A Time to Regroup

By NANCY GIBBS, Mike Allen

You have to wonder sometimes why Presidents even run for re-election, given how things usually turn out. Second terms have a way of veering into wild and menacing terrain, spiked with indictments and scandals and betrayal and grief. Some friends become less friendly because they know you are on your way to retirement while they are on their way to the next campaign. Your team gets tired, the ideas stale, and the fumes of power more toxic. It was through those badlands that President George W. Bush trudged last week, and for once he was walking alone. "The problem is that the President doesn't want to make changes," says a White House adviser who is not looking for a West Wing job, "but he's lost some of his confidence in the three people he listens to the most." Those three are his Vice President, Dick Cheney, whose top aide, I. Lewis (Scooter) Libby, has been charged with brazenly obstructing the investigation into who leaked the name of CIA officer Valerie Plame; Bush senior adviser Karl Rove, who while not indicted has still emerged as a player in the scandal; and chief of staff Andrew Card, who gets some of the blame for bungling the response to Hurricane Katrina and even more for the botched Supreme Court nomination of Harriet Miers. "All relationships with the President, except for his relationship with Laura, have been damaged recently," the White House adviser says. The closest aide who is undamaged is Secretary of State Condoleezza Rice--who is off minding the rest of the world--and, of course, Bush himself. "The funny thing is everybody's failing now, in which case perhaps it's time to look at George Bush's relationship with George Bush."

Especially since, above all things, Bush values loyalty, both to his friends and to his own beliefs. He does not abandon either easily, so these next weeks pose an interesting dilemma. The thing about the wilderness is that if you stay there, you die. That's why the worst week of Bush's presidency actually brought with it a quiet sense of relief among some of his restless aides. "This has wakened them from their notion of infallibility," says a Bush adviser. Those who have been arguing for what would count in this White House as radical change--fresh faces, shiny plans, a wider exchange of ideas--felt that at last they had some leverage because Bush could no longer insist that everything was working just fine.

What no one can know but everyone can spin is whether this week marked a point of no return or a turning point. Top advisers have all but written off the rest of the year as a loss. The aim is to relaunch Bush's presidency in January with a new agenda rolled out in his State of the Union address, now that Social Security reform lies crumpled in a ditch. But to do that, he would need to adapt the style and system that served him well for four years but has now demonstrably failed; add new blood to a team that functions as a palace guard but not as an early-warning system or idea factory; and summon the charisma from his days as a candidate to reconnect with Americans in what has become his last campaign.

THE WEEK FROM HELL

Knowing that the week was likely to produce a convergence of public relations catastrophes, Bush's staff gave him a very busy, very public schedule. He was a patient audience member at a daylong conference that First Lady Laura Bush held on Helping America's Youth, and he worked the crowd in one hotel ballroom for so long that a veteran cameraman said it was like having Bill Clinton back. Bush palled around with Democratic luminary Vernon Jordan at a luncheon and invited a group of military wives to suggest a gift for his 28th wedding anniversary. "Sorry I asked," he quipped when urged to give diamonds.

But there was no escaping or disguising what had happened. More than anything else, it was the Miers meltdown that dissolved once and for all the image of a President whom no one defies and whose luck never runs out. The whole debacle, even Bush insiders say, reflects the problem of a leader who doesn't hear from enough people. "This was entirely avoidable," says an adviser involved in the process. "After Katrina, after Michael Brown, the issue of cronyism was already on the table and a negative. It was incredible to try this."

Although Miers did not formally call Bush with her decision until Wednesday night, by then the deed was all but done. Her meetings with Senators were not winning her any support. One who attended them described her as "smitten by the President," talking endlessly about her admiration for him in her soft Texas drawl. She was unfailingly gracious, but she faced a tough crowd, and the private prep sessions were just as shaky. By that time, conservatives were so riled, even a Bush win would have been a loss. The cost would have been permanent, unforgiving fury from a whole swath of his base--and a Democratic Party smelling blood. Instead, Bush hopes that if he gives his allies a profound sign of respect and acknowledgment of their righteous power, they will agree to unite behind him for the fights ahead.

THE LIBBY MELTDOWN

In many people's minds, the epic fiasco that was the Miers nomination could not have happened if Rove had been at full strength. Tortured by kidney stones, distracted by a circling prosecutor, Rove was not in top form during the 24 days that the nomination was collapsing. There was "a weariness to him you didn't see before," an associate says. "He's very strong, and it's the first time since I've known him that he was fighting for his own political life and not his candidate." It was only after his fourth appearance before the grand jury that aides sensed "a burden off his shoulders," as though Rove judged from the line of questions that he might yet escape.

But whether or not he's in trouble with the law, friends say, he's certainly in trouble with Bush. Rove will continue managing the intersection of politics and policy in the White House but will have to regain the unfettered powers he once held. "The President's relationship with Karl has been damaged over the scandal," a Bush friend says. A source close to Rove says when Bush asked Rove whether he was responsible for leaking Plame's CIA identity to columnist Robert Novak, Rove told him "absolutely not." While that may have been strictly true, Fitzgerald's indictment suggests that Rove did at least discuss Wilson's wife with Novak, as he did with TIME's Matthew Cooper. As for Cheney, who retained Libby as the scandal unfolded and did not follow the advice of some to move him out five months ago, his relationship with Bush has suffered "a strain, not a rupture," says a presidential adviser. That much was clear when the White House let it be known that Card had called Cheney to inform him of the choice of Miers. In earlier times, he would have been intimately involved in such a decision.

