Why Is Rudy Smiling?

By DAVID VON DREHLE

Yes, the political rule book says a pro-choice former New York City mayor married to wife No. 3 cannot possibly win the Republican presidential nomination -- not as long as the G.O.P. remains the preferred party of small towns and social conservatives.

However, the political rule book has been stuffed into a shredder this year. Come summer of 2008, one or both parties will likely fire it from a confetti gun. A million fluttery pieces of conventional wisdom will swirl around a nominee or nominees once thought to be impossible: a woman, a black man, a guy in his 70s, a Mormon, a Hispanic, a Baptist preacher who used to be 100 lbs. overweight. Who knows? This is the year to bet on something unusual happening, and few things in politics are more unusual than Rudolph Giuliani -- "America's mayor," the rock of 9/11, crime fighter and tax cutter.

But what makes his bid for the White House so tricky is the rest of the package, the blue-state mores in the red-state party, along with an operatic personality and a tragicomic domestic life worthy of Boston Legal's Denny Crane. The first marriage, to a second cousin. Extramarital affairs. The messy divorce from his second wife, who learned he was leaving her when he mentioned it at a press conference. Rudy Giuliani is the candidate most likely to field the question, Are you now or have you ever been a prickly, backstabbing tyrant?

He laughs at the suggestion that his stratospheric early poll numbers and laundry list of liabilities leave him nowhere to go but down.

"I've been through it many, many times before," Giuliani tells TIME. "I accept it ... People have every right to explore the positives and the negatives about me. It's true for all these candidates: we all have things we've done right, things we've done wrong." He continues, "That's what this process is about, and you've got to come to peace with it, that it does involve scrutiny, attack, opportunity to explain what you're talking about -- and the chance, ultimately, to change things."

The man was not speaking hypothetically. Giuliani had just finished an appearance at the Los Angeles County sheriff's office, where he hoped to remind people of his record on law and order while having his picture taken with California's socially liberal Republican Governor, Arnold Schwarzenegger. One of the things some G.O.P. leaders like about Giuliani is that he might appeal to Schwarzenegger moderates, forcing the Democrats to play defense in California and other big-vote states like New York, Pennsylvania and New Jersey. But reporters didn't ask him about gang violence or the Golden State's 55 electoral votes. The questions were all about Giuliani's strained relationship with his son Andrew.

Clearly, Giuliani isn't naive about the pounding he can expect to take, not after 20 years as a gladiator in the bloody coliseum of the New York media. His every foible, rage and dysfunction have already been exposed by the tabloids in end-of-the-world fonts. But if he's not naive, what is he? The only conclusion we can draw is that he's confident he can survive.

He's not alone. Enough people are willing to place a bet on Giuliani that the candidate expected to have completed more than 50 fund-raising events, from coast to coast, by the end of March. A big number on his first-quarter financial report would help offset his slow start -- compared with those of rivals John McCain and Mitt Romney -- in building his campaign organization.

What qualifies as a big number? "I don't know what it's going to be," the candidate says. "We're going to try to make it as much as we can."

I tossed out $30 million, a lot of money for anyone's campaign, a Hillary Rodham Clinton sort of number.

"I'm not going to predict it," Giuliani parries. "We're going to do the best we can."

Not exactly an answer, but it was interesting that he didn't bat an eye.

One of the country's most influential Republicans, reluctant to dive publicly into the murky pool, tells me he has upgraded Giuliani from not a chance to ... maybe. "Once you get to be John Wayne, it's awful hard for the other guys to make you into Pee-wee Herman."

No one has ever gone from being a mayor to being President without holding an office in between. Giuliani passed up a chance to run for the Senate in 2000; instead, the years since he left city hall have turned into an experiment in information-age politics. Rather than build his rsum, he has been building his brand.

While most former mayors might harbor a hope of seeing their names on a city park or freeway bridge, Giuliani has stamped his on a consulting firm, an investment bank, a best-selling book and a venerable Texas law firm. Through his speeches and business deals, he has expanded his political network and piled up chits for future favors -- all while making himself rich. Who needs the Senate?

