THE INNER GAME

By NANCY GIBBS

NEWT GINGRICH USED TO DREAM last spring about the day when he would get to sit down and play a kind of Russian roulette with the President. The stakes would be very high. The whole government would be held hostage while the country waited to see who would blink. The House Speaker would confront Bill Clinton with a choice: Sign a historic balanced-budget plan on Republican terms or watch the government shut down. ''Which of the two of us do you think cares more about the government not showing up?" Gingrich asked. ''Him or me?''

Last Thursday night, exactly one year since his triumphant ascent to the Speaker's chair, Gingrich stood before his troops at a private session in the Cannon caucus room. He had told them then that there would come a dark hour, when the fight would grow hard, the polls pitiless, the prospects bleak. And he had promised he would be right at their side, that once they had won the war, all the pain would be forgotten.

He got almost everything right. As he foretold, the public hated the Republican blackmail strategy. But even more ominous, he saw that his coalition was beginning to splinter. On Wednesday morning he had taken a secret ballot of his members on whether to reopen the government. By 111 to 54 they had voted no. But those 54 votes told Gingrich that he was losing control of the House and would have to give up his best weapon in the budget war. And so, with eyes downcast and voice resolute, he recalled his own childhood as an Army brat, remembering what it was like to live in a family that always seemed to be stretching toward its next paycheck. And then came the clincher: ''It is morally wrong and indefensible not to pay federal workers. I don't care what the rest of you think; I am going to get something on the floor in the next couple of days.'' By late the next evening, the U.S. government was back in business, and the Speaker was the one who had blinked.

No matter what the final outcome, this was a bad week for Gingrich. He exposed just how quickly the House that he had mastered could slip away from him. He handed the White House an enormous public relations win, while losing his leverage in the battle. He elevated his G.O.P. rival Bob Dole, who double-crossed Gingrich by boldly declaring that the shutdown wasn't working and by separating himself and his chamber from the House of ill repute.

The more liberal White House aides ended the week in rapture. Not only had they won this skirmish, but the disarray in the G.O.P. ranks made it less likely that there would ever be a balanced-budget deal, which would suit them just fine. In negotiations over the weekend, Clinton tried to placate Republicans by saying he would support a seven-year balanced budget put forward by Senate minority leader Tom Daschle. But one senior Clinton aide admitted that endorsing the plan was just "a p.r. game." Thus while the mere melodramas of locked doors, halted passports and shuttered museums came to a close, the truly historic question of breaking the debt addiction was in danger of receding, out of relief and exhaustion and confusion, as if everyone knew that if the two sides couldn't solve this little matter of paychecks, the bigger issues were past the point of rescue.

As they watched the whole messy business unfold, more than two-thirds of Americans told pollsters they thought both sides were just playing political games rather than actually trying to resolve the issue. But if this really were an epidemic of "politics as usual," it would all be over by now. The shape of a compromise has been clear for months. In the normal way of Washington, some promises would be forgotten and some numbers turned to fudge, so that everybody could declare victory and go home. If the President and the majority in Congress and the public are united in their desire for an end to deficit spending, why is it so difficult to agree on a plan?

For the same reason that while everyone wants to go to heaven, nobody wants to die. It has been 27 years since anyone even proposed a credible, if painful, plan to balance the budget. There can be no chance of balance without reining in entitlements like Medicare, but Clinton knows full well that his party will mutiny if he goes too far. Likewise, the G.O.P.'s plan to cut taxes by $245 billion makes the whole enterprise easier to sell but harder to do. Anything below $200 billion, House Republicans have insisted publicly, is unacceptable. Then there are the eternal schisms, over farm subsidies and foreign aid, over weapons that the Pentagon hasn't asked for but lawmakers defend, and over whether the statehouse or Washington is better equipped to care for the poor. While moderates from both parties may have a compromise in mind, they were not the ones at the table.

