Not long ago, Senator Hillary Clinton went on a 2006 re-election campaign swing through the North Country, that vast expanse of upstate New York that stretches from Albany to the Canadian border. With its mix of family farms and grubby towns struggling with disappearing manufacturing jobs, the region feels less like the Northeast than like the industrial and agricultural Midwest. In other words, it’s not a bad place to gauge how Clinton might play in swing-state America.

It’s a question that of late has obsessed the pundits, who frequently, and often quite mindlessly, hold up the most obscure of the Senator’s utterances or policies–even ones that echo positions she’s held for years–as proof that she’s readying herself for a 2008 presidential run. The political classes tend to offer us two tidy Hillary narratives to choose from. The first (courtesy of Dick Morris and company) is that Clinton has given herself a moderate makeover designed to mask the fact that she’s really a haughty left-wing elitist, in order to appeal to moderate Republicans and culturally conservative, blue-collar Democrats who are deserting their party. The opposing narrative line (courtesy of her supporters) is that Clinton, a devout Methodist, has revealed her true self as a senator; she’s always been more moderate than is generally thought, and, as Anna Quindlen wrote recently in Newsweek, “people are finally seeing past the stereotypes and fabrications.”

Yet if you watch Clinton on one of her upstate swings, as I did earlier this spring, it becomes clear that neither story line gets it right. What’s really happening is that Clinton, a surprisingly agile and ideologically complex politician, is slowly crafting a politics that in some ways is new, and above all is uniquely her own.

Clinton’s evolving approach–call it Brand Hillary–is sincerely rooted in her not-easily-categorized worldview, but it’s also a calculated response to today’s political realities. In effect, she’s taking her husband’s small-issue centrism–its trademark combination of big but often hollow gestures toward the center, pragmatic economic populism and incremental liberal policy gains–and remaking it in her own image, updating it for post-9/11 America with an intense interest in military issues.

At the same time, she’s also experimenting with an increasingly national message about smart government and GOP extremism and testing new, unthreatening ways of revisiting her most politically disastrous issue: healthcare. In one setting after another, she offered the same impromptu-seeming refrain: “You may remember that when my husband was President, I tried to do something about healthcare. Well, I still have the scars to show for it. But I haven’t given up.” That’s a line worthy of the man Hillary married–you can picture Bill sitting at the kitchen table in Chappaqua, repeating the line and chuckling, “That’s good. That’s really good.”

Bill Clinton’s political success, of course, sometimes came at great cost to liberal Democrats, and Hillary’s brand of politics, too, poses a tough dilemma for liberals and progressives. It asks them to swallow their discomfort with her tactically shrewd but sometimes morally questionable maneuvers on big issues like war and abortion. In exchange they get less visible victories for progressivism, as well as the pleasure of seeing the former First Lady–the figure most loathed by the right in at least a generation–succeed at a time when Democrats are desperate to figure out how to get that winning feeling again.

For liberals it remains to be seen whether this transaction will prove to be a good deal. Yet for some Democrats the trade is indeed worth it, as you could easily see during one of Clinton’s first stops on her upstate swing, a speech to Democrats at a re-election fundraiser north of Albany. The event was closed to the press, and the Senator shed her typically demure, bipartisan approach and launched a sharp attack on the GOP. Yet she knew her audience–these were hardly red-meat-craving Democratic activist types. They were rural, moderate Democrats–small-town schoolteachers, librarians, general-store owners. So Clinton’s assault was spirited, but even-tempered and larded with patriotic language.

“We’re seeing the slow and steady erosion of what made America great in the twentieth century,” Clinton told her audience in an even tone. “When I got to the Senate I asked myself, What’s going on here? At first I thought the President just wanted to undo everything my husband had done.” Clinton waited a beat, then added, “And I did take that personally.”

The audience laughed. “But then I thought, Wait a minute. It’s not just about turning the clock back on the 1990s…. They want to turn the clock back on most of the twentieth century. They want to turn the clock all the way back beyond Franklin Roosevelt. Back beyond Teddy Roosevelt. That’s why they’re trying to undo Social Security. Make no mistake about it.

