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Ralph Blewitt Yasser Arafat blaus This program is captioned live. Good evening. Yalda Hakim with the 'World News Australia' update. The Prime Minister's former boyfriend defended her innocence in the ongoing slush fund scandal. The former Australian Workers' Union official, Ralph Blewitt tonight accused the Premier of fraud. Julia Gillard is defiant, lashing out at the Opposition's attack - saying it's a smear campaign and a false presence. A probe into whether Yasser Arafat was poisoned begins. Julia Gillard's personal decision for Australia to vote against a UN motion for Palestine to become a statehood was overturned by her back benched. Bondy amongst other beeches closed because of algal blooms today. I'll have

CLINTON: Mr President, Mr Speaker,

my fellow Americans.

Again, we are here
in the sanctuary of democracy

and, once again,
our democracy has spoken.

NARRATOR: On January 24, 1995,

President Bill Clinton
addressed Congress

and the American people.

Two years into his presidency

and just months after suffering
the worst mid-term election defeat

in modern history,
he was chastened and humble.

Now all of us,
Republicans and Democrats alike,

must say, "We hear you.

"We will work together to earn
the jobs you have given us."

(APPLAUSE)

MAN: After the mid-terms,
the President, I think,

felt that he was almost a hostage
in his own White House.

He was unhappy with
the White House staff,

he was unhappy with
the policy direction,

and so he actually began
a very quiet operation

to begin to change
his administration.

Beginning in early 1995,

White House staffers began to notice
a change in the President.

His speeches contained
unfamiliar language and cadences.

In meetings, he'd get up abruptly
and leave the room.

Many aides felt he was no longer
listening to them.

I recall a meeting

that the President's
economic advisers

and political advisers
were having

about how he was going to
spend the next three weeks,

what themes he was
going to emphasise.

And I remember somebody
from the back of the room -

I think it was Erskine Bowles,

then the President's
Chief of Staff -

saying, "This is all irrelevant."

"Irrelevant? We're the staff.

"We are the people
who help the President.

"Why are we irrelevant?"
And he didn't exactly say.

He said there was some other
force in the White House.

And, again and again,
there seemed to be instances.

It was almost like in astronomy.

There's a black hole
and you can only tell it's there

because planets begin moving
into its gravitational orbit.

But you look
and there's nothing there.

That was Dick Morris.
Dick Morris was the black hole.

Dick Morris, an abrasive
political consultant from New York,

had a history with the Clintons that
went all the way back to Arkansas.

MAN: Other than Hillary Clinton,

he was the most important
political adviser

that Bill Clinton had had
over the course of his career.

He was there for the very first
election to governor, in 1978,

and had been with Bill Clinton

for most of the Arkansas
gubernatorial years.

Morris set up shop
in the White House

and began to chair
weekly strategy meetings

that were attended by most
of the President's senior staff.

MAN: Clinton typically dominates any
group or discussion that he's in.

In the meetings on the second
floor of the residence,

which we had every week,

Clinton would literally sit there
for an hour sometimes

hardly saying a word,
listening to Morris.

MAN: When I first started to work
for Clinton in the White House,

he had two big negatives -

a third of the country
thought he was immoral

and a third of the country
thought he was weak.

And I basically went to him
and I said,

"I can't do much about
the 'immoral',

"but we sure can solve the 'weak'."

And, therefore, we embarked on
a conscious strategy

of making sure
people saw Clinton as strong.

The heart of Morris's operation
was his polling,

which he used to diagnose
where Clinton's' weaknesses lay

and how he could correct them.

HARRIS: Polling became
absolutely central.

"How do we present ourselves
as an alternative to Newt Gingrich?

"How are people seeing
the President?

"What sort of policies
would make them feel better

"about Bill Clinton?"

MAN: They polled everything.

They polled every last word
that came out of his mouth.

They polled where he should
go on vacation!

Instead of going to
Martha's Vineyard,

that elite island
off the coast of Massachusetts,

they had him riding a horse
in Wyoming.

I think Bill Clinton's
allergic to horses.

But that's what the focus group said
would be a more acceptable vacation.

MORRIS: One of the big problems
was the relationship

between Bill and Hillary.

Voters thought that it was
a zero sum game,

that for Hillary to be strong,
Bill would have to be weak.

And, as a result,
the perception of Hillary's strength

became a perception
of Bill's weakness.

The polling made me understand that,

and when I came back
to work for Clinton,

one of the first things I did

was to tell Hillary, "You can be
as influential as you want to be,

"but do it in private.

"Don't sit in on
the strategy meetings,

"don't make the appointments, don't
make everybody be cleared with you.

"At the bedroom at night,
tell him what to do,

"but don't let it be seen
in public."

Morris' advice hit home.

After the stunning defeat
in the mid-term elections,

Hillary had received
a large share of the blame.

ICKES: She was outspoken, she
was smart, she was hard driving,

and some people resented her.

Remember during the campaign, there
was 'two for the price of one'?

People aren't electing
'two for one',

WOMAN: She had been caught out
trying to be a co-president.

That just wasn't gonna fly.

And that's when she had to
begin to really re-examine -

again as she did
as governor's wife -

"What does the public want from me
in this role?"

And to take on gradually

a little bit more of the
traditional role of First Lady.

