Second of three articles

They gathered at the redbrick governor's mansion in Little Rock one morning in late October 1980: Gov. Bill Clinton and his wife Hillary Rodham and several friends from Hot Springs and Fayetteville. It was not yet one year into the decade that was supposed to witness Clinton's political ascension, but already, shockingly, at age 34, it seemed to him that everything might be going down the tubes. His Democratic Party was going down. President Jimmy Carter was going down. And Clinton was going down.

Perhaps his election as governor of Arkansas with more than 60 percent of the vote two years earlier had come too easily. "It was more like Bill was being elected president of his senior class," said Diane Blair, a political science professor and close friend and adviser. "It was not tough at all."

But this was tough, and it was different from Clinton's first race for Congress back in 1974, which he narrowly lost to John Paul Hammerschmidt. That had been a moral victory against a respected incumbent in the most Republican section of the state, and it made Clinton's reputation. Now there was all this hype about him being the boy wonder of American politics, but polls showed him losing to a blustery, beefy savings and loan executive named Frank D. White.

It mattered not at all what White looked like or sounded like or what he stood for: This election had little to do with him and everything to do with young Bill Clinton. Paula Unruh, White's campaign manager, understood that. She and White were killing Clinton with negative advertising, pounding away at the way Clinton handled a rebellion by Cuban boatlift refugees housed at Fort Chaffee and the fact that he had financed a highway reconstruction program by raising tenfold the state car-tag fees.

A grainy film flickered on the governor's television screen showing Cubans running down an Arkansas main street and holding sit-down strikes inside the federal fort -- an image intended, Unruh said later, to subconsciously twin Clinton's response to the refugee situation to Carter's ineffectual handling of the Iranian hostage crisis. Clinton looked at the ad and then turned to his wife and friends in dismay, according to the recollections of several people who were there that day.

"Do people really believe this stuff?" Clinton asked.

"Sure they do," said a friend.

"See!" said Hillary, jumping up from her seat. "People believe what they see and hear, Bill. You can't just sit there and take it!"

It was one of many lessons Clinton would never forget after that campaign, lessons that helped shape his race for the presidency 12 years later. But at the time it was too late to help, and a future race for president seemed irrelevant. There was nothing Clinton could do to turn the momentum his way.

"I was so young and inexperienced," he later recalled. "I didn't understand how to break through my crisis and turn the situation around." Cubans and car tags were part of the "Five C's" working against him, the other three being Carter, coattails and Clinton.

Many Arkansas voters likened that election to a political spanking. Billy was their boy, but he had been a little too uppity. It was not just that he had raised their fees and attacked some of the state's powerful interests, the timber industry and the utilities, during that first two-year term, but he had performed with what was seen as arrogance unbecoming an Arkansan. His top three aides, bearded young activists, were compared to H. R. Haldeman and John Ehrlichman by frustrated legislators and citizens who found it difficult to penetrate the barriers they had set up between Clinton and the outside world.

Trivial items took on symbolic weight against the young governor. The fact that his wife still used her maiden name. The fact that, at a time when the state was pushing a safe-driving campaign, Clinton was caught going 80 mph on a freeway as he barreled from a YMCA to a library dedication. Clinton tried to turn the hostility around with good humor. He joked that because people seemed so upset about his wife's name and the speeding incident, he and Hillary should name their first child Hot Rodham.

Clinton was not laughing when White beat him that November by 32,000 votes, giving him the dubious distinction of being the youngest ex-governor in U.S. history. His high school friend Carolyn Staley remembers visiting the mansion the morning after the defeat in tears and telling Clinton that maybe he should move to a state that appreciated him. Clinton was sore and demoralized -- he snubbed the state press corps for several days -- but leaving Arkansas or getting out of politics were the last things on his mind.

"There was absolutely no doubt that I would run again," Clinton said. "The very moment I was conceding defeat my mind was spinning with ideas about what I had to do to stay active and get back."

