Leon Panetta on Leadership, Fiscal Discipline, and the Lost Art of Governing

Few public servants have seen the American state from as many angles as Leon Panetta. Over the course of his career, he served as a congressman, Chairman of the House Budget Committee, Director of the Office of Management and Budget, White House Chief of Staff, CIA Director, and Secretary of Defense. Across those roles, he was forced to confront the same central challenge in different forms: how to turn values into decisions, decisions into institutions, and institutions into something capable of governing responsibly.
In this conversation, Panetta reflects on the habits that defined his career, from setting goals and building teams to insisting that leadership requires honesty, discipline, and a willingness to make hard tradeoffs. He discusses what budget politics taught him about national priorities, why bipartisan deficit reduction once seemed possible, and why he believes today’s leaders have too often abandoned the political courage that governing requires.
He also looks back on his party switch, his years in the Clinton White House, and his leadership at the CIA and Pentagon, before ending with a broader meditation on public service itself. Running through the entire interview is a conviction that democracy depends less on ideological purity than on the willingness to listen, compromise, and govern.

-Leon Panetta served as U.S. Secretary of Defense, Director of the CIA, White House Chief of Staff, Director of the Office of Management and Budget, and as a member of Congress representing California

Setting Goals, Building Teams, and Making a Difference
Ben Wolf: You’ve had one of those rare careers where the same person has seen the American state from almost every angle: legislator, budget negotiator, White House operator, intelligence chief, defense secretary, and now mentor to future public servants. Across all of those roles, is there a consistent through line? A problem you were always challenged with trying to solve?

Leon Panetta: I always thought it was really important, whatever job I had, to set goals and not just sit at a desk and move stuff from the inbox to the outbox. I really think it is important, and I say that to young people like yourself, that whatever career you engage in, it’s very important to set goals that you want to achieve and, obviously, work on a strategy to achieve those goals. You have to build a team and establish teamwork.
And lastly, I think you need to be honest with yourself about who you are, not try to pretend you’re somebody you’re not, and also be very honest with others. Those are the basic principles I’ve tried to follow in whatever job I’ve had, so that I could look back on those jobs and say I was able to achieve things that I set out to do. In many ways, that gives you a sense that you’ve made a difference.
Public service is really important if you make a difference in people’s lives.


Turning Values Into Numbers
BW: As Chairman of the House Budget Committee, and then as OMB Director, you had to turn values into numbers. What did budget work teach you about leadership that national security debates still too often ignore? Namely, that every grand strategy is also a spending decision, and every spending decision reveals what a country believes in at that moment.

LP: What I learned from my experience as Chair of the Budget Committee, and then when I went into the Clinton administration as Director of OMB, is that numbers are not just numbers. Numbers reflect priorities. What is it that you want to invest in? What is it that you feel is important in terms of programs and how they affect people? And also, how do you achieve discipline so that you’re fiscally disciplined in what you do and don’t simply borrow and spend, or borrow and cut taxes, and add to the deficit?
Because there was pretty good leadership around at the time I was in Congress, on both sides, both Democrats and Republicans were interested in trying to make sure that we were able to reduce the deficit. We had a deficit in those days, not as much as it is now, of course, but we felt it was important to try to deal with that deficit and ultimately provide some real fiscal discipline.
Not easy to do, because it takes some very tough decisions on areas of spending and whether you tax or do not tax people. Fortunately, at the time, we made agreements that basically did both. Initially, we went to Andrews Air Force Base, and a bipartisan group negotiated an agreement that provided for $500 billion in deficit reduction, $250 billion in spending savings, and $250 billion in revenues.
Not easy. It was tough. But we were able to get it passed on a bipartisan basis, and that was important. Then when I became Director of OMB for Bill Clinton, we did the same thing, another $500 billion deficit reduction package.
As a result of both of those important steps, we were able to balance the federal budget. Not only that, but achieve a surplus. And when we achieved that balance and surplus, I thought politically no Congress would want to go back to borrow-and-spend and adding to the debt.
I was wrong.
It didn’t take very long before another administration decided to do a big tax cut that immediately added to the debt, and then other problems followed. Today, unfortunately, and I say this with a great deal of regret, I think both parties are not interested in making the tough decisions that you have to make if you’re going to discipline the budget. So we’ve got a $40 trillion national debt, and that is basically going to pass on to your generation and your children’s generation if we don’t deal with it.


