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Panetta Named Chief of Staff in Major White House Shake-Up : Presidency: Clinton's friend McLarty will step aside and become the counselor to the President. Gergen will move to State Dept. and Rivlin will be budget director in effort to add 'strength, vitality.'


WASHINGTON — President Clinton appointed Budget Director Leon E. Panetta as his new chief of staff Monday in a major shake-up aimed at strengthening a beleaguered White House as it enters the climactic struggle over what the President called his "daunting agenda"--including health care reform, crime and trade.

Panetta, an outspoken Washington insider and former California congressman, replaces Clinton boyhood friend Thomas (Mack) McLarty, a mild-mannered, soft-spoken Arkansan who has been widely criticized as too "nice" and inexperienced to run an often-divided White House.

Clinton named McLarty counselor to the President, a position that keeps him in the White House but without the chain-of-command responsibilities of his old job.

At the same time, David Gergen was removed from his White House communications post and named counselor to the State Department, and Panetta's deputy, Alice Rivlin, was chosen to take over as director of the White House Office of Management and Budget.

Clinton said the moves would add "strength and vitality" to the White House, which members of Congress from both parties--as well as some Administration officials and outside experts--have criticized as unfocused, undisciplined and prone to putting out mixed signals on critical policy issues.

Democrats in Congress said they believe Panetta will move quickly to address those problems. More important, they said, as the struggle over health care and other issues enters the decisive phase, he will bring to his new job an understanding of Congress that comes from the hands-on experience of shepherding difficult measures through the legislative meat grinder.

But none of that will matter, they agreed, unless the President himself dramatically changes what they see as his undisciplined approach to decision-making and management.

On the record, the bluntest assessment of Clinton's underlying problem came from Rep. Vic Fazio (D-West Sacramento), chairman of the Democratic Congressional Campaign Committee in charge of his party's strategy for the 1994 midterm elections.

Clinton's problems, said Fazio, voicing an opinion shared by many Democrats, are "the need to bring issue debates to closure," his failure to meet deadlines for policy formulation and "the need to get out of the crisis-management mode."

One committee chairman, speaking on condition that he not be identified, complained that he has had to go to too many meetings, involving too many people, who talk too much and with too little focus. "They were too indecisive. They never gave McLarty the authority he needed," the lawmaker said.

He said he believes only Clinton can fix the problem. "That's a very important point," he said. "Until the President can improve his management style, it will be very hard for anybody to do a good job running the operation."

Like Clinton, Panetta is a consensus builder who thrives on policy work. Whether he will be able to impose more discipline in the face of the President's own approach to management remains to be seen. But, unlike McLarty, Panetta can be blunt-spoken and does not shrink from criticizing White House operations.

In April of last year, he stunned Clinton and his top staff by going public with a bleak assessment of the President's congressional agenda, declaring that it was jeopardized by internal problems at the White House, including the President's failure to determine priorities. The assessment was widely shared by Democrats in Congress, but such candor from a senior official is almost unheard of in Washington.

Panetta, who will remain at the budget office for two more weeks, indicated that he would move aggressively in taking control of White House operations. "I will want to bring in some of my own people," he said Monday night on CNN's "Lary King Live."

Asked if he might replace White House Press Secretary Dee Dee Myers, he did not dispute the possibility. His two closest advisers at the budget office, both of whom he brought from his congressional staff, are Barry Toiv, his press secretary, and John Angell, his top personal aide.

Clinton, flanked by the principals as he announced the personnel changes at a brief Oval Office news conference, said McLarty had approached him more than a month ago about "better deployment" of the White House staff and had recommended that Panetta replace him as chief of staff.

The President said he, McLarty, Vice President Al Gore and several others had discussed McLarty's recommendations.

McLarty said, however, that he and Clinton first began discussing White House staff problems several months ago. The discussions, he said, got more serious just before the President left for the June 6 D-day anniversary ceremonies in Normandy, when McLarty offered the specific suggestion that Panetta replace him and that he take on the role of counselor to the President.

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