It was then, without articulating it, that Clinton in essence began his long run for the presidency. It started with a line of thinking that he later developed and refined into the theme of his efforts to resuscitate not only his political career in Arkansas but the national Democratic Party over the ensuing decade.

"In those months after my defeat I seriously began to ponder what it would take to re-create a new majority for change in America," Clinton said. "A lot of what I'm saying now grows directly out of what I began thinking then. I began thinking about the no-win situations we were creating by becoming the party of blame. I realized that when we got in trouble it was when the need for change conflicted with people's most deeply ingrained habits or most cherished values. If you want to be for change, you have to render that change in ways people can understand and relate to."

This was not the overnight metamorphosis of a liberal activist into a cautious moderate. In fact, Clinton had been developing his ideas on how Democrats could survive and succeed in what seemed to be a more conservative national environment even before his defeat. At the 1980 Democratic National Convention in New York, he delivered a speech in which he foresaw increased voter alienation and challenged the Democrats to offer "more creative and realistic" solutions to the nation's problems -- solutions, he said, that were being developed more at the state level than in Washington.

"Jimmy Carter and this administration cannot win this election simply by putting together the old elements of the Democratic coalition and repudiating Ronald Reagan," Clinton said. "It is not enough."

Nothing was enough for many Democrats that year, including Clinton. Through 1981 and 1982, his years as a private citizen, he operated on two tracks simultaneously. He maintained a law office in Little Rock in the firm of Wright, Lindsey and Jennings, where he handled a few antitrust cases but spent most of his time preparing his comeback in Arkansas. He persuaded Betsey Wright, a friend from the George McGovern era who had been working on women's political issues in Washington, to move to Little Rock and reconstruct his campaign organization from a room near his at the law firm. In 1981 they commissioned a poll that showed what Clinton anticipated: The voters did not really want White to be their governor, they had just wanted to teach Clinton a lesson.

Clinton spent the last six months of 1981 traveling the state, sometimes with Hillary, sometimes with Wright, other times with his law partner, Bruce Lindsey, in what became a sort of roadshow apologia. "We'd go somewhere and there'd be these confessionals in the supermarket aisles," recalled Hillary Clinton, who decided after that defeat to adjust to Arkansas' cultural mores and go by her husband's surname. "People would come up to Bill and say they voted against him but they were sorry he lost, and he'd say he understood and he was sorry for not listening to them better."

Although he had always had an empathetic personality, it was during that period that Clinton learned what a powerful campaign weapon it could be when he spent hours and days searching people out to listen to their problems and complaints, looking them straight in the eye, his arm braced on their shoulder or clasping their hand. It was a winning style that would serve him well a decade later during his toughest days in New Hampshire, another time when he desperately needed to connect with skeptical voters.

During that comeback campaign against White, Clinton took the unusual step of running commercials in which he confessed his sins of arrogance and publicly apologized to the voters, saying: "I learned that you can't lead without listening." Most of his campaign advisers urged him not to run the ads. "I was horrified by the idea," said Blair. "I didn't think he'd been that bad a governor. Plus I always thought you should show strength, not weakness. But he understood that he had hurt people personally and had to respond personally. He was absolutely right about that."

The Clinton of the 1982 campaign was different in message as well as style. Much as he would do a decade later, he began tailoring his rhetoric to what he considered middle-class tastes. He emphasized the need to move people off welfare. His speeches had law-and-order touches to them, and he began to move his capital punishment position from ambivalence to support.

Clinton won back the governor's job in 1982, winning 54.7 percent of the vote, and no challenger in Arkansas has come that close to him since.

The decade of the 1980s was Clinton's again, his time to rise. But how would he get where he wanted to go? The conventional route to national prominence, the U.S. Senate, seemed closed to him. Arkansas had two popular Democratic senators, Dale Bumpers and David Pryor, and Clinton told friends that he was never certain that he could beat either one of them, even if he wanted to. He could not afford another loss.