Well, welcome to the White House

and to the beginning of
the Christmas season here.

Unsatisfied by her
ceremonial role as first lady,

Hillary began working on
issues important to her

but not alarming to the public.

She began writing a book
about children

and travelled abroad with Chelsea
to advocate for women's rights.

She wrote a weekly
syndicated column,

and even consulted a psychic
in the White House.

But it wasn't enough.

SHEEHY: She felt, for one of

completely depressed.

She said everything that
she was doing wasn't working,

she just didn't know
what to do anymore.

It's 'cause she really
wanted to be in there

right at Bill Clinton's side,

fighting all the political
battles that he was doing.

The President wants to defend
Washington bureaucracy,

Washington red tape
and Washington spending

and higher taxes to pay for less
out of Washington!

While the Clintons struggled
to find their way back

from the political wilderness,

their rival, Republican Speaker
of the House Newt Gingrich,

was dominating politics
in Washington.

MAN: I think Newt felt like he had

led a great revolution,

and led the House,

and the Senate, for that matter,
to victory,

and that we could be the, you know,
the driving force in this city,

and that he was, in effect,

comparable or equal to
the President.

Gingrich and his newly elected
army of Republican representatives

quickly passed bill after bill
from their 'Contract with America'.

Sensing his strength,

Gingrich was intent on drawing
Clinton into a political showdown

that would determine - once
and for all - who was in charge.

In the spring of 1995,
Gingrich picked his battleground.

I think the central issue

that we challenged the Clinton
Administration on was on the budget.

We wanted to balance the budget.

We thought that was the most
important domestic policy issue

that existed in the country,

and it was gonna be ugly, as
all deficit fights inevitably are.

What you currently have is a system

designed to be
a centralised bureaucracy.

In May, Gingrich unveiled a plan

to eliminate the federal budget
deficit in seven years

through huge cuts
in government spending.

Most of the cuts
would be concentrated

in two government
health insurance programs -

Medicare and Medicaid.

Gingrich had managed to
shift the focus of power

and media attention
from Clinton to himself.

With Gingrich in the spotlight,

Clinton seemed
increasingly peripheral.

April 18, 1995.

Bill Clinton gives
a press conference,

and we're all over him
about his lack of power.

"Newt's running the town!
Newt's in control!"

Yes, Jean.

President Clinton, Republicans
have dominated political debate

in this country since they took over
Congress in January,

and even tonight two of
the major television networks

declined to broadcast
this event live.

Do you worry about making sure your
voice is heard in the coming months?

Clinton is forced to say that the
president is still relevant here.

The Constitution gives me relevance,

the power of our ideas
give me relevance,

the record we have built up
over the last two years

and the things we're trying to do
to implement it give it relevance.

The president is relevant here.

WOMAN: It was awful.

You know, "The president
is still relevant."

Just the fact that he felt compelled
to say those words says everything.

I am willing to work
with the Republicans.

The question is, what happens now?

Yes?

(HELICOPTERS WHIRR, SIRENS WAIL)

REPORTER: About a third of
the building has been blown away.

MAN: The next day, on April 19...

..a bomb went off at Oklahoma City.

(BABY CRIES)

It was the largest domestic
terrorist event in American history.

That changed everything.

The bombing in Oklahoma City...

..was an attack on innocent children

..and defenceless citizens.

It was an act of cowardice...

..and it was evil.

The United States
will not tolerate it...

..and I will not allow
the people of this country

to be intimidated by evil cowards.

Within 48 hours of the incident,

the FBI arrested 26-year-old
Timothy McVeigh,

a former soldier with
a burning hatred for the government.

His massive truck bomb,

detonated outside
the Murrah Federal Building,

killed 149 workers,
along with 19 children.

Four days after the bombing,

Clinton travelled to Oklahoma City
to console the mourners.

I went with him
down to Oklahoma City

for that Sunday morning
on the flight.

We worked on the speech some more.

He was very focused on what to say.

I remember we went into what
I think they call the Cow Palace,

and I've never been in a setting
that was as eerily silent

as that one was,

except for the sound of sobbing.

MAN: He stood there for hours
and met with every single person

and talked to everybody.

It's kind of a throwaway line now,

"I feel your pain,"
but he literally could.

I mean, he could take people
and just hug them

and connect to them, in a way,
and really listen to them.

You have lost too much,

but you have not lost everything.

And you have certainly not
lost America...

..for we will stand with you.

MAN: He really found a way
to embrace the country

to help them channel their grief,
their confusion.

It gets him out of the mode
of reacting to Congress

and into the mode of being
a national leader,

the person that the country
can look to

for assurance and reliance
and strength.

To all my fellow Americans
beyond this hall, I say...

..one thing we owe
those who have sacrificed

is the duty to purge ourselves
of the dark forces

which gave rise to this evil.

MAN: He spoke to the country
as a unifying, a healing figure.

But, very subtly and appropriately,

he also drew attention to the fact

that the rhetoric
Timothy McVeigh was using

was not all that different from the
rhetoric that the talk show hosts

and the militias and even some of
the members of Congress were using.

Let us teach our children
that the God of comfort

is also the God of righteousness.

"Those who trouble their own house
will inherit the wind."