“What I see happening in Washington,” Clinton continued, “is a concerted effort by the Administration and the leadership in Congress to really create absolute power. They want to control the judiciary so they can have all three branches of government. I really don’t care what party you are–that’s not in the American tradition…. Right now young men and women are putting their lives on the line in Iraq and Afghanistan, fighting for the America we revere. And that is a country where nobody has all the answers–and nobody should have all the power…. We all need to stand up for what made America great–what created a wonderful set of values that we revere, that we exported and tried to really inculcate in people around the world!”

Wild applause rolled over Clinton now, although it was unclear whether the crowd had appreciated the political subtleties of what they’d witnessed. She had offered a critique of the GOP sharp enough for any progressive–even as she’d given an approving nod to American exceptionalism and a paean to US troops defending our “values” abroad. She’d stoked the partisan passions of her audience–even as she’d sounded an above-partisanship note of concern about the state of the Republic. Indeed, she’d managed to pull off what many Democrats struggle to do these days: She’d weaved her criticisms into a larger narrative about America’s past and future, criticizing the GOP leadership without sounding as if she wanted America to fail–when she said she was “worried” about America, you believed her.

Not long after that speech, Clinton appeared at a dramatically different event, a speech to a roomful of around 300 farmers. These were hard-bitten people who were fully prepared to believe that the Senator from Chappaqua is who her caricaturists say she is. When Clinton strode into that room, she was an entirely different Hillary from the one who’d addressed Democrats only hours earlier. Anyone accustomed to seeing Clinton on TV–where she sometimes seems stiff and insincere–would have been flabbergasted by her sudden transformation. She instantly, and effortlessly, became Homespun Hillary. Her vowels grew flatter, more rural-sounding. “Little” became “li’l.” “Get” became “git.” Entire pronouns vanished, as in: “Heard there are some places in California selling gas for three dollars a gall’n.” She poked fun at city folk. Speaking about how farmers could make money supplying the specialty produce that New York restaurants need, she mimicked a demand made to her by city restaurateurs: “We need all those little funny things you don’t know what they are when they put ’em on your plate.”

The crowd seemed especially impressed with her command of their pocketbook issues. She talked about fuel prices, protecting farmers from foreign competition, the Senate’s neglect of New York agriculture in favor of Western agribusiness. She touted an initiative she’d spearheaded making it easier for local businesspeople to sell products via the Internet: “Fella made fly-fishing rods and lures–all of a sudd’n found there were people in Norway who wanted to buy th’m!”

By the end, you could feel it: Her audience had been won over. Her listeners filed out, murmuring approval of what they’d heard. As Robert Madison, a Republican and owner of a small local dairy farm with his three sons, put it: “Real down-to-earth person. Knows what she wants to do for the farmer.”

To Clinton’s friends and advisers, scenes like the above–in which she effortlessly wins over people who, we’re told, are supposed to hate her–boost their contention that the real Hillary is ideologically complex and surprisingly down-to-earth. They describe her as genuinely moderate on cultural and national security issues (hence her comfort evoking American values before a Democratic audience), say she has a voracious appetite for policy reminiscent of her husband (hence her mastery of farming arcana) and describe her common-sense economic populism as born of her Illinois upbringing (hence her ability to speak to the economic concerns of farmers).

“People have gained a more complete view of Hillary in the Senate than they had when she was in the White House,” says Mandy Grunwald, a close Hillary adviser. “People are getting past the cartoon version of her and seeing that she’s culturally moderate and sensitive to rural and small-town America. That mix has always been a part of her.”

Of course, to Clinton’s critics, particularly on the right, the same scenes just as easily demonstrate the opposite: that her Senate career has been merely a warm-up exercise for 2008. The paeans to American values, the small-town banter, the talk of our troops abroad–it’s all a cynical effort to make people forget the Hillary who proposed a big-government takeover of healthcare and banned Bill’s cigars from the White House. The right’s game plan here is pretty obvious: If she has “moved to the middle,” then she must be, as Dick Morris wrote recently, “a liberal who pretends moderation when she has to.”