Instead the bargaining fell to two men running for President and a third who thinks he doesn't need to if he really wants to run the country. Clinton and Gingrich were burdened by pledges they could not afford to take back, and both were beholden to troops that no longer trust them. They could hear the growing public disgust at the spectacle of furloughed workers and darkened embassies, of unemployment offices shut in Kansas, of service stations in Miami refusing to sell gas to drug-enforcement agents with government American Express cards for fear the bills would not be paid. While the Republicans were taking more heat than the White House, Clinton's ratings for his handling of the budget fight were starting to drop as well. "We can't afford to walk away from the table," said a senior White House adviser, "and neither can they."

By the time the fighting went hand to hand on Tuesday, only the main players were allowed at the table. Clinton, Vice President Gore, Daschle, House minority leader Dick Gephardt and White House chief of staff Leon Panetta sat on the Democratic side. Gingrich, Dole and House majority leader Dick Armey bargained for the Republicans. Once the titans were left alone in the room, the whole tone of the discussions changed from a debate about broad policy issues to a blunt assessment of what it would take to get a deal. And it quickly became clear that neither side knew quite where the other stood. ''What these talks have shown,'' said a Clinton official early on, ''is that both sides have spent the entire year talking about how great their own ideas are without taking the time to learn the advantages of the other side.''

Sitting in the Oval Office on Tuesday, the principals listened as Panetta stood before an easel with a big pad of white paper and made a list of 11 issues they needed to resolve if they wanted to walk out with a budget. On some, according to a source close to the bargaining, Panetta would say, "We can meet you in the middle," while on others, like Medicare, he declared that there was no more ground to give. ''If we're going to get a deal," Panetta told the Republicans, ''we need some wins, and you need some wins.''

Panetta's soliloquy was followed by a free-for-all that brought Clinton to his feet and up to the easel. Any semblance of a systematic bargaining process disappeared. Clinton's allies, especially veterans of the '92 campaign, were reminded once more that the boss can't run a meeting. His wife can, but she was not in the room. Instead the discussion skipped from Medicare to tax cuts, Alaska oil drilling to agriculture and welfare reform. Because the meetings were taking place in his house and he is the leader of the free world, none of the others present felt they could impose their own order on the debate. And so after moving the group on the first night from the Oval Office to the residence for dinner, Clinton sat before the fire, eating pasta with shrimp and debating Medicare Part B premiums and enjoying himself so much that the others privately wondered whether he would ever want the talks to end.

As the President declaimed, the agenda of his audience was plain to see. Armey sat with his head in his hands, looking skeptical. Gephardt looked bored. Dole, the senior combat veteran, seemed the most comfortable and confident. For all the flak that he was catching from conservatives for trying to end the shutdown, he was clearly in his element, the master of the endgame. His disdain for the rookies became clear during one halftime photo op on Capitol Hill, when House budget chairman John Kasich started telling the assembled reporters that there had been ''no visible signs of progress" in the past few days, only to be cut off by Dole's withering comment: ''He hadn't been there."

The President and the Speaker, twin wonks who never run out of breath, dominated the debate. However much each hates what the other stands for, they love competing to be the smartest boy in the class. "Clinton and Gingrich," said press secretary Mike McCurry, "went down into the weeds on a lot of these policy discussions.'' Said Tony Blankley: "I think this was the way the Founding Fathers intended it.'' Clinton and Gingrich took turns in front of the easels, waving Magic Markers and playing charades, as both camps tried to figure out what game they were really playing.

Gingrich realized that many Republicans in the House had come to believe they were being suckered by a President who saw the advantage of stalling. Private White House polls showed the President had been winning the public relations war, at least until recent days. He was reassuring his party base, and the public at large as well, that there were actually some principles he would not abandon under pressure.

And just in case he started to waffle, the Democrats had built in some safeguards. They insisted, for example, that Daschle and Gephardt sit in on the talks and tend to the party's soul. So Clinton decided to use Gephardt as his bad cop. ''You gotta speak up,'' Clinton told Gephardt during private Democratic strategy sessions. And Gephardt followed through. ''If you're going to talk about tax cuts," he told the Republicans at the table, "let's talk about tax cuts for people who need them.''

