Deaver Quits in New Loss for Reagan’s Inner Circle

Michael K. Deaver is resigning as deputy White House chief of staff in one of a series of developments that will significantly alter the face of President Reagan’s inner circle as he begins his second term.

In a surprise announcement Thursday, the President said that Deaver, his trusted adviser and longtime friend from California, will leave his White House post in the spring. Deaver, 46, who has complained publicly that his $72,000-a-year salary is inadequate, is expected to take a lucrative public relations job in Washington.

Last Monday night, William P. Clark, also a California confidant whom Reagan brought to Washington four years ago, told the President that he had decided to resign as secretary of the Interior.

And, in another move that will put more distance between the President and his longtime California associates, Reagan on Thursday resubmitted to the Senate the name of White House counselor Edwin Meese III as his nominee for attorney general, to replace fellow Californian William French Smith.

Meese, whose initial nomination to succeed Smith was stymied last year when questions arose over his financial affairs, is now expected to win Senate confirmation because an independent counsel’s investigation concluded that there was no basis for prosecution. Although Meese may remain an influential member of the Administration, his move to the Justice Department will almost inevitably diminish his role in the White House inner circle.

Moreover, Reagan--still undecided on successors to Clark and Deaver--soon must find replacements for at least two other senior White House officials who sources say are likely to resign before the end of the year: Chief of Staff James A. Baker III and counsel Fred F. Fielding.

Rep. Manuel Lujan Jr. (R-N.M.), who had been mentioned as a possible successor to Clark, withdrew his name from consideration Thursday, saying that he would prefer to remain in Congress.

Deaver’s departure will leave the White House without any of the senior members of the California inner circle that helped shape Reagan’s first-term presidency.

Deaver, who has been extremely close to Reagan and his wife, Nancy, had been expected to announce his resignation sometime during the next few months. But the timing of the announcement--in a two-paragraph prepared statement--caught White House aides by surprise.

Story About Wife

The announcement came several hours after the Wall Street Journal published a detailed story saying that Deaver’s political connections had helped his wife, Carolyn, make $50,000 to $60,000 a year in income as a public relations consultant despite her lack of experience in public relations.

Carolyn Deaver got her job through the assistance of Roy Pfautch, a political consultant and major Republican fund raiser, according to the Journal. Later, the newspaper said, Deaver, who controls Reagan’s schedule, arranged for a Japanese client of Pfautch to meet with the President at the White House and also arranged for Reagan to visit Pfautch’s home in St. Louis for a fund-raising event benefiting Eureka College, Reagan’s alma mater.

Among other things, the Journal also reported that the Deavers had benefited from “creative tax planning by a San Francisco accountant whom Mr. Deaver helped obtain a prestigious federal appointment.”

‘No Comment’

Deaver, who was quoted by the Journal as saying that none of his activities involved any misconduct, did not return a reporter’s telephone calls Thursday. A secretary in his office said that there would be “no comment” in response to any questions from the press.

White House spokesman Larry Speakes said Deaver informed Reagan of his decision only Thursday morning, but Speakes denied that the resignation announcement was in any way connected with the Journal’s story.

In the White House statement, Reagan said he accepted the resignation with “deep regret” and added: “Mike has rendered 18 years of loyal and outstanding service to me and to the First Lady, both in California and in Washington. Nancy and I will sorely miss him, as will the nation. He has compiled an outstanding record during his four years of service to this Administration.”

Deaver has been negotiating for a position with Burson Marsteller, a New York public relations firm. Harold Burson, the firm’s chairman, said he has offered to pay Deaver at least $200,000 a year to head the company’s 40-person Washington office. Burson said that while he still hopes to hire Deaver, he understands that Deaver is considering other offers.

At the White House, Deaver’s power and influence have far exceeded his title as deputy chief of staff. Referred to by other aides as “the keeper of the body,” he has been the principal protector of Reagan’s time and schedule. As such, he has been the aide most active in limiting press access to the President.

Deaver also has been Reagan’s chief image maker.

During the early part of the Reagan presidency, with a powerful troika of Deaver, Baker and Meese running the White House, there were frequent reports of infighting--with Baker and Deaver forces aligned against Meese loyalists.

In 1982, a fourth power was added to the White House inner circle when Reagan named Clark, then deputy secretary of state, to succeed Richard V. Allen as the President’s national security adviser.

In August of that year, such bitter infighting broke out, with Clark declaring neutrality and Baker and Deaver still aligned against Meese, that Reagan appealed at a Cabinet meeting for an end to the sniping.

With Meese headed for the Justice Department, Baker has made it clear to colleagues that he will not remain in the high-pressure job of chief of staff for much longer.

And Fielding, who gave up a six-figure income and a partnership in the Washington office of a prominent Philadelphia law firm to become White House counsel, has indicated to friends that he plans to re-enter law practice by the end of the year.

The deputy counsel, Richard Hauser, also is expected to leave the White House for law practice--possibly in partnership with Fielding.

Meanwhile, conservatives who believe they are losing an important voice at the White House in Meese’s upcoming departure are urging that Reagan appoint Edwin J. Feulner, president of the Heritage Foundation, a conservative think tank, to succeed Meese as presidential counselor.

The White House has not made clear whether the counselor post will be filled, however, and Meese has told some conservatives that it probably will remain vacant.

Feulner said that while he is aware that conservatives are campaigning for his appointment: “I’m happy where I am.”