Marketed in boardrooms, convention centers, basketball arenas and political rallies, the name Giuliani (pronounced ka-ching!) has been used to sell concepts like public safety, the repair of bankrupt companies and the ability, as Kipling put it, to keep your head when all about you are losing theirs. In a word, the Giuliani brand stands for leadership: the one-word title of his book and the mantra of his staff members.

Cashing in while gearing up -- few politicians have the name recognition to pull it off, but after watching Giuliani, more of them may try it. The strategy germinated even before 9/11, as the lame-duck mayor hatched plans to start a consulting business, Giuliani Partners, with some of the leading figures from his administration. Their cachet would come from the renaissance of New York City during the Giuliani years: crime and welfare rolls down sharply, quality of life and overall snazziness trending up.

Then al-Qaeda destroyed the World Trade Center. New York City's worst catastrophe was Giuliani's finest hour, and the worldwide acclaim he received gave his start-up company instant momentum. Firms lined up to buy the advice, credibility and connections of a man who had been knighted (honorary) by the Queen of England, hailed as "Rudy the Rock" by the President of France and chosen as TIME's Person of the Year.

For the most part, the founders of Giuliani Partners were as New York as breakfast at Barney Greengrass. One man stood out: Roy Bailey. He wasn't part of the city's revival or linked to its gutsy endurance. Bailey was a Texan, a Republican moneyman and a former finance chairman of the Texas G.O.P. and was therefore intimately familiar with the inner workings and deep pockets of the most awesome fund-raising operation in political history, the Bush network.

In other words, because of his strong brand, Giuliani didn't have to go on bended knee, like an ordinary politician, to the man who was to become his campaign-finance chairman. Instead, weaving a web of potential major donors became just another enterprise of Giuliani Partners. With one hand, the firm signed contracts to advise such security-conscious businesses as Entergy (a leading U.S. nuclear power plant operator) and Broadwater Energy (which hopes to build a liquefied-natural-gas terminal in New York's Long Island Sound). With the other hand, the company began reaching out to such key Bush supporters as oilman T. Boone Pickens, investor Thomas Hicks and the Bass family.

There have been missteps. Giuliani's push to have former New York City police commissioner Bernard Kerik of Giuliani Partners nominated for Secretary of Homeland Security was a fiasco. Investigators quickly turned up some undisclosed financial favors done for Kerik by a company seeking municipal contracts. But in general, business and politics have meshed so smoothly inside Rudy Inc. that at times you can't tell them apart.

Consider, for example, the transformation of Brooklyn-bred Rudy into an honorary Texas oil lawyer. From the start of their private-sector days, Giuliani and his associates were intent on joining a law firm in addition to running their consulting business. It made sense: before he was mayor, Giuliani was a senior official in the Reagan-era Justice Department. His subsequent flashy tenure as U.S. attorney in New York launched his political career. As he explained in an interview with a Texas newspaper last year, "About three-quarters of the people in Giuliani Partners are lawyers, and we always wanted to practice law."

As it happened, Bailey had a friend in Texas named Patrick Oxford, managing partner of an old Houston law firm called Bracewell & Patterson. And Oxford had a problem. He could see that the future was bleak for regional law firms in a globalizing economy. Expanding the firm, especially into Manhattan, had become a matter of life and death, Oxford later recalled.

Kismet! In 2005 a match was made and, after a courtesy call to the widow of old Mr. Patterson and a first payment to Giuliani estimated at $1 million to $1.5 million, the firm was renamed Bracewell & Giuliani. The former mayor began recruiting lawyers and drumming up business in his old stamping grounds.

Here's where the politics comes in: Oxford is a well-wired Republican who raised hundreds of thousands of dollars for the Bush campaigns. Oxford said at the time the deal was struck that it wouldn't be a success until the firm had 100 lawyers in New York. Giuliani is leaving the partnership well short of that goal. But Oxford must not be too unhappy. He is the chairman of Giuliani's exploratory committee.