What a Serious Budget Fix Would Require
BW: If I might ask, what do you think a good solution to that deficit problem would look like today? People talk about cutting social services or reducing defense budgets, but with every decision there’s a big opportunity cost. In your eyes, what would the best approach be?

LP: I think the best thing we did at the time was that we were willing to put everything on the table. You can’t exclude certain areas. You can’t say, “Oh no, we’re going to look at discretionary spending, but we’re not going to look at entitlements.” Entitlements make up two-thirds of the federal budget. You have to look at entitlements. You have to look at discretionary spending, both defense and domestic, and you have to look at revenues, and determine exactly what kind of balance you can achieve.
By doing that, very frankly, it provided cover for both parties. Democrats don’t like to cut spending. Republicans don’t like to raise taxes. But by being able to do all of that as a package, we held it together. And the result was that we looked at the American people and said: everybody’s got to sacrifice a little bit if we’re going to achieve some kind of fiscal discipline.
We were willing to do that. The presidents at the time were willing to support it, and the leadership in both parties was willing to support it. That kind of leadership is critical, because make no mistake about it, these are tough decisions. When you’re looking at entitlements, you’re looking at Social Security, Medicare, Medicaid, farm price support programs. You’re looking at programs that are very popular, and it’s not easy to try to discipline those programs. The same thing is true for taxes, obviously.
But if you’re willing to take those on and do all of that, in other words, put everything on the table, then I think you can arrive at the kind of balanced agreement that can be supported politically by both parties.


Why He Left the Republican Party
BW: I want to go back in time to your election to the House of Representatives. Early in your career, you switched parties. You had worked in the Nixon administration as a Republican and had accumulated relationships within the Republican Party, so you might have been expected to stay. What was behind that decision? And were you nervous that in switching, you might not have support on the other side?
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LP: I actually began as a Republican here in California, but I was a Republican in what I would call the Hiram Johnson mold. Hiram Johnson, who was Governor of California, was also a Republican, but he was a moderate and a progressive, and really felt it was important not only to deal with civil rights, but with the rights of employees and other important issues.
I got a job working in the United States Senate with a Republican senator from California named Tom Kuchel, who came out of that Hiram Johnson group. We had Earl Warren, Goodwin Knight, and others. They were moderate Republicans, and Kuchel was Minority Whip under Everett Dirksen. There were other moderate Republicans like him: Jacob Javits, Clifford Case, Hugh Scott, Mark Hatfield. They worked with Democrats on a lot of legislation.
It was really a great experience for me because both sides were willing to work together. I often say I’ve seen Washington at its best and Washington at its worst. The good news is I saw Washington work, where both parties, Democrat and Republican, were willing to sit down and work together on major issues.
What happened, I think, was civil rights. Republicans in the Senate had worked on civil rights legislation with the Democrats, but then Republicans began to back away from strong civil rights enforcement. Nixon made a deal with Southern Republicans to back off strong enforcement on civil rights. At the time, I was appointed Director of the Office for Civil Rights, and my job was to enforce the law. I was getting a lot of political pressure to back off, and ultimately I lost my job as a result of that.
That was kind of the first step. Then, in the next administration, they started going after moderate Republicans. I think it was Spiro Agnew who actually ran against Charlie Goodell, the Republican senator from New York, because they thought he was too liberal. So the party began to cut its own throat.
I just thought the Democratic Party had a bigger tent. It accepted people from the left as well as the right, and that I would be more comfortable there in terms of what I believed in. So I made that change, and I’ve never regretted it.


What the White House Taught Him About Leadership
BW: Let’s look to the Clinton years. When you became White House Chief of Staff, what changed in your understanding of leadership? At what point, for you, did you understand the main challenge in making the presidency actually function?