BAER: Here was a president
who had been, by many people,

deemed not to be strong,

who suddenly was being viewed
as both sensitive and strong,

which was a great
and very powerful combination.

At that moment,
perhaps for the first moment,

he inhabited the presidency.

(CREAKING)

Hey, babe, we gotta go over that
bush fire survival plan today. Um, I'm kind of busy. Uh, why don't we just
do it tomorrow some time? Yeah, alright, I'll pencil it in. Thank you, sweetheart.
(GLASS SMASHES) Do you want a cup of tea?
I'd love one. (FLAMES CRACKLE AND ROAR)

Bill Clinton had begun to find
his voice at home,

but he commanded little respect
on the international stage.

For two years,
Clinton had stumbled through

a series of foreign policy mishaps.

An ill-considered action in Somalia

had cost the lives of 18 US soldiers

and deterred the President
from asserting

American military power
around the world.

Without strong US leadership,

the world's problems
were reaching a critical state.

In central Europe,

Bosnian Serbs had begun wiping out
the largely Muslim population

in their own country.

WOMAN: In 1995, the massacres
in Bosnia were in full swing.

Daily rivers of blood.

After two years
of this kind of savagery,

Bill Clinton had
a disaster on his hands.

This was genocide in Europe.

Since becoming president,

Clinton had deferred to
European countries,

with soldiers in Bosnia

as part of the United Nations
peacekeeping operation.

MAN: One has to understand that when
you are in a peacekeeping operation,

which is an international effort,

one president cannot call the shots.

One president cannot
take the decision.

Particularly when the president's
country has no troops on the ground.

Clinton's reluctance to send
American soldiers to Bosnia

collided with growing calls
for US intervention.

Mr President, I cannot
not tell you something.

I have been in
the former Yugoslavia.

We must do something to stop
the bloodshed in that country!

MORRIS: The ongoing scenes
of this horrific genocidal slaughter

going on by the Serbs
against the Muslims

was just undermining
Clinton's image day after day.

Clinton would complain, "The media's
trying to force me into a war

"and I don't want it.

"I'm not going to go into
my own Vietnam."

And every night
these images came on the screen.

The violence in Bosnia reached
a climax in the summer of 1995.

A new set of European leaders
implored Clinton to act.

"The position of leader
of the free world,"

complained French president
Jacques Chirac, "is vacant."

Privately, Clinton had begun
to rethink his policy.

Haunted by his failure to stop
a genocide in Rwanda

the previous year,
he could no longer stand idly by.

MORRIS: Finally, the President
set up a trip-wire

where if the Bosnian Serbs attacked,

it would trigger a massive
NATO military response.

On July 11, 1995,

Bosnian Serb soldiers
overran the city of Srebrenica

and murdered more than 8,000
defenceless men and boys.

That was a real shock for everyone.

And for that to happen in Europe...

..many decades after World War II,

was something that nobody
could sit back and swallow.

For Clinton,
the wire had been tripped.

On August 30, fighter planes
from NATO bases across Europe,

acting on the President's go-ahead,

launched a massive attack
against Serbs in Bosnia

called Operation Deliberate Force.

MAN: He didn't blink.

And there wasn't tension on him,
there wasn't pressure on him,

he wasn't sweating and worrying
about, "Did I do the right thing?"

We knew then, we knew that day,

that we had a commander-in-chief
who was rational

and comfortable with
the use of force.

For the next two weeks,
NATO pilots flew 3,500 sorties,

as millions around the world watched
the air war unfold on television.

REPORTER: The NATO action
began early this morning,

the harsh light of fires and
explosions colouring the night sky.

Some people watched the bombardment
from their houses,

but after more than 10,000 deaths
here in the last three years,

most Sarajevans had given up
any hope of outside intervention.

Last night it came on a scale

which could yet change
the course of this war.

On September 14, Serbian guns
ringing Sarajevo fell silent.

Two months later, Clinton convened
the warring parties in Dayton, Ohio,

to negotiate an end to hostilities.

The parties have agreed
to put down their arms

and roll up their sleeves
and work for peace...

AMANPOUR: Finally,
when you got tough and you said,

"Enough already -
we don't accept genocide

"at the end of the 20th century
in our backyard,"

they got serious and it stopped.

And then the United States,
not the Europeans,

lead the Dayton peace process.

And to this day,
imperfect as it may be, it has held.

The Dayton Peace Accords were a
triumph for Clinton's foreign policy

and restored his standing
as leader of the free world.

The same month, he visited the
troubled country of Northern Ireland

where crowds hailed him
as a peacemaker.

The young people -
Catholic and Protestant alike -

made it clear to me,
not only with their words

but by the expressions on
their faces, that they want peace.

(CROWD CHEERS)

After three years as president,

he had developed a new vision
of America's interests abroad.

It would come to be known
as 'the Clinton Doctrine'.

CLINTON: It's easy to say
that we really have no interests

in who lives in this or that valley
in Bosnia,

or who owns a strip of brush land
in the Horn of Africa,

or some piece of parched earth
by the Jordan River.

But the true measure
of our interests

lies not in how small
or distant these places are,

or in whether we have trouble
pronouncing their names...

..the question we must ask is, what
are the consequences to our security

of letting conflicts fester
and spread?