One midwinter morning in San Diego, I found myself in a traffic jam leading to the local sports arena. It was a magnificent day, bright as a child's coloring book, but thousands of people were destined to spend it inside, in the dark, listening to a long series of upbeat, can-do speeches -- capped by a message from Rudy Giuliani.

In Presidential politics, the candidate striking the most optimistic note has the advantage, whether it's Franklin Roosevelt facing down fear, Ronald Reagan awakening to morning in America or Bill Clinton believing in a place called Hope. Giuliani is banking on this. Since leaving office, he has toiled diligently in the vineyard of positive thinking, delivering hundreds of motivational speeches -- and earning millions in fees -- to huge audiences of potential voters at conventions, commencements and all-day seminars like this one.

By the time Giuliani was introduced, his audience had heard some six hours of encouragement on topics ranging from spiritual health to real estate. Still, they sprang to their feet cheering as he took the stage, indoor fireworks booming, streamers cascading around his slightly hunched shoulders, Frank Sinatra blaring from the sound system.

"Ru-dy! Ru-dy! Ru-dy!" they chanted. "I have to warn you," he began, "I always say something that gets people upset."

But not today. New Yorkers who remember an irascible mayor scolding citizens, denouncing critics and questing after new enemies would be amazed by the sunshiney fellow Giuliani has become. He explained his six principles of leadership, which helped him through 9/11 and "also can help you in your personal life." Things like knowing what you stand for, setting goals and having courage.

"You have to be an optimist," he said, preaching to the choir. Reagan was. "People used to say he saw the country through rose-colored glasses. If you don't see it that way, you can't make it that way."

Much has been made of Giuliani's likely troubles with religious conservatives in his party over abortion and gay rights. "Everyone really likes and respects the mayor personally," said Florida Republican strategist Brian Ballard, who has cast his lot with McCain. "But it's tough to take that record and run in a conservative primary."

The influence of single-issue social conservatives in Republican Presidential politics is often exaggerated, however. The first choice of the Christian-right leadership rarely ends up being the party's nominee. And even in some of the most conservative states, the power of social issues may be on the ebb. Voters in South Dakota rejected a stern antiabortion law in November. A similar bill in Utah failed in early March. Kansas has restored Darwin to public school classrooms and tossed out the state attorney general who sought to examine abortion records.

By mastering the language of the motivational circuit, Giuliani has tapped into an alternative vein of American religious thought -- the gospel of success. The idea that God intends for Americans to prosper is as old as the nation. A century ago, Russell Conwell, a Baptist preacher, distilled this gospel in his speech "Acres of Diamonds." Through some 6,000 public appearances, the tireless Conwell told his exotic story of a man who left his farm to search the globe for gems, only to die penniless and bereft -- while the world's largest diamond mine lay waiting to be discovered on the man's original acreage. In every life, Conwell preached, untold riches wait just beneath the surface, because our success is God's will.

From Napoleon Hill (Think and Grow Rich) to Norman Vincent Peale (The Power of Positive Thinking), from Zig Ziglar (Born to Win) to Rick Warren (The Purpose-Driven Life), this idea has never lost its power over the American imagination. Giuliani tries to tap into that power by presenting himself as the ultimate can-do politician, a man who approaches government like a business, who prefers results over ideologies and who sees victory as the national birthright. "The reason I ran for mayor of New York is the same reason I'm running for President of the United States: because I believe I can change things," Giuliani tells TIME -- big things like America's dependence on foreign oil, its troubled health care system and the federal spending spree. "I believe I can make government more like a business ... a problem solver rather than a problem creator.

"Nobody believed I could do it," he continues. The secret to his success, he explains, in a pure expression of the motivational faith, is that he refuses to accept failure. "I believe there are sensible, commonsense things you can do that will make government once again look to people like a functioning, problem-solving organization."

