Daley Stepping Down in Rare White House Shake-Up

Daley Stepping Down in Rare White House Shake-Up
WASHINGTON — President Obama announced Monday that the White House chief of staff, William M. Daley, was stepping down, jolting the top ranks of his administration less than a year before he faces a difficult re-election. Mr. Daley will be replaced by Jacob J. Lew, the budget director and a seasoned Washington insider with ties to Capitol Hill.

Mr. Daley, a fellow Chicagoan who was recruited by Mr. Obama a year ago to help strike bipartisan legislative deals, struggled to find his footing in a ferociously partisan Washington and failed to help his boss broker a huge budget agreement with Congressional Republicans last summer. His departure interrupts a run of good news for the White House, with tentative signs of life in the job market, victory over Republicans on the payroll tax and Republican presidential candidates assailing one another on the campaign trail.

It was a distracting shake-up in a White House that has prided itself on a lack of internal drama, with a tightly knit circle of loyal senior advisers playing a steadying role. Mr. Obama said he asked Mr. Daley to reconsider his decision — made after a holiday respite from the capital — but Mr. Daley, a 63-year-old member of a Chicago political dynasty, was determined to leave.

“Obviously this was not easy news to hear,” Mr. Obama said in a brief appearance in the State Dining Room, flanked by Mr. Daley and Mr. Lew. “In the end,” the president said, “the pull of the hometown we both love — a city that’s been synonymous with the Daley family for generations — was too great.”

Mr. Lew, known as Jack, is a mild-mannered and steady technocrat with long experience in the White House and on Capitol Hill, having served two administrations and a speaker of the House, Thomas P. O’Neill. He was also a deputy to Secretary of State Hillary Rodham Clinton, coordinating the “civilian surge” in Afghanistan, which Mr. Obama said would equip him to deal with foreign policy issues.

A major question, though, is whether Mr. Lew will be any more successful than Mr. Daley in establishing himself in the president’s inner circle. It was not yet clear, for example, whether Mr. Lew would share some of his duties with Pete Rouse, a low-key former Congressional aide who is close to the president and was assigned some of Mr. Daley’s responsibilities after the failed budget talks.

That move last fall, though portrayed by the White House as sensible sharing of the burden with an adroit colleague, ended up being seen as a very public rebuke of Mr. Daley, one that undermined his standing. Administration officials said Mr. Lew and Mr. Rouse would work out those issues between them, though one said Mr. Rouse was likely to remain influential.

Mr. Lew, however, has a broader web of contacts in Washington than Mr. Daley, a former banker and commerce secretary in the Clinton administration. He also enjoys support on Capitol Hill, where Mr. Daley was criticized for not adequately cultivating leaders like Senator Harry Reid of Nevada, the majority leader who bristled last year when Mr. Daley seemed to blame Democrats as well as Republicans for lack of progress on Capitol Hill.

In a statement, Mr. Reid lavishly praised Mr. Lew, calling him a “consummate professional with intimate knowledge of Congress.” He gave credit to Mr. Daley for seeing through “a tumultuous year in which Republicans’ unprecedented obstructionism turned every issue into an all-or-nothing battle.”

Mr. Daley handed in his resignation to Mr. Obama last Tuesday after discussing it with his wife on vacation in Mexico during the Christmas holiday. In a resignation letter that was long on praise for Mr. Obama’s accomplishments, Mr. Daley did not cite a specific reason for leaving, beyond declaring, “It’s time for me to go back to the city I love.” He declined further comment.

“It’s been a pretty frenetic year,” said a senior administration official, speaking on the condition of anonymity so that he could discuss private conversations. “He felt like it was a propitious time.”

Mr. Daley, the son and brother of legendary Chicago mayors, proved to be an awkward fit on the Obama team. Chosen largely for his deal-making skills and ties to the business world, he failed to strike a “grand bargain” on the federal debt and deficit with the Republican speaker of the House, John A. Boehner — a setback that left him and other White House staff members stunned and bruised for weeks.

Mr. Daley instituted a more button-down style at the White House, after the more temperamental style of his predecessor, Rahm Emanuel, who left to run for mayor of Chicago.

The news of Mr. Daley’s departure was first reported by The Tribune Company newspaper chain.

That Mr. Daley was frustrated by Washington was no secret. In October, he told a Chicago television station that he planned to leave the White House in January 2013, at the end of Mr. Obama’s first term. In an interview with The New York Times in September, he dwelt on the failed budget negotiations, and evinced little appetite for the cut-and-thrust of partisan combat that followed them.

“The nation is being pushed into that, by the Republican primaries, by the type of ‘my-way-or-the-highway’ language in Congress,” he said.

Mr. Obama praised Mr. Daley for his role in shepherding trade agreements with Colombia, Panama and South Korea. He also helped design the president’s $447 billion jobs bill, which — with the exception of a short-term extension in the payroll tax waiver and a few other odds and ends — was stymied in Congress.

While the president said he asked Mr. Daley to reconsider his decision, he did not apply the kind of pressure he brought to bear on Treasury Secretary Timothy F. Geithner, who has for several months been eager to return to New York.

Administration officials said Mr. Daley would play a role in fund-raising for the Obama campaign, probably with the title of campaign co-chairman. With his family pedigree and Wall Street connections, he is likely to remain a force in Democratic politics. Mr. Obama said in his statement that he planned to consult Mr. Daley regularly.

The president also said that Mr. Lew, 55, had been Mr. Daley’s choice as his replacement, and the “one clear choice” for the job. Mr. Lew worked alongside Mr. Daley in the effort to strike a budget deal with Republicans.

“Jack’s economic advice has been invaluable and he has my complete trust, both because of his mastery of the numbers, but because of the values behind those numbers,” Mr. Obama said, noting that Mr. Lew, who had served in the administration of President Bill Clinton, was the only budget director in history to preside over budget surpluses for three consecutive years.

Mr. Lew, who divides his time between New York and Washington, has built a reputation as a pragmatic liberal who believes Democrats must compromise with Republicans on long-term deficits in order to forestall draconian cuts to entitlement programs like Medicare and Social Security.

Before joining the Obama administration, he was a banker at Citigroup, helping run a division with esoteric investments in real estate and construction — a connection that was criticized by liberal groups on Monday. No successor as budget director to Mr. Lew was announced, but his deputy, Heather Higginbottom, and Rob Nabors, currently the Congressional liaison, were considered contenders for the post.