We cannot - indeed, we should not -
do everything or be everywhere,

but where our values
and our interests are at stake

and where we can make a difference,
we must be prepared to do so.

MAN: There was a Clinton Doctrine,

but it wasn't purely
a military doctrine,

it was a national security doctrine.

President Clinton thought the United
States is an indispensable nation.

You can't do things
without the United States.

It may not be
only the United States,

and it's certainly
not doing it alone,

but it's the United States that
brings the decisive edge

in being able to get things done.

And that where you can make
a difference, you should.

In the latest poll I saw...

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are just the beginning.

Graeme's Apia experience, taken
from a real flood claims call. (PHONE RINGS) Hey, Graeme.
It's Ray here from Apia. How you going?
Oh, not bad. Starting to almost feel
normal selves again. (LAUGHS)
Oh, well, that's good to hear. I just can't have
enough praise and admiration for what you've done for us. It's kept us
with our heads above water. Pardon that pun too.
(LAUGHS) If you're over 50, Apia makes home
insurance a rewarding experience. Call 13 50 50 for a chat today.

..86% of the American people said,

"Balance the budget now.

"Don't wait, don't postpone,
don't give us promises."

Even as Clinton
brought peace to Europe,

the ideological war at home
was heating up.

Speaker Newt Gingrich was standing
by his balanced budget proposal,

daring the President to veto it.

Once again,

Clinton hoped to use his powers
of persuasion to end the impasse.

MAN: He was thinking,

"What I'm gonna do
is I'm gonna capture these guys.

"Because A,
I'm smarter than they are,

"and B, that's my whole life's
learning, is how to capture people.

"And I'm gonna do it through
sheer force of personality.

"I can sit down with Newt Gingrich,

"I can sit down with the devil
himself, and I can cut a deal."

Gingrich would not yield
to Clinton's charms.

Unless the President agreed to
huge cuts in Medicare and Medicaid,

Congress would refuse to appropriate
money for the federal government,

shutting it down.

BLANKLEY: The one thing that
the House of Representatives has

is the power of the purse.

We can deny money.

It is the only thing that the House
of Representatives alone can do,

can refuse to vote an appropriation.

So, inevitably,
whatever the fight was going to be,

it was going to come down to us
denying the White House money.

Clinton seemed caught between
two toxic political choices -

if he opposed Gingrich's
balanced budget plan,

he would be portrayed as a defender
of big government deficits...

..if he gave in,

he would effectively cede control
of the government

to Gingrich and the Republicans.

But there was a third option.

Dick Morris had been polling the
Republicans' proposed budget cuts

and believed he had found
an opening.

MORRIS: I did a poll for Clinton

where I tested each of those cuts
and its impact,

and I said to him,
"Do you want the 4-hour briefing

"or the 1-word briefing?"

And he said, "Start with the
one word." I said, "Medicare."

I said, "None of the other cuts
are nearly as important

"as the cut they're proposing
in Medicare."

The public supported
a balanced budget, Morris argued,

but not at the expense of their
most cherished federal program.

MORRIS: I said that what's important

is that you take away from
the Republicans

the balanced budget issue.

If you can show how you can balance
the budget without cutting Medicare

but by cutting everything else,
then you can call their bluff,

and then, all of a sudden,

it becomes a question of
WHAT do we cut, not DO we cut.

Morris called his strategy
'triangulation'.

Clinton seized on it
as a way to regain the initiative

from the Republicans.

In June, over the strong objections
of liberals on his staff,

he announced his own
balanced budget plan,

protecting Medicare and Medicaid.

There is an alternative,
a way to balance this budget.

It's not that we shouldn't
balance the budget.

We should balance the budget -

I believe we're GOING to do that.

But we don't have to do it
in a draconian way

that hurts the American people.

"You know, whether or not to balance
the budget, we can't win that fight.

"We're going to lose.

"But once you accept that
we're going to balance the budget,

"now let's have a fight
about what we're going to cut

"and what we're going to protect.

"That's a fight we can win.

"Are you going to protect Medicare?

"Are you going to protect
Social Security?

"You want to shut down
the government over that? Let's go."

In mid-November,

with the issue of Medicare cuts
still dividing the two sides,

the federal government ran out
of money and shut down.

Nearly a million federal employees
were instantly furloughed,

government offices closed,

all but the most essential services
ground to a halt.

(RINGING TONE)

WOMAN: The Washington
Passport Agency is closed
for lack of funding.

WOMAN: ..the shutdown of
the federal government...

MAN: The National Park Service...
WOMAN: ..is closed indefinitely.

If it ends soon, the shutdown will
have been a temporary inconvenience,

but if prolonged it could
cost the country a lot of anguish

and many millions of dollars.

BAKER: Clinton took a gamble,

the biggest gamble of
his presidency to that point,

in saying, "No, I'm going to
let the government shut down

"rather than accept the cuts
that you're proposing here."

REPORTER: Day three
and nobody moves,

least of all the 800,000
federal workers forced to stay home.

The American people should not be
held hostage anymore

to the Republican budget priorities.

ALL: (CHANT) Work, work.
Put the government back to work.

Through a first shutdown in November
and then a longer one in December,

neither Clinton nor Gingrich
blinked.