Giuliani takes a similar approach to his signature issue, the fight against terrorism. Those memorable images of September 2001, Giuliani dusted with the soot of fallen buildings and atomized aircraft, give him automatic standing on this powerful topic in every corner of the country. Traveling by private jet (Gulfstream IV or better, his contract stipulates) and charging $100,000 for each speech, Giuliani reassures audiences that all America requires to prevail is confidence.

"We're good people," the candidate said recently to an audience in California's farm country. "We want to do business with people. That's what we're good at ...

"America doesn't like war. We didn't like the Vietnam War; we didn't like Korea." Without saying the word Iraq, he lets the audience make the connection, then moves on to the theme of bouncing back from mistakes. Terrorists "believe we're weak," he said. "They believe their perverted ideas are stronger than our ideas of freedom ... And they're wrong."

The huge applause that greets this last line is the root of Giuliani's seduction: he embodies the belief that America can, with the right attitude, redeem mistakes and succeed in the end, if we just stay positive.

The First Baptist North Spartanburg church in South Carolina is a theologically conservative success story, a suburban megachurch where 3,000 people have been known to show up for Sunday school. If social issues drive votes anywhere in America, it's around here. Yet Giuliani recently filled the fire station across the highway from First Baptist for a rally at which he was endorsed by the chairman of the county council and the executive director of the state firefighters association, who said, "Rudy Giuliani is the face of the response to 9/11."

One of the first people I met at the rally turned out to be a member of First Baptist church. His name was Paul Walters; he is a dentist, a Republican committeeman and a Giuliani fan. When I asked what his pastor might think of that, he just shook his head as if I was missing the point.

"Rudy can handle the social issues," Walters said confidently, because of his record in New York and because "people are going to look at the bigger issues, especially terrorism. Until we get a handle on that, the social issues will be down here," he said, gesturing at knee level.

A few minutes later, John McCarley, a weather-beaten cattleman with a deep drawl and a faded Yankees cap, echoed that analysis. "We're in an era where we need leadership," he said. "There will be social issues where we disagree, but ... we won't have a litmus test. He transcends that."

After five years of maneuvering into position, everything is suddenly moving much faster than Giuliani expected: the race for endorsements, the fund-raising schedule, the competition for staff members. The rush of major states to jump their primaries to Feb. 5 could compress months of campaigning into a handful of days. A faster schedule, with big urban states playing a major role in the primaries, should favor a well-known candidate with proven crossover appeal. "It's good for me, no question about it, from a tactical point of view," says Giuliani. Furthermore, Giuliani strategists believe his experience as a tireless campaigner for other Republicans during the past five years is good preparation for a race that will play out in a transcontinental blitz of airport rallies. He knows how to balance exhaustion and exposure without making a campaign-killing mistake. And he has friends in many places. According to Anthony Carbonetti, the candidate's longtime political adviser, Giuliani has done more than 150 political speeches across 42 states since leaving office, including an eight-day marathon in 2004 in which he spoke 22 times in 14 states.

For now, Giuliani is strangely low key. He hasn't yet outlined a campaign speech. He tends to meander from one talking point to the next, in a way that certainly isn't formal but isn't quite conversational either. Even these talking points seem improvised. I recently heard him address a big meeting of conservatives in Washington at which he chose to emphasize free-market competition to improve public schools. But when I asked him three days later to list his campaign priorities, education didn't make his top five.

He keeps forgetting to mention that he believes he would make a good President. ("I don't mean to toot my own horn," he said at the firehouse, when he finally remembered to boast.) Giuliani's biggest round of applause is usually the one when he's introduced.

But knowing how hot the spotlight soon will be, perhaps this muted approach is intentional. He chooses to avoid the center of the room as long as possible. And whenever he faces the press, Giuliani makes sure his handlers shout "Last question!" just moments after the first question is uttered. No news is good news for the Giuliani brand, and every quiet week that passes, the unlikely candidate is one week closer to rewriting the rules.