The Vice President too was a designated tough guy, to help give Clinton some cover. He heckled the enemy, repeatedly interrupting Gingrich during his presentation of Medicare options. At one point, Gingrich had to bite his lip when Gore cut in with the warning that "we can't frighten senior citizens. We must all guard against that." Gingrich, who had watched the Democrats spend millions of dollars last year attacking "Republican cuts" in Medicare, said nothing, having been counseled to stay calm at such moments. Gore remained feisty, however--so much so that rumors began circulating that he was throwing bones to the party faithful with an eye to a presidential race against Gephardt in the year 2000.

For his part, Gingrich did not exactly enjoy the full faith and confidence of his revolutionary guard, which is why majority leader Dick Armey was there to play the role of Gingrich's minder. For months Gingrich has used his hard-line freshmen as a foil in his negotiations. The White House has not always believed his hands were tied, but in recent days the tension between Gingrich and his troops was obvious. When the negotiators decided to tighten the circle, the White House wanted Armey gone. But Gingrich insisted he stay, saying that excluding the majority leader would be unacceptable to the House Republicans. They wanted him as an ideological check, as well as an alternative to the increasingly discredited Speaker.

Though the White House has portrayed Armey as the conservatives' attack dog, he was virtually (and uncharacteristically) silent in these negotiations, as he sat taking copious notes and, as McCurry put it, "kicking Gingrich under the table when necessary." Every so often, though, he had to excuse himself and slip out of the room. Three years ago, the First Lady declared that the entire White House would be a no-smoking zone as long as her husband was President. This means heavy smokers such as Armey had to slip out to the Rose Garden colonnade for a smoking break. If that were not indignity enough, Armey does not have a pass to roam around the West Wing. So whenever he ducked out of the meetings, he needed an escort to make sure the guards didn't shoot him on sight. At one point, Clinton's economic adviser, Gene Sperling, had Armey duty; another time a Secret Service agent warned the majority leader not to toss his cigarette butt into the Rose Garden. The dead leaves, the agent told him, might be a fire hazard.

If the President's strategy was hard to read, it may be because Clinton didn't have one. Since last spring, many of his top aides had advised that the greater political advantage lay in saying no to everything. Clinton has for the most part listened instead to adviser Dick Morris, who thought a budget deal would rob the G.O.P. of its best campaign issue going into the '96 race. So Clinton hovered in between, hoping for the best of both worlds and, in the meantime, doing everything he could to exploit the divisions within the G.O.P. ranks.

In the heat of the battle, Clinton joked to Dole that the two of them should fly to Florida together and work out a deal. Dole for his part tried hard to keep the talks on track and avoid a spitball fight. McCurry had taken to referring to the House leadership as "that gruesome group up there," inspiring an alliterative retort from Tony Blankley, who called Clinton and Gore the "budget-busting barons of bankruptcy." When Clinton told Dole Wednesday that he was about to make a statement about the shutdown, Dole urged that the President be a little more circumspect. Clinton ended up blasting the House for its stubbornness but praising Dole, Gingrich and, amazingly, Armey by name. The strategy, McCurry admitted, was to isolate the House extremists. "We're trying to make it very uncomfortable for them to keep this government shut down for another hour," he said.

By this time it was every man for himself. And so it was Dole who, in a single stroke, made sense of all the chaos and left his rivals looking like amateurs. He had gone along with the muscular House strategy for months, hoping the shutdown would help pry the President away from his base. But as the crisis wore on, he saw he wasn't getting any leverage. Dole kept telling his team the message had to be the balanced budget, not the shutdown. "We've got to find a way to get out of this mess," he would say. He needed to get back on the campaign trail. And he could not imagine anything much dumber than forcing people to work without pay while paying others who could not work.

On Tuesday, when Dole surprised everyone and proposed a continuing resolution to fund the shuttered agencies, House Republicans were outraged; some began calling their party's presidential front runner "Mr. Caveman." But by Thursday even Gingrich and his allies acknowledged they were playing a losing hand, and they left the negotiations to go back to the Hill and regroup. Kasich and Senate budget chairman Pete Domenici returned from a meeting with Panetta and told their colleagues they were now convinced Clinton was stonewalling. White House officials say Kasich and Domenici were simply discouraged that they could not roll the President as they had hoped. "Listen, you guys," Panetta told them, "did you think this was going to end with you being able to walk out and declare victory? That's not how negotiations work."

