First Lady Vows to Pay if Whitewater Tax Owed : Inquiry: Mrs. Clinton says couple will ‘act appropriately’ should any obligations be unveiled. New counsel sees nothing coming of controversy.

WASHINGTON — First Lady Hillary Rodham Clinton said she and President Clinton are prepared to pay back taxes if it turns out that they underpaid on their Whitewater real estate investment, according to published reports Sunday. Meanwhile, newly named White House Counsel Lloyd N. Cutler predicted that the controversy “will turn out to be nothing at all.”

Changing earlier plans for a TV appearance with the President this week, the First Lady gave brief interviews over the weekend to Time and Newsweek magazines as she prepared to resume her campaign for health care reform with a trip to Denver today.

She told Time that if information emerges that indicates she and her husband owe any back taxes in connection with the Ozark real estate venture, “we will act appropriately.”

U.S. News & World Report quoted White House “insiders” as saying that David E. Kendall, the Clintons’ personal attorney, has told the couple that all he has uncovered are “tax errors and improper deductions” relating to the Whitewater development.

The magazine said Kendall “has assured the First Couple that as far as he can tell they have not seriously violated the law.”

Reached at his law office Sunday, Kendall declined to comment.

The Whitewater controversy dominated the Sunday television talk shows, with Cutler appearing on three programs to defend the Administration.

Asked on NBC-TV’s “Meet the Press” if he agreed with Kendall that the Clintons may owe back taxes and penalties, Cutler said: “All I can tell you is that Mr. Kendall is a very good private lawyer. . . . What the Clintons did in this investment some 10 or 12 years ago is a private affair of theirs in which they’re represented by private counsel. This is not really a White House matter.”

Cutler described his new role as helping to deal with the impact of the case on the presidency and with making certain, “as President Clinton said when he asked me to take this job, that everything we do within the White House justifies public confidence in the openness and integrity of his Administration.”

Despite his acknowledgment that he did not yet know all the details, Cutler defended the White House on several controversial issues, including the meetings that White House aides had with Treasury Department officials about their investigation into the failed savings and loan involved in the Whitewater case.

Those meetings are being investigated by Robert B. Fiske Jr., the special counsel appointed to look into the Whitewater dealings and related matters.

“The fact is no one--if I’m correctly informed--no one in the White House asked that any change be made, and no change was made,” he said.

Asked if he had yet sat down with the Clintons and asked them to tell him everything they know about Whitewater, he said: “No, I have not. I have had an opportunity to meet with the President at some length . . . but I have not been into the details of Whitewater. . . . I think in the end it will turn out, at least as far as even a breath of criminal activity by either the President and the First Lady, it will turn out to be nothing at all.”

Asked on CBS-TV’s “Face the Nation” if the President has told him whether he was innocent of any wrongdoing in the matter, Cutler said: “Of course, he said that to me. And I believe him.”

Cutler also said on the CBS program that he is certain that the Clintons and their staffs will cooperate fully with any congressional hearing on the Whitewater matter, just as they are now cooperating with the special counsel’s office.

Portions of some documents might have to be withheld for national security reasons, Cutler said, “but in general, when people in the White House, from the President on down, are asked about their personal conduct in the White House involving official business, they should cooperate, and I believe they will.”

Calls for congressional hearings continued to come from Republicans, with Democrats just as adamant that they should be delayed.

On ABC-TV’s “This Week With David Brinkley,” Senate Minority Leader Bob Dole (R-Kan.) reiterated his desire to have hearings soon.

“I think the sooner we have that, the better it’s going to be for . . . President and Mrs. Clinton,” he said. “We can delay, we can stonewall, but sooner or later there are going to be hearings.”

But House Speaker Thomas S. Foley (D-Wash.) said Congress should “respect” Fiske’s request that there be no hearings until his investigations of the White House-Treasury Department meetings are concluded.

There have been allegations that the Clintons lost less than the $68,000 that they have previously claimed from their investment in the Whitewater resort development in Arkansas, a partnership they shared with James B. McDougal, the owner of Madison Guaranty Savings & Loan, the failed thrift that is also part of Fiske’s probe.

McDougal has claimed that the Clintons invested no more than $13,000, although he has said he has no documentation of his charge--a concession the First Lady noted in her 30-minute interview with Time.

“Jim didn’t have any documents. He can recall only from his memory,” she said.

Previously, the Clintons have acknowledged that they improperly took tax deductions in 1984 and 1985 on interest payments actually made by the Whitewater partnership. They later filed amended tax returns.

McDougal appeared on the ABC program and denied charges that any money from his savings and loan had been funneled into Clinton’s gubernatorial election campaign in Arkansas in 1984.

“That’s a lie,” McDougal said. “That’s a Republican lie. . . . In no way, shape, form or fashion was any Madison Guaranty money put into a Clinton campaign. I’m prepared to go to court in the morning on that. Let’s settle that issue. It’s a lie.”

But McDougal said Hillary Clinton had failed to supply him with old Whitewater real estate development documents that he needed to fill out his income tax returns. The documents have presumably been turned over to the special counsel’s office. McDougal said he would be satisfied with copies of the originals.

Asked if he could guess why she had not sent him the documents, McDougal said: “I suppose there’s possible embarrassment from some aspect of it . . . for the White House.”