Bill Daley, Unhappy Camper: Why He Was Demoted at the White House

The chief of staff grew frustrated as congressional complaints about him mounted—and Obama tacked left.

Jewel Samad, AFP / Getty Images

Washington loves a good story about White House intrigue, who’s up and who’s down, and so the news that Chief of Staff Bill Daley would be giving up a portion of his duties had everyone speculating about the real reason for the mini-shakeup. Not surprisingly, Press Secretary Jay Carney cautioned reporters not to make too much of what he minimized as merely a move to make the White House run more efficiently. He said it was Daley’s idea to shed some of his responsibilities, and to have another of the president’s men, Pete Rouse, a seasoned congressional hand, take on more of the day-to-day management of the White House.

But wait, this is Washington, and nobody gives up power willingly, so here’s what happened, according to people who know the players. Daley was always miscast. He’s a Chicago businessman, accustomed to being in charge and impatient with Congress. He got much of the blame for the debt-ceiling debacle last summer that brought the government to the brink of default. While that took its toll, it was not fatal, says a Daley friend. “What was fatal: the accumulated weight of not moving the needle.”

In other words, with President Obama’s approval rating stuck in the low 40s, and nothing seeming to move the numbers, the shift to the center that Daley symbolized when he was brought into the White House in January was scrapped for a populist bid to reclaim the Democratic base. The result: Daley was not happy.

According to a veteran lobbyist, word got back to the White House that the chief of staff was up on Capitol Hill distancing himself from the president, saying, “They’re not listening to me.” That’s a cardinal sin for a White House adviser, and in a city where the buildings have ears, it’s not one that stays hidden for long.

Daley’s management skills also came under fire. “He goes dark—you need an answer, and by the time he gets back to you, it’s too late,” says a former colleague familiar with his style after working with him in the private sector. “And that’s not good for the manager of a bunch of burning pots.”

Since he and Obama never had an intimate bond, channels were built around Daley. It wasn’t personal; that’s how the world works. But Daley didn’t like it, and last month he vented in an interview with Politico columnist Roger Simon. His remarks sprinkled with expletives, Daley managed to diss his predecessor, Rahm Emanuel, who succeeded Daley’s brother as mayor of Chicago; anger Democrats on Capitol Hill by lumping them in as equal obstacles to Republicans; and denigrate President Obama’s decisionmaking as finding that middle ground between “being really s---ty policy or really s---ty politics.”

Daley has his defenders, and among them is Democratic consultant Bob Shrum, who worked with him when Daley ran Al Gore’s 2000 campaign. “He had his views and I had mine, but he was open-minded and collegial,” he says. “Some of the descriptions I’m reading about him I don’t recognize.”

Most of Daley’s bad reviews emanate from Capitol Hill. Shrum says the White House chief of staff should never be the congressional liaison, and given the obstinate nature of the current GOP opposition, “You could have a combination of Kenny O’Donnell, Jim Baker, and Leon Panetta the last few months and events would not have been different.” (These legendary chiefs of staff served Presidents Kennedy, Reagan, and Clinton, respectively.)

Daley’s partial demotion was cheered by Senate Democrats who have the most to gain with Rouse, a former Senate aide, serving as their new sounding board. “Is this welcome on Capitol Hill? The answer is yes,” a Senate aide said. “Daley just didn’t get the place.”

In contrast to the blunt-spoken Daley and his sometimes overbearing ways, Rouse is the quintessential anonymous man, an old-school staffer who in his DNA never wants the story to be about him. “When his name is in the paper, he cringes,” says a Hill veteran.

With 30 years of experience on the Hill and as former Senate leader Tom Daschle’s chief of staff, Rouse had such stature in Congress that he was known as the 101st senator. “Pete combines operational and political skill—he is the indispensable man,” says the Hill source. “Daley was always just passing through.”

Rouse doesn’t want to be chief of staff, and apparently doesn’t mind that Daley retains the title while handing off much of the work. Daley will function more as a senior minister to the opposition and conservative Democrats, and to business leaders.

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Asked if the diminished duties are humiliating for Daley, a proud and accomplished man, a longtime Democratic consultant said that is true in the world of Washington and cable television, but in real life it’s just another bump in the road: “Think of it as an organ transplant that never really took.”