It was high-stakes poker -

whichever side was blamed
for the shutdown

would probably lose
the next presidential election.

BLANKLEY: Our conviction was,

ultimately, a president is held
responsible for his government.

And that if we didn't blink,

at some point...
the public would say,

"The President needs to get
this government functioning."

The pressure on the President
was enormous.

Every day,
the political damage mounted.

Almost a billion dollars
in lost wages,

new Medicare and Social Security
claims going unprocessed,

the federal government
unable to discharge

even its most basic functions.

And the confrontation played out
on television every night.

Day 13 of the federal budget crisis
and the shutdown

that's brought parts of
the government to a dead stop.

The major players were all
assembled in Washington today

and they were talking,
but not to each other.

Now, one of the major problems
we have in America

is we have a president
who doesn't mind playing

and he doesn't mind talking
but he seems to hate working.

We're working.

This was all sui generis.
This was completely new.

Nobody knew the temperament
of the country,

how it was going to play out.

And it was literally hour by hour,
certainly day by day.

MAN: There was a fear
by many Democrats,

even some within the White House,

who just thought, you know,

"He's not going to be able
to say no to them.

"He wants to get along with them.

"He thinks that's the way
to save his presidency."

With the government closed,

Clinton prowled the empty halls
of the White House,

deprived of the human contact
he craved.

Among the few people permitted
to come to work

were the White House interns,

including a 22-year-old
named Monica Lewinsky.

The daughter of a Beverly Hills
doctor and his socialite wife,

Lewinsky was a graduate of
Oregon's Lewis & Clark College.

She had an air of confidence,
even boldness,

that set her apart
from her fellow interns.

On November 15,
the second day of the shutdown,

Clinton and Lewinsky struck up
a conversation,

in which Lewinsky confessed,
"I have a huge crush on you."

There were almost these sparks
flying between them

from that first moment
when they saw each other.

And as Monica said, "He gave me
the full Bill Clinton

"and undressed me with his eyes."

Hours later, the two had
their first sexual encounter.

MAN: It's almost as though there was
a part of Bill Clinton

that he had no control over,

that whenever it had the opportunity
to come out, it was gonna come out,

and with no forethought,
with no calculation,

with no sense of the consequences,
it was simply gonna happen.

And that's terrifying.

NEWSREADER: At this hour,
US President Bill Clinton is meeting

with top Congressional leaders

in another attempt to resolve
their budget stand-off.

As Clinton recklessly pursued
his affair with Lewinsky,

he and Gingrich were locked
in their own highwire embrace.

The President offered compromise
after compromise,

but Gingrich would not budge.

Unless Clinton agreed to his
formula of budget and tax cuts,

he would keep the government closed.

BLUMENTHAL: They believed
that he was soft,

that he could be pushed around

and that they could have their way.

They believed that he lacked
the confidence to stand up to them.

They believed they understood
his psychology

and they thought that they had
the political upper hand.

But Clinton sensed that his
political enemies had overreached

and were out of step
with the American people.

As long as they insist on
plunging ahead

with a budget
that violates our values,

and a process that is characterised
more by pressure

than constitutional practice,

I will fight it.

I am fighting it today.
I will fight it tomorrow.

(APPLAUSE)

I will fight it next week
and next month.

I will fight it
until we get a budget

that is fair to ALL Americans.

(CHEERING AND APPLAUSE)

PANETTA: There is a moment I will
never forget in the Oval Office.

We had been going through
negotiations on the budget.

And there were some of us
that were nervous

that President Clinton
might go too far,

that he might want to go so far
in compromising

that he might hurt himself
politically.

And so we kept putting different
offers on the table,

and they kept coming back
and saying,

"Not good enough, not good enough."

And we finally reached a day where
he wanted to do one more compromise,

one more step.

Newt Gingrich said, "No,"

and Bill Clinton basically
looked at them and said,

"You know, Newt, I can't do
what you want me to do.

"I don't believe it's
right for the country,

"and it may cost me the election
but I can't do it."

And my first reaction was, "He's
drawn a line that he had to draw."

He understood that he would have to
take a risk of not winning.

And winning was what
he was always about.

From that moment,
I think, in many ways

it became a renewal of Bill Clinton,
in terms of who he was,

both within himself
and with the American people.

ALL: (CHANT) We want to work!
We want to work!

As of last night, the public
appeared to be more sympathetic

to Mr Clinton's position.

Many traditional Americans,
including some Republicans,

were outraged that
a speaker of the house

would shut down the government.

Gingrich is not the president,
he shouldn't be acting like he is.

Suddenly, Bill Clinton became the
embodiment of traditional America.

He's the president
of the United States.

Whether you agree with him or not,
no-one has the right

to shut down government
when he's the president.

Finally, Senator Bob Dole -

worried that the shutdown would hurt
his presidential campaign -

corralled the necessary votes in
the Senate to reopen the government.

Clinton had won.

(APPLAUSE)

In the weeks that followed,

Clinton staked out a middle ground
between the two parties

with a vision of government that was
neither enemy, nor saviour.

The era of big government is over.

(CHEERING AND APPLAUSE)

But we cannot go back to the time

when our citizens were left
to fend for themselves.

(CHEERING AND APPLAUSE)

It was a real change in his vision
of how the presidency could work.