To critics on the left, however, the real Hillary is far from reliably liberal–and to them, that’s the problem. Someone of her stature might have moved the national dialogue to the left on many fronts. Indeed, many progressives wholeheartedly backed her 2000 Senate run, expecting her to carry the banner for liberal causes in, say, the manner of Massachusetts Senator Ted Kennedy. But they’ve been disappointed. Clinton has studiously avoided becoming the ideological warrior on big issues many supporters hoped for. “She certainly hasn’t been a liberal trumpet like Kennedy, even though she’s the Senator from New York and has all the freedom she needs,” says Robert Borosage, co-director of the Campaign for America’s Future. “Kennedy has been a leading opponent of the GOP’s militarism. He’s called for large investments in education, Medicare for all. Hillary hasn’t been out front on any of those issues.”

What’s more, there’s some truth to the claim that various of Clinton’s recent public statements and policy positions have come at a real cost to progressivism, much the way her husband’s “triangulation” damaged the left in the 1990s. Her justification for voting in support of the Iraq War sounded like a cross between her husband’s verbal parsing and John Kerry’s maddening rhetorical contortions: “Bipartisan support for this resolution makes success in the United Nations more likely and, therefore, war less likely.” The vote seemed to many a huge missed opportunity. A senator from New York, the prime target on September 11, voting against the war might have given a helpful boost to the global antiwar movement, which at the time was mobilizing against America’s invasion of Iraq.

More recently, Clinton’s flirtation with conservative Senator Rick Santorum–they jointly requested federal funds for research on how electronic media affect children–made liberals uneasy because it stank of pandering to so-called “values” voters. But the Santorum dalliance amounted to more than a mere difference of opinion with traditional liberals. It gave bipartisan cover not just to Hillary but to Santorum as well–legitimizing one of the Senate’s ultraconservative standard-bearers. That undercuts broader Democratic efforts to win on various fronts by painting the GOP as captive of the hard right.

Finally, Clinton’s January speech seeking “common ground” with prolifers on reducing pregnancies seemed intended to distance her from beleaguered prochoice leaders. She might, for instance, have looked for ways to deliver her message with new NARAL president Nancy Keenan, who’s been sounding a similar message. Instead, Clinton’s speech enables the right to paint prochoice groups as pro-abortion.

Yet for all that, there’s no denying that Clinton has been extraordinarily successful, at least politically. Her approval rating in New York is nudging 70 percent. Many Republicans are on record as offering high praise. Consider that both Rudy Giuliani and George Pataki have punted on challenging her in 2006, even though dethroning Hillary would provide untold national attention and possibly be a springboard to the presidency in 2008.

What accounts for her success? Partly it can be chalked up to the fact that Hillary Clinton turned out to be a really, really good politician. Yet one could also argue that her success flows from the unique brand of politics that she has been practicing. To describe her approach as “triangulating” or “moving right” misses the point. For all the consternation on the left about Clinton, her approach depends less than her husband’s did on using the left as a foil. Instead it relies on two fundamental ingredients: She projects pragmatism on economic issues, and she signals ideological flexibility on social issues. This latter tactic is not, as is often argued, about appeasing the cultural right. It’s about appealing to moderates in both parties.

Take the Santorum press conference. You can endlessly debate whether popular entertainment hurts kids, or whether government should fix the problem. Yet if there’s one thing most middle-of-the-road parents can agree on, it’s that they are worried about how pop culture affects their children. By appearing with a right-wing Republican loathed by liberal Dems, she’s essentially telling moderate Republicans, “parenting should transcend ideology, so this Democrat will stand with anyone if it might help kids.” Yes, it legitimizes Santorum. But it also helps to defuse an undeniably potent right-wing strategy: the effort to paint Dems as antifamily.

