Whitewater falls.

Whitewater is more than a scandal. It's Clintonomics in action.

Our government has lost touch with our values, while our politicians continue to shout about it. I was raised to believe that the American Dream was built on rewarding hard work. But we have seen the folks in Washington turn the American ethic on its head. For too long, those who play by the rules and keep the faith have gotten the shaft, and those who cut corners and cut deals have been rewarded.

Bill Clinton, 1992 Democratic National Convention

THE 1992 DEMOCRATIC CONVENTION was quite a spectacle, filled with Oprah-style personal revelations and infused with the giddy anticipation of power. Again and again, Democrats congratulated themselves on their compassion, their enlightenment, their feminism, their commitment to "change." Self-righteousness flowed like a mighty stream. And the savings-and-loan bailout got nearly as many mentions as abortion.

"The most irresponsible people in all the 1980s were those at the top of the ladder: the inside traders, quick buck artists and S&L kingpins who looked out for themselves and not for the country," read the party's platform.

"In Houston |at the Republican convention~, the supply-siders, the race baiters and the S&L looters will tell us that self-indulgence was self-reliance," prophesied party chairman Ron Brown.

"Remember the savings and loans?... Americans discovered that wealthy bankers--educated in the most exquisite forms of conservative, Republican banking--through their incompetence and thievery, and the government's neglect, had stolen or squandered everything in sight!" said Mario Cuomo.

Such behavior would soon be a thing of the past, promised the party. "In contrast to the Republican policy of leniency toward white collar crime...Democrats will redouble efforts to ferret out and punish those who betray the public trust, rig financial markets, misuse their depositors' money or swindle their customers," vowed the platform.

And, at the convention's climax, Bill Clinton declared, "In the name of all the people who do the work, pay the taxes, raise the kids, and play by the rules, in the name of the hard-working Americans who make up our forgotten middle class, I accept your nomination for President of the United States."

WHAT A DIFFERENCE TWO YEARS MAKE. Now we know where Bill and Hillary Clinton got their ideas about the '80s, about S&Ls, about quick-buck artists, about politicians who shout about values, about "those who cut comers and cut deals." The Clintons weren't just mouthing Democratic slogans. They were speaking from experience.

The Clintons had a party in the '80s, and the people of Arkansas--and, quite likely, the rest of us, too--paid for it. The tribunes of the "forgotten middle class," the denouncers of greed, lived like Third World aristocrats, with a bevy of servants, a mansion, cars, and most of their expenses provided by the taxpayers of the nation's second-poorest state. Bill and Hillary Clinton lived far more lavishly than most other thirty something Ivy League yuppies, not to mention the Democratic platform's beloved "working men and women." And the Clintons made most of their money and obtained their perks not by productive, wealth-creating labor but by exploiting the "parasite economy," reshuffling other people's money through the political process.

Without inherited wealth, an appreciating home value, or much investment savvy, the Clintons accumulated a net worth of $700,000--an enormous sum for Arkansans in their early 40s. That wealth represented the profits of power: Bill's job brought both a nearly-all-expenses-paid lifestyle and a promise of influence-for-hire through the very pricey Hillary. She wasn't named one of the 100 best lawyers in America by National Law Journal but one of the 100 most powerful.

None of this was news even during the Clintons' convention coronation. And any honest observer also knew that the S&L fiasco was a bipartisan affair--though few journalists bothered to clarify that point during their convention commentary.

But we didn't know back then just how much of the '80s the Clintons had spent hanging out with an S&L kingpin, how hard they had tried to be quick-buck artists, and how much of their personal and political fortune was tied to the legalized looting of the federal treasury. We didn't know how infrequently the Clintons and their friends played by the rules.

We still don't know for sure. With new Whitewater allegations and revelations emerging almost daily, the question now is whether the Clintons are criminals, or just sleazy influence peddlers who play fast and loose with the Internal Revenue Code (while denouncing people who argue for lower tax rates). Either way, we've heard the last of "St. Hillary."

WASHINGTON LOVES SCANDALS. I DON'T. Scandals usually depend on mind-numbing details. They create backlash. And they detract from substance. Just as ClintonCare was about to go down to humiliating defeat on its merits, Whitewater emerged to take the blame. The almost-discredited health-care plan lingers on, and Hillary preserves her undeserved image as a policy wizard.

The first lady even blames her health-care crusade for the Whitewater scandal: "This is a well-organized and well-financed attempt to undermine my husband, and by extension, myself." (Revealing quote, that. Most Clinton sympathizers would reverse the targets.)

But the Whitewater affair isn't just a scandal. The Clintons aren't just sanctimonious hypocrites. And Eleanor Clift's Deliverance defense--"We're looking at a difference in cultural business mores between Arkansas and Washington"--doesn't just insult small, Southern states. It misses the whole point.

The Clintons' Arkansas and the Clintons' Washington are, in fact, much the same. Whitewater reveals the way the Clintons as policy makers, not just personal profit-seekers, see business and politics and the relation between the two. The administration's economic policy represents the very combination of regulation and subsidies, the mingling of the public and the private, that creates Whitewater-style cronyism.

"This is a pro-business administration," Chief of Staff Mack McLarty recently told The Washington Post. Business and government used to be enemies, he said. "That's not the case any more: We're all in this together."

That doesn't mean, of course, that the Clinton administration will keep its hands off business matters. Rather, it favors businesses that might favor Clinton--selling airplanes with a presidential phone call to King Fahd and U.S. loans to the Saudis, for instance--and punishes businesses that cross its policies. Witness Hillary's tirades against the pharmaceutical and insurance industries.

In the Clintons' America, profiting from politically encouraged legal retainers and loans you don't have to repay is OK; profiting from creating and selling life-saving drugs is evil. What matters is whose side you're on.

"We're not looking at Central America. We're looking at the United States," said Michael Barone in response to Clift's Deliverance defense on Crossfire. "They weren't the governor of Nicaragua. They were the governor of a state in the United States."

But Central American-style mercantilism, with its privileges for the well-connected few and oppressive regulation for the masses, is what Clintonomics is all about. It's what makes Bill Clinton a "New Democrat," rather than an old-fashioned business basher. Whitewater isn't an isolated scandal. It's policy.