He had started with this heroic
notion of the presidency -

passing big laws,
doing grand things -

and then the public
just rejected it.

It hit a brick wall of what
the public thought of government.

And he realised that he had to
change how he was president

and he had to rebuild that
public trust in government.

Capitalising on his momentum,

Clinton announced
a stream of initiatives

designed to show middle-class
Americans that he understood

and could improve their lives.

MORRIS: After
the government shutdown,

we adopted a political strategy
based on one word - 'values'.

And our concept was that we would
help you raise your child better.

We have worked very hard
to help communities fight crime.

MORRIS: "I'll provide you
with drug-free school zones,

"school uniforms,
medical leave for your children."

Reduce teen smoking
by raising the price of cigarettes,

putting into place
tough restrictions on advertising.

MORRIS: "I'll give you all of these
weapons to raise better children."

This is a V-chip,

and it will be required to be put
in all new television sets.

Not even the Republicans
could stand in Clinton's way.

LOTT: After trying to move
heaven and earth,

big swathes in his first two years,

he started feeding us up

and he'd get into our knickers

with ideas that we really
could not vote against -

a hundred thousand cops
on the street.

A Republican gonna vote against
more law enforcement officers?

It was a politics of the possible,

not the things he dreamed of doing

but the things he COULD do.

MORRIS: He crafted a whole new
view in American politics -

literally a third way,
a moderate way -

and achieved the results
the American people wanted.

Three years into his first term,

Clinton had pulled one of the
greatest Houdini acts

in presidential history.

With approval ratings on the rise,

he could once again call himself
'the Comeback Kid'.

But, as with nearly every
Bill Clinton comeback,

it was soon followed by
yet another scandal.

Yesterday, a trove of documents

from Mrs Clinton's old law firm

that various investigators issued
subpoenas for months ago

were suddenly discovered

in the office of
one of the Clintons' aides.

In January 1996,

a sheaf of Hillary's old
billing records was discovered

in the private residence
of the White House.

The documents showed that she had
done legal work

for her old friend Jim McDougal

while he was engaged in fraudulent
real estate deals in Arkansas.

The Whitewater Inquiry, which had
receded from the front pages,

suddenly came roaring back.

NEWSREADER: There's the issue of
why it took the White House so long

to turn up the billing records.

This is a pattern -
delay, deception, withhold.

GORMLEY: The discovery of
the billing records

for Hillary Clinton's work
for Jim McDougal

and Madison Guaranty was explosive.

Everyone had been looking for
those billing records.

There were subpoenas all
over the place to turn those over.

And then, all of a sudden,
they just show up.

Our job is to get at the truth,

and the truth will speak for itself.

So thank you very much.

The Whitewater Inquiry was now
in the hands of

a new independent counsel.

Kenneth Starr had been appointed

by a panel of conservative judges
to replace Robert Fiske.

Starr was a respected jurist

and former official in
the Bush Administration.

At first, his appointment
caused little consternation

in the White House.

ICKES: The jury was out initially

because Starr had quite
a sterling reputation.

He was well known in judicial
circles, he was not rabid.

He was considered a very good,

conservative but very good,
court of appeals justice.

So people were hopeful.

In fact, however,
Starr would prove to be

a far more aggressive independent
counsel than his predecessor.

Unlike Fiske, who determined
to finish his work quickly,

Starr would follow his investigation
wherever it led,

no matter the cost in time or money.

I came to believe it was
a persecution, not a prosecution.

It was an investigation
in search of a crime,

which is not how investigations
are supposed to work.

They were not investigating
an allegation of a crime -

they were looking for a crime.

To Starr, the sudden appearance
of Hillary's billing records

seemed anything but accidental.

MAN: The discovery of
the Rose Law Firm records

was a very significant event.

It was a significant event

because there had been
a subpoena outstanding

for those law firm records
for a long, long time.

And the Rose Law Firm said,
"We don't have them,

"and they were taken away."

And there were issues as to,

well, why would law firm records
leave the law firm?

They weren't individual records,
they were law firm records,

so why wouldn't they be there?

Where are they?

REPORTER: Mrs Clinton!
Good morning. How are you all?

Mrs Clinton,
how important is this week,

in terms of turning
your image around?

Oh, I think it's important
to talk about the book I've written

about America's children, and
that's what I'm going to try to do.

Plus answer all the questions.

The discovery of her missing
billing records

undermined Hillary's efforts
to recede from the public spotlight.

MAN: ..Rose Law Firm records were
found in the White House in August.

As she set out on a national tour
to promote her book on children,

she could not escape
the questions about Whitewater.

It's an important question,
Mrs Clinton,

because Republicans on the Senate
Banking Committee say that...

SHEEHY: She was totally under siege,
so was the President,

but he allows this kind of thing
much more easily

to roll off his back.

Hillary becomes obsessed.

She has an enemy,
the enemy is the special prosecutor,

and one or the other
is going to be killed.

Ethics will continue to do that.

In Ken Starr, though,
Hillary had met her match.

Behind his avuncular smile,
he was relentless and implacable.

On January 19,
Starr subpoenaed Hillary,

the only first lady ever to have
been forced to testify

before a grand jury.

