Transition Team

Obama’s Next Inner Circle: Who Will Fill the New Cabinet?

Who’ll be in the new Cabinet? A look at picks from Kerry to Podesta—and the GOP options. By Eleanor Clift.

Olivier Douliery / Corbis

Speculating on a team for President Obama’s second term is like working a jigsaw puzzle. Move Chief of Staff Jacob Lew to Treasury, which is widely anticipated, and you have to find the right person to fill Lew’s demanding job. As Obama reflects on his choices in the coming weeks, he will move people around within the administration wherever he can, reward loyalists when he can, and recruit a Republican or two to make good on his Election Night promise of reconciliation with the opposition.

“Obama needs to send a signal that what he said with regard to reconciliation is real,” says Republican strategist Brad Blakeman, who served in the Bush White House. “Bringing new people into the cabinet and to the White House provides the president with a new team to fight old battles from a new perspective.”

The top-tier cabinet posts get the most attention—Treasury, State, Defense, and Justice. Treasury seems settled. Early talk has faded about installing Erskine Bowles of Simpson-Bowles deficit-cutting fame. While his appointment would send a strong signal to the markets that Obama is serious about deficit reduction, the Democratic base wouldn’t be happy, and it’s too soon to start an argument with the folks who elected him.

Hillary Clinton says she will stay at State until her successor is confirmed. The two leading candidates are U.N. Ambassador Susan Rice and John Kerry, chairman of the Senate Foreign Relations Committee. Rice has taken a hit from her insistence on five Sunday shows days after the attack in Benghazi that it was the result of a spontaneous demonstration, which proved untrue. A Democrat with ties to the White House says: “Obama is feeling feisty. He wants her. She’ll get knocked around (in the Senate-confirmation process), but he thinks she can handle it.”

The intelligence community has taken responsibility for the talking points that Rice repeated, acknowledging they were “stale,” says former State Department spokesman P.J. Crowley. A report on the matter will be issued next month, and Crowley thinks that’s time enough to draw conclusions. If Obama goes ahead with Rice, that would test the political climate in the new Senate as well. “It’s one thing to hold up a judge, but when there are serious crises in Syria and Iran, holding up a secretary of state is another matter.”

Rice has her critics and they support Kerry, who many say deserves the top post at State in return for his yeoman service on the Foreign Relations Committee. Appointing Kerry would open up his Senate seat and plunge the administration back into another contested Senate race potentially with freshly defeated Scott Brown, who could suit up for another run. The prospect of that contest would likely bring Gov. Deval Patrick out of the statehouse to hold the seat.

With both Kerry and Rice facing obstacles, a third name popped up in the chattering classes on Thursday: National Security Council adviser Tom Donilon, who could slide into State without a ripple. The problem with Donilon is that Obama likes a big personality in the job, think Clinton and Condi Rice, and Donilon is a behind-the-scenes kind of guy who rarely goes on television.

Leon Panetta is willing to stay on at Defense to shepherd the department through the fiscal cliff, and Michele Flournoy, former undersecretary of defense for policy, is a leading contender to succeed him. There’s never been a woman in that spot, and Flournoy is highly regarded. “She’s brilliant, smart as hell, has deep knowledge across the defense issues—personnel, weapons systems, strategy, she knows how to run the Pentagon, and she’s very well liked,” says a senior Democrat who doesn’t want to be quoted gaming out the president’s choices. Flournoy could also become national security adviser should Donilon move on.

Another contender: former Republican senator Chuck Hagel. Obama really wants to recruit Republicans, but there aren’t many that would be a comfortable fit. GOP Senator Richard Lugar’s name comes up as a likely ambassadorial appointment.

Several cabinet members have signaled their wish to stay in their posts at least for a while. They include Attorney General Eric Holder, who wants to be in place to mark the 50th anniversary of landmark civil-rights legislation passed in the ’60s. Homeland Security Secretary Janet Napolitano will stay. Friends say that she would like to move over and become attorney general if Holder steps down, the kind of in-house transfer that Obama relishes.

An intriguing name circulating for secretary of energy is John Podesta, founder of the liberal think tank Center for American Progress. Clean energy is his passion, and he would bring political smarts along with policy smarts. He was chief of staff during President Clinton’s second term.

Lastly, the Obama campaign staff can probably write their own tickets in the administration. The indefatigable Stephanie Cutter, who defended Obama on the cable news shows, could succeed David Plouffe at the White House should Plouffe leave. Jim Messina, the Obama campaign manager, is a potential contender to become chief of staff, but more likely, says a friend, “he’ll write a book and make a ton of money.”