The changeover is simple enough to explain: Lew is well-liked both inside the administration and in Congress. Daley, after about a year in the job, isn’t.
Inside the administration, many look back with regret at the decision to send Lew to State and Larry Summers to lead the National Economics Council. In some early versions of the organization chart, Lew would have taken the NEC job and, some believe, run a calmer, more collaborative economic process.
In Congress, Lew’s stock is unusually high. He has emerged as one of the members of the Obama administration Republicans prefer working with. Earlier this year, Ben Smith, then at Politico, profiled Lew under the headline: “Lew: A liberal GOP says it trusts.” The piece included an admiring comment from House Majority Leader Eric Cantor.
Daley, by contrast, has struggled to win over both White House staff and Congress. The initial hope was that he would help win business and Republican support for the White House’s initiatives. Neither hope panned out. Relations between Republicans and the White House are at a low ebb. But under Daley’s leadership, relations between the White House and Hill Democrats also grew frayed. And few in the White House found him an inspiring leader or were impressed with the results of the strategy he helped craft through 2011.
But Daley was actually demoted in November. Pete Rouse, who served as Obama’s chief of staff in the Senate and remained a close adviser in the White House, took over some of Daley’s portfolio. But Rouse, who many — including Obama — have wanted to see assume the chief of staff position, has been reluctant to formally accept. The elevation of Lew suggests that Rouse was, again, resistant to stepping into this position himself. (Daley will co-chair Obama’s reelection campaign.)
Lew’s move also makes sense in terms of the next year’s agenda. Lew is a budget expert, and the key substantive negotiations of 2012 will be budget negotiations — namely, the automatic spending cuts agreed to in the debt-ceiling deal and the expiration of the Bush tax cuts, both of which are scheduled to happen Jan. 1, 2013.
That sets up a division of labor of sorts. The politics will largely be handled through the Obama campaign, which is led by ex-deputy chief of staff Jim Messina, who is more of a wartime consigliere than a policy wonk. The policy negotiations will be handled by Lew and the White House. The question for the White House is what happens if and when the two conflict. It’s easy to imagine, for instance, the campaign wanting the White House to cut a deal on the Bush tax cuts to defuse charges that Obama intends to raise taxes in his second term, even as the White House might want to wait till after the election when they’ll have more leverage.