Rather than take her testimony
in the White House,

he insisted that she come to
the federal courthouse

in downtown Washington.

I think the idea that they would
make her come to the courthouse

and to the grand jury
was intended to humiliate her.

REPORTER: Would you rather have been
somewhere else today?

Oh, about a million other places
today, indeed.

In the end, Hillary's
billing records proved little.

They showed that she had
represented Jim McDougal

but didn't prove she'd known
he had used fraudulent loans

to prop up the failing
Whitewater development.

Though many urged him
to drop the investigation,

Starr redoubled his efforts.

PODESTA: He reopened all the files
that Fiske had closed,

he chased down and challenged
every privilege

that had been afforded
not just to President Clinton

but to previous presidents,

he decided to reinterview everybody,

bring 'em all back for
the grand jury.

The independent counsel focused
on finding witnesses in Arkansas

who could testify to
the Clintons' participation

in fraudulent real estate deals
15 years before.

BRANTLEY: People at the lowest level
were hurt.

People's lives were ruined.

People were left in debt that
they took years to get out of.

They broke people.

I mean, investigators invaded
high school campuses

to put the thumbscrews on
high school kids for information.

In May, Starr was able to convict
Jim McDougal of loan fraud.

Under the threat of imprisonment,
McDougal agreed to cooperate.

Suddenly, he claimed that
Bill Clinton had known

about his illegal loans.

GORMLEY: After Jim McDougal
is convicted, everything changes.

Up until that point, he never
pointed the finger at the Clintons.

He never indicated that they were
involved in wrongdoing.

But, once he's convicted,
all of a sudden he begins

coming up with stories
that implicate the Clintons.

McDougal's testimony was confused
and contradictory.

Few believed him.

Unable to find
other credible evidence,

Starr felt stymied

and increasingly determined
to find something

that would stick to the President.

GORMLEY: There's no question at all
that at this point,

the Starr prosecutors believe that
the Clintons are hiding evidence

and lying when they deny
that they had involvement

in some of McDougal's enterprises.

And, conversely,
the White House thinks

that these Starr prosecutors
have shifted

and now all they're doing
is a president hunt.

As Starr scoured the President's
past for evidence of crimes,

Clinton's prospects for the future
were looking brighter than ever.

BAKER: By the time that he is
heading into summer,

looking toward the fall
for his re-election,

President Clinton is
a new man again.

He's no longer
the figure of ridicule,

the weak figure
he had become in 1994.

He's standing strong
again with the public.

And his opponents are looking weak.

Clinton's Republican opponent in
the presidential election that fall

was Kansas senator Robert Dole.

With the economy strong
and Clinton resurgent,

Dole could do little but
characterise the President

as a free-spending liberal.

The federal government is too big

and it spends too much
of YOUR money, YOUR money.

To force the issue,

the Republican Congress
in August sent Clinton

a welfare reform bill
he had already vetoed twice.

Welfare reform had been a key part

of Clinton's
'New Democrat' philosophy...

..but he was aware of how much
liberals in his own party

hated the bill.

HARRIS: Bill Clinton authentically
believed in welfare reform,

that's welfare reform
in the abstract.

He wasn't being asked to sign
welfare reform in the abstract,

and so the question was, do you
sign it and proclaim a victory

knowing that to do so
is to leave many

in your own party's base
hugely demoralised?

Or do you veto it
and accept the consequences

of vetoing popular legislation just
a few months before the election?

It was an agonising choice
for Bill Clinton.

Good afternoon.

In August, the President
signed the Welfare Reform Bill.

When I ran for president
four years ago,

I pledged to end welfare
as we know it.

I have worked very hard for
four years to do just that.

Today, the Congress will
vote on legislation

that gives us a chance
to live up to that promise.

Clinton's decision was
the last straw for many on the left.

Several of his closest political
allies resigned in protest.

It made him someone who was
capable of anything.

And it no longer mattered
what party he was in.

You couldn't tell what he would do

and what he would be
willing to go along with.

With welfare reform behind him,

Clinton solidified his grip
on the race.

Deprived of his last
best campaign issue,

Bob Dole waged an anaemic race.

Clinton, meanwhile,
campaigned with gusto.

We will together build a bridge
to the 21st century wide enough

and strong enough to take us
to America's best days.

Will you do that?

(WILD CHEERING AND APPLAUSE)

ICKES: He was in his element.

He was shorn of this great burden
that had been over him in '94.

He was out making the case

in the best, most positive
and toughest way he could,

and he was loving it.

KING: Clinton was
no longer the issue.

People were not asking,
how he became president,

or "This guy's illegitimate,"

He was now looked upon as
THE President.

In November, Clinton won by a margin
that had once seemed inconceivable,

taking 31 states
and 70% of the electoral votes.

I, William Jefferson Clinton,
do solemnly swear...

..that I will faithfully execute
the office

of President of the United States.

..that I will faithfully execute
the office

of President of the United States.

BAKER: The re-election in 1996

is obviously one of the great
comebacks in American politics.

A president who had been
written off as road kill

just two years earlier

managed to come back to a very
convincing re-election in 1996.

The first Democrat to win a second
term since Franklin Roosevelt.

Clinton had survived.

Some believed by selling his soul,

others by finding it again.

