The White House Shuffle

By GEORGE J. CHURCH

Being fired has become almost as routine a fate for White House chiefs of staff as for major-league baseball managers. But for a chief of staff to fire himself -- well, it happened for the first time only last week. Thomas ("Mack") McLarty had become increasingly convinced he was miscast as the man trying to impose some order on the chaotic White House operation. Despite McLarty's success as a business executive -- head of the giant Arkla gas company -- his affable nature and background as a chum of Bill Clinton's since kindergarten days really fitted him to be a kind of consigliere, offering private advice and comfort to the President. (Candor too: he is the only member of Clinton's staff who can criticize the President without upsetting him.) Overseeing his friend's schedule and managing his policy agenda eluded McLarty. Clinton was equally frustrated. In three separate chats last spring, he expressed disappointment that McLarty's administrative duties were keeping him from serving as the kind of sounding board for presidential decisions that Clinton wanted.

Finally in May, even as White House insiders were speculating that it might be time to "knife the Mack," McLarty decided to do the deed himself. He suggested to Clinton that he move aside to become a full-time adviser -- and he had an answer prepared for the President's obvious question: "If you weren't chief of staff, who would be?" His nominee: Leon Panetta, then budget boss. Why Panetta? Well, he was a strong personality, had established a rapport with both Clinton and Vice President Al Gore and had become thoroughly familiar with the day-to-day workings of the White House because of the wide- ranging responsibilities associated with budget matters. Best of all, during his 15 years as a California Congressman, Panetta had acquired a thorough knowledge of Washington, and he had his own staff, which had been in on every important fiscal negotiation since 1980.

When McLarty sounded him out, though, Panetta did not exactly jump at the offer. He was flattered but wanted to talk further before taking on what sometimes looks like mission impossible. Those talks took about a month. Finally Clinton invited Panetta for a weekend visit to Camp David that turned out to be the clincher. The switch was announced when they got back to Washington at the start of last week. McLarty becomes Counsellor to the President, replacing David Gergen, the old Reaganaut who moves to the State Department as an adviser. That arrangement was suggested by Gore; Gergen agreed, despite some qualms, partly because he wanted to burnish his already impressive resume with a foreign policy post, partly because he knew he had to move aside to make room for McLarty. Panetta's old post as head of the Office of Management and Budget goes to Panetta's deputy, Alice Rivlin, a dedicated deficit hawk (like Panetta himself, a bit too much so for some of Clinton's more liberal advisers).

Will the new arrangement work? Panetta proved in last year's fight to develop a deficit-cutting program that he can set a clear policy line, stick to it and prevail over stiff opposition. But in bringing order and discipline to the largely unfocused White House operation, the new chief may well face a truly formidable adversary: Bill Clinton. The President's penchant for holding endless meetings, repeatedly reopening questions after they have supposedly been decided, and granting access to the Oval Office to dozens of aides who have overlapping duties and no clear job descriptions is the root of the trouble. Says a White House official: "Leon says he has Clinton's authority, and I believe Clinton did say that. But I don't know how much authority Panetta will be given in reality. What happens when he comes in to Clinton and says that you can't have four different people running the same show?"

What in fact happened the first time Panetta even hinted at shaking up personnel was unhappily illuminating. Appearing on Larry King's TV talk show with McLarty, the new chief of staff seemed to imply that Dee Dee Myers might be moved aside as press spokeswoman. A White House press officer promptly alerted Jeff Eller, a communications official, who conferred with senior adviser Bruce Lindsey, who met with deputy chief of staff Harold Ickes; all of them were traveling with Clinton in New York. After Ickes showed Clinton a transcript of the remarks, the President first conferred by phone with Gore and then, after midnight, called Panetta. Late though it was, the new chief got on the phone to Myers and told her she was staying. When Panetta the next day told reporters at lunch that he has "full authority" to make any changes in personnel he thinks necessary, his words rang hollow; his listeners knew perfectly well that Clinton had just told him the opposite, at least so far as Myers was concerned. Says a former White House chief of staff: "Clinton is saying, 'Don't mess with this person. Don't mess with that person.' This is how it all comes unwound."

On the other hand, Clinton has long shown a talent for recognizing when he is in trouble and doing whatever he must to pull through. Says an adviser: "When Bill Clinton's back is to the wall, when he is on the tracks and the train is close, he will always do that which is best for his survival." And officials who usually put a positive spin on the ugliest events view the situation as just that critical. Says one: "The wheels are coming off this presidency."

Hyperbole? Perhaps, but apart from his one-day victory in May on the Brady handgun-control bill, the President has had virtually no good news for months. True, the House Ways and Means Committee last week approved a health-care- reform bill mandating universal coverage and requiring employers to pay most of the cost of providing it. The White House hailed that as a major victory, even though the measure just squeaked through, 20 to 18, with four Democrats as well as all 14 committee Republicans on the voting against it.

