April 18, 2005 12:00 PM

As the hard-nosed CEO of General Electric, Jack Welch relished a reputation for bracing candor. It’s unlikely, however, that the man who titled his 2001 memoir Jack: Straight From the Gut ever uttered the words, “Do you want us to make out?”

During a recent PEOPLE photo shoot at his townhouse overlooking Boston Common, Welch, 69, jokingly says just that—as he leans in close to his new wife, Suzy Wetlaufer Welch, 45. Has the Toughest Boss in America, as FORTUNE once labeled him, gone soft? Perhaps, at least when it comes to the woman in his life—who also happens to be the coauthor of his new book, Winning, A Practical Guide to Climbing the Corporate Ladder. To hear the Welches tell it, the year they spent cranking out the 372-page tome since their April 2004 wedding was one long honeymoon. “I love her from the tips of her toes to the top of her head,” Jack says of his collaborator. Says Suzy, “We wake up every morning and say, ‘Pinch me!’ because it’s such a dream.” Friends compare them to hormone-addled teens. “It’s goofy—we know,” admits the third Mrs. Welch, who sports 10.8 carats of diamonds on her wedding and engagement bands. “You can go into the bathroom and [be sick] after talking to us. But it’s real.”

The pair met in 2001, when Suzy, then editor of the Harvard Business Review, interviewed Jack. “We’re the only couple in the world who have their first discussion on tape. We sit and play it over,” he says. Romance bloomed, but there was a gargantuan, and wildly publicized, hitch: Jack was still married to second wife Jane. The scandal cost Suzy her job—and tarnished his reputation. During a divorce battle over an estimated $900 million fortune, Jane’s lawyers leaked details of Welch’s lavish GE perks, which he eventually relinquished. He and Suzy say they have no regrets. “I’d jump through that fire wall 100 times to get where we are now,” says Jack.

The pair share their 19th-century Beacon Hill townhouse with Suzy’s four young children from her first marriage, to money manager Eric Wetlaufer. By all accounts, the blended crew gets on famously. “I get a new chance at a family,” says Welch, who admits that he wasn’t always there for his four grown children by first wife Carolyn Osburn. The former workaholic now finds time to hunt for paintings and takes Pilates three times a week. He has also, he says, found a spiritual side and attends church regularly with Suzy, an Evangelical Christian. In Nantucket, where he owns another home, “it used to be he’d golf all day,” says Jackie, who’s married to his oldest son, John. “Now he and Suzy pile the kids into a Jeep and go play in the waves.”

While her future husband was rising at GE, Suzanne Spring, born in Portland, Ore., was a star student at Exeter and Harvard who went on to successful careers in journalism and business. Her only failure, say friends, was her marriage to Wetlaufer, her high school sweetheart, which ended in the late ’90s. “Suzy is an old-fashioned girl,” says pal Nancy Bauer, a philosophy professor at Tufts. “She wanted nothing more than to be a good wife.” During Welch’s divorce, the press often portrayed her as a promiscuous gold-digger. “I wasn’t used to having stories told about me that were fiction,” she says now. “My nanny said to me, ‘Wow, you had a really amazing life-too bad you weren’t there.’ ”

Impressed by how the pair weathered the scandal, Welch’s children welcomed Suzy into the family. “When he talked about Suzy, there was this twinkle in his eye,” says Jackie. “And when she just said his name, you could tell how much he meant to her.” Since the wedding, the Welches have largely stayed off the social circuit, preferring dinners with pals and Red Sox games to black-tie evenings. “There’s nothing pretentious about them,” says friend Joel Klein, chancellor of New York City’s public schools. “They could be the kids I grew up with in Queens.”

The Welches say whatever comes next, they’ll do it together—no matter what anyone thinks. “Jack and I are a mirror,” says Suzy. “If people look at us and think, ‘Oldest story in the book,’ then they are coming from a cynical place. But if they can see how happy we are, then they believe in love.”

JD Heyman in Boston

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