At last the moral, political and philosophical imperatives came crashing down on their House. Gingrich spent the rest of the day talking with various factions within his ranks, and at 7 p.m. Thursday he summoned them to the Cannon building to offer his proposal. Dole had, in essence, taken 10 steps so the others could take five. It was the sort of leadership that earned him, in another venue, a chestful of medals and a withered right arm. Some freshmen could not believe their own House leader was deserting the cause. "There is not a need to cave," said an incredulous Todd Tiahrt, a freshman from Kansas. "All the issues we have been talking about for the past 12 months are still very important to us." But to others, Gingrich was simply facing reality. "We're drained and we're tired, and we're not moving ahead," said a Republican second-term Congressman. "If the troops don't get a break soon, we will crack." He also noted a favorite Gingrich maxim, not original to him, which says the definition of insanity is to keep doing the same thing over and over again and expect a different result.

By Friday morning the Speaker was brooking no dissent. "He walked in and told us to sit down and stop the side conferences," said several members who were there. After a brief explanation of his plan to return 760,000 workers to the payroll, Gingrich urged their support and unveiled his threats. "If you don't vote for it, don't come to me..."--he paused for a long and very pregnant moment before continuing--". and talk about teamwork. If you think you should be Speaker of the House, then run for Speaker. I'm here to tell you this is a team decision." The freshmen got the message. "Yesterday it was a democracy," said one. "This morning we were in a dictatorship."

If his luck holds out and he doesn't squander his opportunity, Clinton could walk away with the big prize--a deal that reflects his essential beliefs and robs Dole of his premier campaign issue. House Republican leaders are contemplating a last-chance offer that could attract bipartisan support: cutting $155 billion in Medicare, providing targeted tax cuts worth $180 billion, fattening the pool of discretionary spending a bit to woo liberals, and then getting in line behind the Senate's more moderate welfare-reform plan. If that plan goes nowhere with Clinton, Republicans will try to spend the next two weeks bragging about their new flexibility while pointing up his continued intransigence. Indeed, many members remain convinced that whatever the President says, whatever he offers, Clinton will never sign a deal. "We realize that, and now we have to go to plan B, and plan B is to get the government back on its feet," said Representative Chris Shays of Connecticut, a close ally of Gingrich's. "The President simply isn't going to balance the budget, and so we take this to the November election.''

That's partly why the real winner last week may well have been Dole. In hindsight, his strategy looks exquisitely wise. He was the one who first agreed to end the shutdown, despite howls from the House and charges of treason from campaign rivals like Phil Gramm and Pat Buchanan. By Friday, when the House reversed course, Dole not only looked statesmanlike; he had also diminished Gingrich as a rival on his right and distanced himself from his party's extremists. At the same time, he had acquired a weapon to carry through the rest of the campaign against Clinton. Everywhere he goes for the next 10 months, he can make the case that he is the only one actually capable of balancing a budget.

The polls already reward what some Republican campaign veterans are calling Dole's "triangulation" strategy. A cbs News survey early last week showed Dole's job-approval rating had risen to 63%, up 11 points from December, while Clinton's was flat at 50% and Gingrich's was up 4 points but still a dismal 33%. It was, of all people, Sonny Bono who had the best explanation of the Speaker's folly. "I always respected his ability to be an artful dodger," said the freshman lawmaker. "He has an instinctive ability to make you believe things are going one way when they're going another. But on that score, I think he got fooled by the President. He just had never dealt with someone with his kind of ability before." As for the freshmen, maybe they had it coming. "A lot of us became zealots," said Bono. "We got a lot of ink, and coming from show biz, I know that a funny thing about ink is you start buying your own publicity. Some members miscalculated and thought it was their own power, when in fact it was given to them. And today was a day of discovery on the part of some freshmen. This is a new reality."

--Reported by Jeffrey H. Birnbaum, Nina Burleigh, James Carney, Michael Duffy and Karen Tumulty/Washington

With reporting by JEFFREY H. BIRNBAUM, NINA BURLEIGH, JAMES CARNEY, MICHAEL DUFFY AND KAREN TUMULTY/WASHINGTON