Or take the abortion speech. You could argue that while it might have been discomfiting to prochoice groups, it’s actually a smart tactical response to the right’s increasingly successful strategy of painting prochoicers as ideological extremists. Polls consistently show that majorities favor legalized abortion. But decades of conservative attacks have fooled voters into believing that prochoice groups are to the left of public opinion. The speech wasn’t really about abortion policy; it was about what to do before conception to reduce pregnancies, and while Clinton stressed teen abstinence, her main focus was on encouraging birth control, a stance objectionable only to the hard right.

The political beauty of this, as NewDonkey.com’s Ed Kilgore has observed, is that it makes a subtle play for Republican moderates by forcing right-wing ideologues to reveal themselves as the true extremists, as foes of the common-sense goal of lowering rates of unwanted pregnancies. “When Democrats speak this way about abortion,” says one senior Hillary adviser, “it drives a wedge between sensible Republicans, who want to reduce the amount of abortions, and the right-wing crazies, whose main goal is to stop people from having sex.”

Her approach on economic issues is, at bottom, quite similar. By all accounts, Clinton has devoted a great deal of energy to dealing with the sluggish upstate economy. But here again it’s worth noting the political subtleties of her approach. Her solutions tend to be less about correcting inequalities of wealth or class and more about finding ways that government can make the economy work better for everyone, CEOs and low-level employees alike. This difference is most visible in healthcare. Whereas her 1993 plan called for massive government intervention and pitted employee against employer, today she is careful to talk about the nation’s disastrously screwed-up healthcare system as one that’s afflicting not just the uninsured but also large employers paying huge premiums. As she likes telling upstate audiences, “GM has become a healthcare company that makes cars.” It’s not surprising, then, that her onetime nemesis, Newt Gingrich, suddenly finds himself in sympathy with her ideas on healthcare issues.

To the extent that her pragmatic economic approach in turn provides cover for progressive advances, Hillary has torn a page from the Book of Bill. President Clinton recognized that if you could persuade voters that you weren’t ideologically rigid, that you were merely interested in government that works, you could get Republican moderates to listen–and getting them to listen is the key–to a Democrat talk about federal spending and fiscal responsibility. The paradox is that the tactic allowed Clinton a freer hand to pursue incremental liberal policy gains. As Joe Klein details in The Natural, President Clinton may have sold out on welfare reform and NAFTA, but those decisions gave him elbow room to expand spending on lower-profile liberal programs, from Head Start to Americorps.

To be sure, such advances did little to allay the disappointment many progressives felt when Bill Clinton lurched to the center on economic issues after winning office in 1992 on an aggressively populist platform. Hillary, too, has in some ways followed a similarly cautious approach. She isn’t seriously grappling with big-picture economic issues such as growing corporate power and weakening union strength, or articulating a grand economic vision that would help liberalism make a big comeback. And yet, for all the talk about her “moderate makeover,” analysts say that Hillary is staking out surprisingly progressive positions on some key economic issues. One example: Hillary voted against the biggest trade bill of the new millennium–the Trade Act of 2002, which many criticized as an effort to dramatically weaken Congress’s ability to help craft national trade policy–even though Bill sought a similar version of this “fast track” legislation as President. “Bill Clinton had no genuine long-term progressive economic vision–a lot of it was smoke and mirrors,” says Chris Slevin, the deputy director of Public Citizen’s global trade division. “But now that it’s clear that the Clinton free-trade experiment has not delivered on its promises of more jobs in the United States and of progress in Mexico, Hillary has no choice but to take a more thoughtful, progressive approach to trade than her husband ever did.”

In other areas too, the “new moderate” Senator Clinton has compiled quite a liberal voting record. If you don’t believe it, just ask the liberal group Americans for Democratic Action. In 2004, ADA says, the Senator earned a “liberal quotient” of 95 percent (compare that to, say, John Edwards at 60 percent, or the Democratic senators as a whole, at 85 percent).