LP: It’s a very fundamental approach that a president needs to take, which is: I’m President of the United States, and what do I need to do in order to improve the lives of my fellow Americans in this country?
I worked for both Bill Clinton and Barack Obama. Both of them were very bright. Both of them were very capable. Bill Clinton is one of the brightest people I’ve ever known. You could sit down and brief him on complex issues. He would ask a lot of questions, which was good, and he would make decisions as to what he felt needed to be done. He was not afraid to make those decisions.
The good thing about that experience is I saw a president who really took the time to evaluate issues, get the pros and cons, look at different options, and then select an option that he was comfortable with. The purpose of a chief of staff, like myself, was to help present that information to the president, give him the information he needed, and give him the advice.
These were presidents who didn’t mind having smart people in the room. They wanted smart advisors. They wanted people who were experienced in their areas. That is very important for a president. No president knows everything about everything. No president.
Presidents who are successful are willing to listen to people who have experience and can provide guidance. If you do that, your chances are not only that you will get the right information, but that you will make a decision that really is in the interest of the country. And that ultimately is what a president has to do. If I’m going to make a decision, is it in the interest of the American people? That is the fundamental question every president should take seriously.


Credibility at the CIA
BW: You would later become Director of the CIA, where the cost of wishful thinking is obviously much higher. I want to ask: you served in the Army briefly, but beyond that, you did not have a long intelligence résumé. Going into that role, did you have hesitancy? How did you prepare yourself for it?

LP: As you said, I was an intelligence officer in the Army, which is a long way from being Director of the CIA. But I did deal with intelligence. Frankly, as the president’s chief of staff, the president every morning is presented with what’s called the President’s Daily Brief, which is a summary of intelligence from around the world that every president gets access to. So I had a pretty good sense of the role of intelligence and the importance of speaking truth to power.
However, I had spent my life on the budget. I had spent my life working on issues protecting the ocean and working on agriculture issues and that kind of thing. So I didn’t really have a lot of background in it. I asked the president why he was selecting me, and he basically said, “Because I think you can help restore the credibility of the CIA,” which was badly damaged in those days, and both parties were attacking the CIA. He also said, “I want you to go after Bin Laden.”
For almost ten years, nobody really knew where Bin Laden was. I like a challenge. The jobs I’ve always taken, I’ve taken because they were a challenge.
The way I approached it was that I had a very good aide and chief of staff, a guy named Jeremy Bash, who had worked on the intelligence committees in Congress. When I was nominated, I went back and got a full set of briefings from all of the key people at the CIA, so I had a good sense of what they were involved with and what they were doing.
When I went to the CIA, I did something Jeremy had recommended: I didn’t bring a big team of people with me. It was just myself and my chief of staff who walked into the CIA. That basically sent a signal that I was not trying to change the CIA. I was prepared to accept the professionalism of the people who worked there.
Because of that, I developed a very good bond with the people at the CIA and worked closely with them. If you appreciate the fundamental role of the CIA, which is to speak truth to power and present accurate intelligence about the threats that are out there, and if you believe in that, then you understand what the CIA is all about.
We were able to do that job, and obviously we were able to carry out the operation that got Bin Laden. That built a real team that worked together, not only intelligence officers but Special Forces as well. To see that kind of coordinated effort and see it work, that is probably one of the proudest things I’ve done in my life.


On War, Clarity, and Presidential Responsibility
BW: In your recent New York Times essay with Chuck Hagel, you warned, in effect, against drifting into a war with Iran without a clear objective or end state. Let me ask it to you bluntly: what is the first question a president must be able to answer before using force? And how can you tell when an administration is evading that question and acting without clear objectives?

LP: As Secretary of Defense, and in that op-ed with Chuck Hagel, who was also Secretary of Defense, we know that probably our most serious responsibility is to deploy our young men and women in uniform into harm’s way. If we’re sending them to war, it’s very important that we have a clear objective. What is the objective of sending them into combat? What is the strategy for achieving that objective? And what’s the endgame? How do we ultimately wrap it up and bring those forces back home?
I think it’s really important to think through all of those issues. The problem is, when a president becomes evasive as to what the objective really is, or comes up with different versions of why the country is going to war, it creates confusion, not only among the American people, but among our men and women in uniform, who deserve to know the truth about why they are going to war. They’re putting their lives on the line. They are entitled to know exactly why they are at war.
For that reason, I think it is really important for presidents of the United States to speak very truthfully about exactly what the objective is and how that objective is going to be achieved. That is something I think is a problem right now, because the president keeps coming up with different reasons why we would be at war with Iran.