His choice was to build his base from within the framework of his state job. To reach the major league circuit, he first had to win in the minors: with the Arkansas legislature, which though predominantly Democratic was among the most conservative bodies in the nation. And he had to show some quantifiable measures of success in raising the living standards of a poor southern state that ranked near the bottom in virtually every economic and social category. "Thank God for Mississippi" would no longer suffice as the informal motto for a state whose governor had national ambitions.

To his critics in Arkansas, it seemed that Clinton's will to survive began to overtake his convictions.

Where during his first term he often challenged the state's major industries on environmental and tax-equity issues, he now began courting them more often. He dropped the energy conservation office he had instituted during his first term. He backed away from challenging the timber industry on clearcutting. In the interest of pulling the state out of a recession, he made a crusade of giving industries tax breaks for economic development while maintaining a regressive state sales tax on food and frequently raising sales taxes and user fees.

Some legislators who during his first term complained that he was too arrogant now said that he was so malleable and eager to please that they could not trust him. "He wanted everyone to love him, so he would leave the impression that he was agreeing with you on every issue," said Democratic state Sen. Nick Wilson. "People were supposed to forget the fact that they couldn't always trust what he told them. It was just his way of being nice to you."

It was during that period that Paul Greenberg, now editorial editor of the Arkansas Democrat, coined the disparaging monicker for Clinton: "Slick Willie." "He developed the politics of ultraconsensus, this desire to never offend a single voter," said Greenberg. "You can't argue with the success of it, looking at where he is now, but it also accounts for the residue of distrust that haunted him during the presidential campaign a decade later. It became a continuous thread in the Clinton story."

Public policy activists in the state, who had considered Clinton a progressive, became increasingly frustrated with him. "He had so much potential," said Brownie Ledbetter, the state's leading tax-equity gadfly. "But he became more and more reluctant to challenge the power elite."

"It was obvious to anybody here that Clinton was a political animal who had wanted to be president for a long time and felt he had to change course to get there," said Bruce McMath, a Little Rock environmental attorney and son of former Arkansas reform governor Sid McMath. "To succeed he needed to have money and a network, so he became more pragmatic in some areas, including the environment, sometimes exceedingly so."

Clinton said he felt misunderstood by liberal critics. He was not selling out, he said later, but rather trying to get beyond the ideological impasses that had stymied his party during the post-Vietnam era. His detractors were framing each of his decisions in their left-right framework, he said, "instead of seeing that we would no longer have a Democratic Party unless we figured out how to move beyond that."

During the mid-1980s, Clinton began using Arkansas as a testing ground for many of the ideas that he thought would be important to the transformation of his party on a national level. Whether this was "altogether serendipitous," as Wright says, or more calculated is open to debate. In either case, Clinton's Arkansas programs coincided with work that was being done at the National Governors Association (NGA) and helped his steady rise to prominence among governors -- who voted him their most effective colleague -- and other Democratic policy activists.

The programs that most interested Clinton were ones that he could place within a larger theme he was developing about the relationship between government and individuals. To frame this theme he used a rhetorical device that he carried into the 1992 presidential race -- opportunity and responsibility. In his education overhaul packages, regarded as national models and Clinton's landmark legislative success of the decade, the opportunity was for teachers to get higher pay and more flexibility, for students to get more course offerings and smaller class sizes, and the responsibility was for both students and teachers to document their skills and effort through standardized competence tests.

He used the same approach for welfare reforms and other measures that he pushed when he became chairman of the governors' group in 1986. "The heart of our welfare reform proposal," Clinton said of the NGA plan that he later helped mark up and steer through Congress, "is the contract that conditions the right to benefits on the assumption of personal responsibility to pursue a path to independence, through education, training and work."

Clinton the boy wonder turned 40 in the same week that he took over the governors' conference, and he mused during his opening address to his colleagues whether this would be a "milestone or millstone" year for the first of the "over the hill baby boomers."