What about Clinton’s biggest lapse–her Iraq vote? For some antiwar progressives, no doubt, it will be a deal-breaker. And, of course, they are unlikely to be comforted by the fact that she really thought she was doing the right thing, as people who are close to her insist she did. Yet to focus on that one vote, again, misses the larger goal of Clinton’s politics. As she recognizes, the Democratic Party’s problem on national security far transcends the Iraq vote. Decades of assaults on Dems from the right (helped along by international fiascoes presided over by Lyndon Johnson and Jimmy Carter) have succeeded in persuading Americans that Dems are fundamentally uncomfortable with the application of American “hard” power abroad. As Clinton well knows, this is not something that can be corrected by merely donning a pair of plastic hawk’s wings. It’s a perception problem that will take a long time–and a lot of hard work–to reverse. So she’s methodically built up a comfort level–and comfort is the key–with national security issues, joining the Armed Services Committee and spending countless hours mastering military arcana. This approach is far more involved and politically shrewd than just talking tough on the Sunday chat shows. It’s not off-putting to the Democratic base, which loathes Joe Lieberman-style militaristic posturing. And it comes across as genuine, because it’s rooted in Clinton’s strategy of emphasizing smart, pragmatic government over ideology.

Of course, sitting on Armed Services is hardly a substitute for articulating a sweeping foreign policy vision that can compete with GOP militarism. But it may be a necessary first step. Polls indicate that there’s rising disquiet with the direction of Bush’s foreign policies. At the same time, Americans appear consistently more comfortable entrusting foreign policy to the GOP. What that suggests is that perhaps the real problem Dems have on national security is not just the quality of their ideas but that moderates simply won’t listen to them. That in turn suggests that one key to reversing Democratic decline in the foreign policy arena is to do what Bill Clinton managed to accomplish on various domestic issues: Get moderates to open their ears. Which is, arguably, the larger context of Hillary’s Iraq vote. “Putting aside whether her vote was a mistake, which I think it was, she voted what she believed to be right,” says John Podesta, head of the Center for American Progress and President Clinton’s former chief of staff. “The larger end result may be that the middle of the country sees a senator with a tough nose who is not afraid to use force.”

For months Democrats–and some outside the party–have been saying that Hillary can’t win in 2008. You’ve heard the arguments: She starts out with 40 percent against her. She will energize GOP turnout–not to mention fundraising–like nobody else. Sure, Republicans have decided they like the real Hillary. But as Michelle Cottle wrote in The New Republic, “the bulk of the electorate, all those folks who won’t tune into the race until after Labor Day ’08, will be voting on Hillary the icon.”

That all may turn out to be true. What’s more, the retail politics Clinton has mastered may be lost on the gargantuan stage of a presidential race. And the right’s ability to dominate the news cycle these days may guarantee that Hillary’s skills remain beside the point–her enduring First Lady image could trump her actual politics and persona. “You just have to accept the fact that with any Clinton, the media is going to be difficult,” Grunwald says. “You don’t ask why. You just deal.”

Of course, any speculation about 2008 might take into account the small detail of who her opponent turns out to be, not to mention what the climate of the electorate is three years hence. But whatever the scenario in 2008, she has put together at least the beginnings of a winning political formula right now. Her version of Clinton centrism has been less about doing what Bill needed to do to survive in the White House–pit center against left–and more about doing what she needed to do to survive in the Senate–pit pragmatism and hard work against ideology. In essence, she’s triangulating against herself: She’s revealing the common-sense-solution-embracing Hillary, in contrast to the left-wing ideologue her caricaturists gave us. It helps that Hillary, while extraordinarily shrewd and calculating, also really is hard-working, hard-headed and culturally moderate. In the end, the irony is that her effort is working not just because it’s smart politics but also because it’s largely genuine.

It remains to be seen, of course, whether Clinton will be good for progressives or for the party as a whole. In the short term, though, she can certainly help the party–if nothing else, she’s at least beginning to develop a Democratic alternative that could constitute one path to political success. “Hillary may not be an iconic liberal, but she fights for the people liberals care about–women, children, veterans, people without healthcare,” Podesta says. “Best of all, she’s tough, and she knows how to win.”