final memo on top and says ‘This is what State says, this is what Defense says, this is what Treasury says, this is what I think,’ ” Albright said. “I did tell her that it was very important to have a strong relationship with the secretary of defense.”

Indeed, Gates was really the only player on Obama’s National Security Council who had more experience than Hillary in Washington’s power game. Hillary pursued a much different strategy for dealing with him, cultivating an alliance that made it hard for either of them to be pushed around by the National Security Staff. Like Hillary, Gates had been an active Republican at a time of major liberal social upheaval in the mid-1960s—she as a “Goldwater Girl” in high school, and he as a member of the College of William and Mary
Young Republicans. A career intelligence officer, Gates first made his way into the White House as a member of the National Security Council staff in 1974 and worked all the way up the ranks of the nation’s spy community to the post of CIA director under President George H. W. Bush. President George W. Bush recruited him back into government to succeed Donald Rumsfeld as secretary of defense, and Obama asked him to stay on. Hillary and Gates were
the two people on Obama’s national security team who didn’t need a map to get around the West Wing. Unlike Hillary, who had been at least one step removed from the national security process as first lady, Gates had a lot of experience inside the Situation Room. “The next time you’re in a situation with Gates, just think in your mind, ‘How many seats did he sit in?’ ” one of Hillary’s advisers recalls Albright saying. “He knows what everybody’s going to say.”

Between their common cultural roots, their proximity in age (Gates is four years older), and their status as the wise old hands on Obama’s National Security Council, it was easy for Hillary and Gates to develop a certain kinship. They became so close so fast that there’s a common misperception in Washington that they had been friends before, either when she was on the Armed Services Committee or perhaps during the Clinton administration. Several senior State and Defense Department sources offered up versions of the birth of their friendship along those lines. One had a more perceptive take: Hillary had made friends with a number of high-level flag officers—three- and four-star generals and admirals—during her time on Armed Services, and Gates had taken note from afar. Her reputation as a serious thinker on military issues preceded her. The Pentagon brass respected this Democrat who, to their surprise, was not only an ardent advocate of a strong military but also a careful student of their plans, their programs, and the way they went about securing funding. It wasn’t just political positioning. She believed in all forms of American power, including force, even though those views had hurt her badly in the Democratic primary in 2008, when Obama invigorated the antiwar left by contrasting his opposition to the Iraq War with Hillary’s vote for it.