As he gave his second
inaugural address,

Bill Clinton sought to turn the page

on the ugly partisan battles
of the last four years.

The American people
returned to office

a president of one party
and a congress of another.

Surely they did not do this

to advance the politics
of petty bickering

and extreme partisanship
they plainly deplore.

(CHEERING AND APPLAUSE)

BAER: The one part of that speech
that I think mattered more to him

than any other was his reference
to the scriptural phrase,

to be the "repairer of the breach",
from Isaiah.

They call on us instead
to be repairers of the breach.

BAER: He really felt like
he had come through

this trial by fire and storm,

and that the country had too, and
that now we could repair the breach

and move forward together.

He really believed

that he had this chance to build
this bridge to the 21st century...

..and that we had to do
certain things

that would help all people
to get there.

As Clinton strode triumphantly
down Pennsylvania Avenue

flush with victory,

there was no hint that
he had already set in motion

events that would soon divide
the country as never before...

..and nearly destroy his presidency.

Supertext Captions by
Red Bee Media Australia
Captions copyright SBS 2012

This program is captioned live. Slush fund controversy - Julia Gillard grilled as two former union officials dispute events.I'm Luke Waters reporting from Ramallah on the West Bank, where a few hours ago the remains of former Palestinian leader, Yasser Arafat, were removed from that mausoleum. Told to clean up their act. A race row facing major shopping centres in Australia.Bullying, racism, some sexual harassment.Warm welcome - the leader of the Syro- Malabar community in Sydney. VOICEOVER: From SBS this is 'World News Australia'. Good evening. Welcome to the programme. I'm Yalda Hakim. Two former union officials who set up a slush fund 20 years ago are brawling over who committed fraud, and whether the now Prime Minister, their former Prime Minister, their former legal adviceer, was involved. Julia Gillard's former boyfriend, Bruce Wilson, emerged tonight to declare that neither she nor he received any benefit from the fund. His former colleague, Ralph Blewitt alleges they did. The Prime Minister's former boyfriend broke his silence in her defence, and his own.Julia Gillard - did she benefit in any way from the operation of this slush fund? Not at all. ush fund? Not at all. How much did you benefit financially from the operation of the fund? e operation of the fund? I didn't benefit financially from it at all.The Opposition questioned Julia Gillard's conduct as a partner at law firm Slater & Gordon in the 1990s, when she gave off-the-books legal advice to Bruce Wilson, her boyfriend, an official at the work, and his offsider, Ralph Blewitt. It was setting up an association, ripinged to a slush fund, -- linked to a slush fund, which was set up for their election, but was misappropriated.Let's look at the two parties, Julia Gillard and Bruce Wilson. They were more intelligent than me. I went along for the ride and and as instructed by Bruce Wilson.Whether Bruce Wilson had someone deposit $5,000 in Julia Gillard's bank account, Bruce Wilson can't recall.Can the Prime Minister rule out these payments were for her home renovations.Slutsly yes - complete smeesh, un-- absolutely yes - complete smeesh. IrgThis is re-- complete smear. This is absolutely untrue. Ralph Blewitt, he said, received money from the slush fund. It sounds crazy, but he had been packaging it up and burying it in his backyard, of all things. Outside parliament the goption Leader levelled her own allegation -- Leader levelled her own allegations.She and Bruce Wilson wanted to hide from the Australian Workers' Union that a fund was set up.Later she said she was not accusing her of fraud.The Prime Minister's office will not comment, pointing to her previous denials. Julia Gillard said when she gave original advice she new nothing of their activities.e new nothing of their activities. Bruce Wilson agrees.Julia ruce Wilson agrees.Julia Bishop had a meeting with Ralph Blewitt Friday.Meeting with a scumbag to bring down a Prime Minister.If the Opposition genuinely thought there was anything serious at the base of this, why wouldn't the Leader of the Opposition have the guts to get up and do it himself.Parliament continues tomorrow. And tonight two Liberal MPs have crossed the floor to oppose Labour's move to effectively excise the Australian mainland from the migration zone. The legs reduces the legal rights of asylum seeker -- legislation reduces the legal rights of asylum seeker who ights of asylum seeker who reach the mainland by boat. Russell Broadbent, and Judi Moylan voted against their party. The bill is expected to pass both houses with the Opposition support. Officials in Ramallah reburied the remains of Yasser Arafat, after exhuming them to take samples they hope will solve the mystery of his death. Luke Waters, SBS correspondent, explains. There's no shortage of attention and scrutiny in this process. We have been told by Palestinian guards this is as close as we'll get to the mausoleum in which former leader Yasser Arafat is buried. The roads around the complex blocked for four days, and a bu tarpaulin prevents photographic and filming opportunities. Several months ago Yasser Arafat's widow alleged a too.Ic substance was found on his clothing, -- toxic substance was found on his clothing. Yasser Arafat died in a military hospital, and many claimed he was poisoned by the Israelis, a claim vemently denied. In the region, an Israeli Defence Minister, Ehud Barak gave no hints as to whether he'll join forces with the former Foreign Minister, Tzipi Livni, after announcing his retirement. She confirmed she'll return to politics forming a new centre lift party. There were speculations that they'd run together. Ehud Barak says he's Boeing out of the race altogether.