THE STARR FACTOR

By Richard Lacayo

Midway through a long spell of bad news, Bill Clinton took the stage of Constitution Hall in Washington last Thursday to address the Presidential Scholars, a group of high school honor students, along with their parents and teachers. "This has been sort of a crazy week around here," he admitted. Given that this was an especially brainy gathering, he jokingly asked if anybody could help him get a handle on things. "I was hoping," he said, "maybe one of the scholars could explain chaos theory."

Good choice. Chaotic is how things must feel right now at the White House, as each day brings another shot over Whitewater and the FBI files. But the explanation doesn't require much scientific theory. For months Clinton has been waiting for the G.O.P. contender who would turn the '96 race into a real battle. It looks as though he has found him at last--and it's not Bob Dole. Every serious matter bedeviling the President has Kenneth Starr connected to it somewhere. And the special prosecutor who once predicted that his investigations would be wrapped up well before the '96 election now gives every sign that he will pursue the President and First Lady into their second term, if they get that far. With the Dole campaign still unable to gain traction on its own, Republican hopes are riding on a presidency worn to pieces by subpoenas and indictments.

Starr's major coup last week was to get Washington to tear itself away from the fang baring on Capitol Hill and take note of the opening of the second Whitewater trial in Little Rock, Arkansas. Herby Branscum Jr. and Robert Hill, joint owners of a bank in microscopic Perryville, Arkansas (pop. 1,141), are charged with illegally channeling funds to Clinton's 1990 gubernatorial campaign. The two men allegedly failed to notify the irs that they let Clinton's campaign withdraw $30,000 at one time--banks must report any cash transaction over $10,000--by disguising the withdrawal in smaller amounts. As it happens, Branscum was eventually appointed to the state highway commission. Hill got reappointed to the state banking board.

The convictions that Starr recently won of Jim and Susan McDougal, the Clintons' former Whitewater partners, had already raised the stakes for this trial. So did the fact that the charges involve Clinton campaign finances. Even so, the trial might not have provided much drama if Starr had not bitten hard into the White House by indicating that he will name the President's close friend and adviser Bruce Lindsey, who was treasurer of Clinton's 1990 gubernatorial campaign, as an unindicted co-conspirator, a term popularized during Watergate. With that, Starr attached two scandals by prosaic association. Like the little cookie in Proust, the words bring on a flood of memories, in this case most of them foul.

What the phrase means in strictly legal terms is that prosecutors may not have enough evidence to charge Lindsey but believe he is linked to a crime. The court will now be able to hear testimony about things that he may have said concerning the alleged crimes that would otherwise be inadmissible as hearsay. That testimony will probably come from the bank's ex-president Neal Ainley, the chief prosecution witness, who has already pleaded guilty to failing to report cash transactions from the campaign.

Lindsey says the campaign money was withdrawn in small amounts to keep it from the notice of Clinton's political opponents, not the irs, and that it was duly reported on campaign-finance documents after the election. "Any suggestion that my writing four checks was intended to mislead bank regulators is simply false," he said, after emerging suddenly from the West Wing and intercepting reporters on the White House driveway. He will take the witness stand sometime this summer; Clinton will testify by videotape.

All of that erupted while Washington was still trying to digest dueling reports from Republicans and Democrats on the Senate Whitewater Committee. Thirteen months of hearings produced 768 pages from the Republican majority claiming "a pattern of deception and arrogance" by the White House. In the aftermath of Vince Foster's suicide, their version goes, Hillary Clinton tried to keep federal investigators out of his office to protect files on Whitewater and the firings at the White House Travel Office. Then White House aides stonewalled before the committee, the Republicans contend. Their report also names the First Lady as the person most likely to have placed her missing law-firm billing records in the White House book room, where an aide discovered them last year.

In rebuttal, Democrats produced 300 pages of their own that turned the Republican version upside down. The reappearing billing records, for instance, are laid to a confused assistant and a White House construction crew. Because G.O.P. members could find no hint of wrongdoing by the President, the minority report charges, they decided to pile on Hillary.

But some of Mrs. Clinton's most loyal defenders may not know what to make of the disclosure that since early 1995, she has consulted an alternative spiritual adviser to help her deal with the Whitewater attacks and other woes. In a new book about the presidential campaign, The Choice, Bob Woodward reports that Mrs. Clinton came to rely on Jean Houston, 55, a co-director of the Foundation for Mind Research, who is described by Woodward as "a believer in spirits, mythic and historic connections to the past and other worlds." In one hour-long session in April 1995, Houston led the First Lady through an imaginary conversation with her idol Eleanor Roosevelt. As Hillary and some of her aides gathered around a table in the White House solarium, Houston encouraged Hillary to close her eyes and reveal her difficulties to the illusory Mrs. Roosevelt. Next, under Houston's direction, Mrs. Clinton took up the part of Eleanor herself, telling Hillary how hard it was during her own tenure as First Lady and encouraging Mrs. Clinton to do what she thought was right. Houston persuaded Mrs. Clinton to engage in a similar dialogue with Mohandas Gandhi, but the First Lady drew the line at the suggestion she talk to Jesus Christ in front of the group.

If the Senate Whitewater Committee's 13 months of inquiry boiled down to a battle of spitballs, the Clintons could breathe easy. But again it's Starr who can make the real trouble. The Republicans have asked him to investigate for "possible violations of law" White House deputy chief of staff Harold Ickes, Hillary Clinton confidante Susan Thomases and Webster Hubbell, the former Associate Attorney General who is serving time for inflating billing records at the Rose Law Firm in Little Rock. And after briefly trying to assign the task to the FBI, Attorney General Janet Reno has asked Starr to investigate how the White House got hold of secret bureau files on officials of the Bush and Reagan administrations. Reno's pass to him undercuts Administration attempts to portray the special prosecutor as an unindicted co-conspirator of the Dole campaign, just a courtroom branch of the Republican election-year strategy.

The Administration's initial version of Filegate, that White House operatives Craig Livingstone and Anthony Marceca had been working from an outdated list of names, was disputed last week before a House committee. Nancy Gemmell, Marceca's predecessor in his job, said she left him an up-to-date list. Richard Miller, a Secret Service official, denied that his agency could have provided the White House with an access list that included names from previous administrations.

The White House has moved Livingstone out of his job as head of the personnel security office. It is being reorganized by Charles Easley, a former Army counterintelligence specialist who worked for both Ronald Reagan and George Bush. Otherwise, the Administration has been trying to dismiss the latest developments in Whitewater/Fileflap as a G.O.P. attempt to find an election issue. It's campaign season, says a senior Administration official, when "every mistake is a conspiracy, every charge is a conviction, every rumor is reality."

And it's a season when the only reality that counts is in the polling. So far, the numbers are remarkably steady. Surveys continue to show Clinton ahead of Dole by as much as 20 points. Campaign operatives say that the First Lady also remains a popular speaker among the Democratic faithful and that she will therefore keep venturing out often among them. "Most polls lately show that her approval ratings are better than Bob Dole's," says White House political director Doug Sosnik. Among the many ironies of campaign '96 is the fact that Republicans are subtly trying to identify Bill Clinton with Richard Nixon. But another irony is that Clinton may turn out to be more like Ronald Reagan, the man everybody called the Teflon President because none of his problems seemed to stick.

--Reported by Jeffrey H. Birnbaum, J.F.O. McAllister and Viveca Novak/Washington

With reporting by JEFFREY H. BIRNBAUM, J.F.O. MCALLISTER AND VIVECA NOVAK/WASHINGTON