His 40th birthday, Clinton said later, reminded him once more of his father's premature death in an auto accident three months before Clinton was born and of his own mortality. It was a confusing period for him, he said. He was on top of his game politically, but not personally. He was concerned about his family life, his relationship with Hillary and the time he could spend with his daughter, Chelsea. And he was riddled with guilt over the troubles of his younger half-brother, Roger Clinton Jr., a musician who had been convicted and imprisoned on cocaine charges.

He was still dealing with those conflicts less than a year later when the opportunity he had prepared for all his adult life virtually fell in his lap. The 1988 presidential campaign had just begun, and already candidates were bailing out left and right. First the front-runner, Gary Hart, was forced out of the race and then Bumpers, the presumed candidate Clinton had been deferring to, decided not to run. As soon as Bumpers made his announcement, pressure mounted on Clinton to enter the race. "Bill was surprised by that," said Wright. "He thought Bumpers would run and should run."

The encouragement was coming in calls and letters by the hundreds. From Washington, veterans of the McGovern and Hart campaigns such as lawyer John Holum began writing memos on how and why Clinton should run. From California, longtime friend and veteran political organizer Mickey Kantor began working the network for him. Kantor, Clinton's campaign director this year, had been under Clinton's spell since the day he first met him in 1979 in Washington: He flew back to California to tell his friends, "I've just met the best I've ever seen!"

It did not seem as though it would take much to get Clinton into the race that summer five years ago. He expanded his speaking schedule and tested his message at a business convention in Virginia and a state Democratic convention in Wisconsin. Wright made arrangements to leave the governor's staff and set up the campaign. They began raising seed money in Arkansas and meeting with key contacts in the Super Tuesday states. A date was set for his announcement, July 15, 1987, and friends flew in from around the country to be with him. They wanted a dignified setting, in the House chambers, but state law prohibited that so they rented the ballroom at Little Rock's Excelsior Hotel.

But as expectations increased that Clinton might get in the race, word spread through the national political circuit of journalists and elected officials that the Arkansas governor might have what was then called "the Gary Hart Problem." The reports and intimations of reports about an extramarital relationship that took Hart out of the race, in the minds of some Clinton advisers, had created a political climate that might prove troublesome for Clinton as well.

Among the few Clinton loyalists urging Clinton not to run was David Matthews, his former law student who went on to serve as his chief ally in the Arkansas legislature. "I spent an hour with him in the governor's office one day doing the best I could to argue him out of running," Matthews said. "I didn't think it was the thing to do for himself or his family at that time. I worried for him. I knew what a premium he placed on having a good relationship with his daughter, and I didn't want him to get hurt. Running for president is such a battleground. You could anticipate then some of the things he ran into this year."

But Matthews thought he was unconvincing, and even Wright assumed that Clinton was going to run. "We really thought he was going to, right up until the date we set for it," she said. "But it's like having second thoughts about getting married. If you have second thoughts, don't do it."

Clinton had second thoughts. The prevailing view of national political observers at the time was that he shied away from the race because of the sex issue. People close to him said his reluctance had a larger framework than that.

He had dedicated his life to public service and to his dream of being president. He loved the sport of politics, the handshakes and the deals and the policy discussions and the compromises and the phone calls -- he loved it all, from the five-point plan to the backroom bull -- but he realized that this time he wasn't making the phone calls. He was telling himself that he was not ready. On July 15, friends from around the country congregated in Little Rock. They walked over to the ballroom of the Excelsior Hotel on the banks of the Arkansas River and watched Clinton say something he had never before said in his life: He didn't have it in him to run.

"I need some family time. I need some personal time. Politicians are people too," he said. "I think sometimes we forget it, but they really are. The only thing I or any other candidate has to offer in running for president is what's inside. That's what sets people on fire and gets their confidence and their votes, whether they live in Arkansas or Wisconsin or Montana or New York. That part of my life needs renewal."