Cheney's standing has suffered mainly because Libby emerges as such a liability. Fitzgerald threw the book at him not for anything he said to reporters but for what he said to the FBI and the grand jury. The indictments suggest that the aide whose aim was to spin the war might have tried to spin the prosecutor. "Lying was a remarkable act of stupidity on Libby's part," says Richard Nixon's former White House counsel John Dean. "He's old enough to know better. He watched Watergate and Iran-contra. To try to pull the leg of the grand jury was really quite remarkable."

As expected, Libby promptly resigned, and Bush and Cheney expressed their regrets and followed with the inevitable promise to focus on the nation's business. By itself, the departure of Libby won't necessarily affect Bush Administration policy toward Iraq. Although Libby was one of the earliest and most urgent proponents of the war, he doesn't seem to have been as influential in charting U.S. policy since the invasion. But the indictments once again cast light on the Administration's case for invading Iraq and come against a backdrop of growing discontent about the war and where it's headed among some of Bush's former allies.

Until recently, the doubts about Bush from the right have focused on the mismanagement of the war rather than on the decision to go to war. But even before the Libby indictments, the wall of silence had been crumbling. First there was the Oct. 19 speech by Colonel Lawrence Wilkerson, former chief of staff for Secretary of State Colin Powell, in which Wilkerson charged that a "cabal" of Cheney and Secretary of Defense Donald Rumsfeld had "flummoxed" a President who is "not versed in international relations and not too much interested in them either." Even more stinging was the interview given by Brent Scowcroft--National Security Adviser to Bush's father during the first Gulf War--to the New Yorker, in which he not only questioned the wisdom of invading Iraq but also criticized the wider Bush doctrine of spreading democracy in the Middle East.

But neither man belongs to the White House inner circle and neither has a better plan. Wilkerson rejects an idea that close to 50% of Americans support: beginning a withdrawal of U.S. troops now, whether the Iraqis are ready or not. The fact that even some of Bush's critics continue to advocate staying the course in Iraq helps explain why there doesn't seem to be much urgency in the Administration for speeding up the exit strategy. Notes Leslie Gelb, former Council on Foreign Relations president: "All Washington political insiders are saying the writing's on the wall, the troops are coming out. I don't think they're factoring the President into account. He's not running for re-election. He's a true believer."

THE RESET BUTTON

There's a theory going around Washington about why this year has gone so haywire, one that goes to Rove's essential strength. "These guys are very good at campaigning," says an outside adviser to the White House, "and not so good at governing." As long as there is an election on the horizon, they function like a humming machine and their coalition stays in line. But in an environment where that isn't there, they fall apart.

The year's successes--an energy bill, the highway bill, bankruptcy reform, a free-trade agreement--all came before the Category 5 bad news of the fall. But a well-received court nominee could help Bush turn the corner. He will be traveling to South America and Asia before the holidays, which is why the White House road map to recovery starts in earnest in January. "It is fundamentally a question of reconnecting with the American people," says a senior member of the Bush team. "One of the good things about being President of the United States is that even when you're down, you have the ability to control your own destiny through the bully pulpit."

Bush officials are literally going back and reading his campaign speeches. Aides say they have a "back-to-basics" strategy focusing on such traditional Republican issues as spending restraint. As part of the search for a fresh agenda, groups of Bush aides are working on new immigration and tax-reform policies for possible rollout. But immigration is an issue that splits the party's base, and the recommendations of Bush's tax-reform commission, most notably doing away with the mortgage-interest deduction, are universally viewed as a nonstarter. To try to lower energy prices, the White House is considering taking steps--legislative, diplomatic or jawboning. But in a global economy, getting prices down is easier said than done.

As for a shift in the lineup, Card could be named Treasury Secretary by the beginning of the year. Among his possible replacements are White House budget director Joshua Bolten, former Montana Governor Marc Racicot and deputy budget director Clay Johnson III. An adviser says the personnel shifts will be gradual: "They don't want to communicate panic because they're not panicked."

It won't help that Bush's main enforcers on the Hill are themselves in a defensive crouch. Cheney could find himself a witness in a criminal trial, House majority leader Tom DeLay had to step down to fight indictments for money laundering, and Senate majority leader Bill Frist is under investigation for possible insider trading. The party's ambitious comers are not running as Bush's allies and heirs, and the 2006 campaign promises to be an epic battle. G.O.P. pollster Bill McInturff says the percentage of people who define themselves as "very interested" in the 2006 elections is already at 57%, compared with 39% in October 2002, a month before those midterm elections. History is certainly not on Bush's side. Since 1966, if a President's approval rating dipped below 50% at a midterm election, his party lost an average of 42 seats in the House--which next year would be enough to put the Democrats back in power. Still, optimists at the White House have reached the point that they are taking comfort from the example of Clinton, who came back strong after his party's shellacking in the 1994 elections and wound up popular despite his own, very different set of scandals. Next thing you know, Bush will be calling himself the Comeback Kid.

With reporting by Perry Bacon Jr., Massimo Calabresi, SALLY B. DONNELLY, MICHAEL DUFFY, Elaine Shannon, Karen Tumulty/Washington, Romesh Ratnesar, Jeremy Caplan/New York