But on Saturday afternoon, when the Senate finance Committee approved its own health reform legislation by a vote of 12 to 8, it rejected the idea of requiring employees to pay for the coverage, even in 2002 if 95% of the population is not covered by then. Committee members were unwilling to accept the so-called hard trigger favored by committee chairman Daniel Patrick Moynihan. Instead, they substituted a masterpiece of fuzziness: if 95% of the people do not have health-insurance coverage by 2002, a national health commission will make recommendations on what to do -- but Congress will not have to follow or even consider them.

What the votes seemed to portend is that no bill with an employer mandate -- regarded by the White House as absolutely essential -- can get more than about 40 votes in the Senate. In fact, the only proposal thus far even approaching that mark is a Republican measure, unveiled last week by minority leader Bob Dole and backed by 39 of the Senate's 44 G.O.P. members. It is a minimalist bill, forcing insurers to cover some people they now reject and providing $100 billion in subsidies over five years to those too poor to afford the premiums -- and that's about it. The continuing divisions among Democrats and the new unity among Republicans raise more doubt than ever whether any health-care bill remotely resembling Clinton's plan -- or any bill whatsoever -- can find a majority. Prospects were not improved by an agreement last week under which Ross Perot will put up about $1 million for a TV show to be produced by the Republican National Committee critiquing Clinton's plans.

Not much else is going Clinton's way either. The $30 billion anticrime bill -- supposed to pass in April -- is hung up again, largely once more by divisions among Democrats. Liberals and blacks in the House have added a provision designed to promote racial equality in administering the death penalty that even sympathetic Senators warn cannot get through the upper chamber, because it looks to Republicans like a backhanded attempt to do away with capital punishment altogether. The White House has been unable to figure out how to raise the $12 billion it thinks will be needed to finance a new world-trade treaty it wants Congress to pass by year's end; thus that treaty's fate is in doubt. And while the economy continues to perk up -- despite the slides in the value of the dollar and in the stock and bond markets -- the public is not giving Clinton credit.

In fact, the public displays little sign of giving Clinton credit for much of anything. Quite the opposite: the latest Washington Post-ABC News poll shows 53% of respondents disapproving of his performance as President, the worst figure in his 18-month tenure. Even among those who still do support Clinton, only about a third describe themselves as strong fans; the rest are only lukewarm -- a worrisome new development. White House officials give two reasons: the bogging down of the legislative program, which has convinced many voters that Clinton is not the gridlock breaker he advertised himself to be, and -- surprisingly -- Paula Jones. True or not, some Clinton aides think, her allegations of sexual harassment have weakened the President's support among the once faithful. "It's made him a national joke," says an Administration official.

Panetta obviously cannot do much about Paula Jones. If he can tighten up the White House operation and make it more efficient, that might help break the legislative logjam. But not necessarily. One indirect effect of his arrival is likely to be a sharper, more partisan, more anti-Republican tone at the White House. Whether that is really what the Clinton presidency needs is questionable. Nevertheless, the change in tone was evident even last week. The President, who had previously talked sweet bipartisan reason and adaptability on health care, lambasted Dole's proposal as "politics as usual" that threw crumbs to the poor, gave insurance companies everything they wanted and did nothing for the middle class. That might seem surprising, since in last year's fight to develop a budget program, Panetta successfully insisted on much more deficit reduction than Clinton's more partisan counselors wanted. According to Bob Woodward's new book, The Agenda, political adviser Paul Begala sneeringly called Panetta "the poster boy for economic constipation." At the White House, though, deficit reduction is regarded as last year's issue and, for the moment, is all but forgotten.

Panetta is close to senior adviser George Stephanopoulos, who is likely to gain in clout -- partly as a matter of subtraction. With Gergen focusing on foreign policy and McLarty playing a more compartmentalized role, Clinton will hear less of their moderate advice to counter the more liberal outlook of Stephanopoulos. (In fact, one reason Gergen took Gore's offer to go to State is that he knew Stephanopoulos would cut him out of the information loop on domestic-policy questions once McLarty was no longer in a position as chief of staff to protect him.) Despite their past differences with Panetta, political advisers such as Begala, James Carville and Mandy Grunwald are likely to gain in strength too with less counterinfluence from Gergen and McLarty (and a possible boost from Hillary Rodham Clinton, who tends to lean their way). All these advisers reject the bipartisan approach that won victories for the Brady Bill and NAFTA in favor of an appeal to the liberal Democratic core constituency. In some cases they would rather have an issue to use against the Republicans than a legislative victory.

Clinton himself seems increasingly testy, as evidenced by his attack on right-wing broadcasters. Some of them, he exploded, "say that anybody that doesn't agree with them is godless . . . not a good Christian . . . fair game for any wild, false charge." Some of his advisers thought it was a mistake for the President to get into a mud-slinging match and urged him not to do it again. But with battle lines sharpening in Congress and both parties jockeying into position for congressional elections, it promises to be a long, hot summer on Capitol Hill -- and anything but a mild fall on the hustings.

With reporting by Laurence I. Barrett, Michael Duffy and Dick Thompson/Washington