What He Tries to Teach Young People
BW: As we begin to close, I want to turn the conversation back to students. Across your many different positions, you’ve seen interns and young staffers go on to pursue all kinds of careers. Over the years, what have been the most persistent traits you’ve seen in the students who later went on to succeed?

LP: My wife and I established, when I came back from working for Bill Clinton as chief of staff, an institute for public policy. The purpose of our institute is to try to inspire young people to lives of public service.
I’m often asked what attracted me to public life, and it was really several reasons. Number one, I was the son of Italian immigrants who felt very strongly about the importance of serving the country. I served in the military for two years, which taught me a lot about how you build a team that can take the hill. And there was a young president who said, “Ask not what your country can do for you, but what you can do for your country.” That inspired me to get involved in public service.
My wife and I felt, when we got back, that young people were not attracted to lives of public service. So we thought it was really important to see if we could inspire young people to be part of our democracy, because they are the next generation of leaders, and they have to be involved in our democracy.
We created a curriculum to try to inspire them. We have an internship program where we train students to go back to Washington and work with the California delegation, both Democrats and Republicans. What we do that is different is bring them to the institute for two weeks of training on issues and on understanding how Congress works, so that when they go back to Washington, they are well trained, or at least they understand what they are getting into.
The most important thing I stress to them is: maintain your objectivity. Don’t get dragged into the partisan warfare that is now a part of Washington. Whether you work for a Republican or a Democrat, always maintain your objectivity, step back, and look at the big picture. I think that is really important.
I also think it is important to focus on the substance of issues. We have another program at the Panetta Institute where I bring in law students from Santa Clara University, my old alma mater, as well as graduate students. I have them look at a major issue, whether it is immigration, health care, the budget, whatever it may be. And what I ask them to do is give me the Republican position, give me the Democratic position, and then tell me what a compromise would look like.
That is called governing. That is what our democracy is supposed to do.
What I am trying to do is restore the art of governing so that young people understand they have to look at both sides. They have to be willing to listen. They have to be willing to understand what all sides are talking about. But their responsibility is to come forward with compromise and consensus. You are not going to simply slam dunk whatever the hell you think needs to be done. It doesn’t work that way in a democracy.
For most of my career in Washington, Washington worked because Republicans and Democrats were willing to sit down, trust each other, work together, and come up with consensus. That is how we governed. I think that is a lost art right now.
What I try to stress with young people is: take the time to understand that you have to listen to other people’s views, and you ultimately have to try to find consensus.

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The Book He Would Recommend
BW: Finally, Secretary Panetta, as is customary with The Pathway Blog, if there were a student bold enough to be interested in following a career path similar to yours, what book would you recommend to them, and why?

LP: I really think that young people ought to take the time to read the history of our Founders. A great book on John Adams, a great book on George Washington, some great books on Thomas Jefferson and Ben Franklin. Take the time to read about the Founding Fathers. What motivated them? How did they look at life? How were they able, in their genius, to come up with what our democracy would look like?
They were all children of the Enlightenment. But the reality is, they had a sense that they wanted to create something special when it came to governing. And in the Constitution, they ultimately put together those elements. They did not want to centralize power in any one branch of government. They did not want a king. They did not want a king and Parliament. They did not want a Star Chamber court. So they created a system of checks and balances in our democracy.
I think it is really important for young people to understand why our country was created with those principles, because in the end, our democracy doesn’t work unless there is a willingness to sit down, have a dialogue, and ultimately arrive at consensus. That is the way democracy works.
They need to understand that right now, frankly, Washington is dysfunctional. The president doesn’t work with Congress. Neither party works together with the other party. They are in constant confrontation, and the problems this country needs to address are not being addressed because of partisan differences.
So what I want young people to know is that it doesn’t have to be that way. It doesn’t have to be that way. If you are willing to provide leadership, then let me tell you what I often say to students: in a democracy, we govern either by leadership or by crisis. If leadership is there and willing to make tough decisions, then we can avoid crisis. If leadership is not there and leaders are unwilling to make tough decisions, then we will govern by crisis.
Right now, Washington is largely governed by crisis.

BW: Incredibly well put. Mr. Secretary, thank you so much for your time.