Regan, Baker to Trade Jobs as Reagan Aides : Sudden Shift by Treasury Secretary, Top Adviser Wins Support From Congress, Business Sector

President Reagan, in an unexpected shift among senior members of his Administration, announced Tuesday that White House Chief of Staff James A. Baker III and Secretary of the Treasury Donald T. Regan will exchange jobs.

The extraordinary exchange was worked out in tight secrecy last week by Baker, Regan and Deputy Chief of Staff Michael K. Deaver and was presented to Reagan on Monday for his approval. Barely 24 hours later, the President, flanked by Baker and Regan, announced it at a hastily arranged White House news briefing.

Unexpected Move

The move, although generally greeted favorably both inside and outside the Administration, stunned most observers because Baker and Regan had indicated that they would remain in their current posts for some time.

“It’s a shocker,” one White House official said. “But it makes all kind of sense. Both wanted new jobs, and Regan gets to retain his Cabinet-level status. Baker gets a Cabinet job and one that will give him a little less of the day-to-day grind.”

Moreover, the business community will support the shift, Richard Lesher, president of the U.S. Chamber of Commerce, predicted. “Although the announcement came as a complete surprise, the two individuals involved are seasoned and extremely capable,” he said.

Baker’s departure--which is dependent upon his confirmation by the Senate as Treasury secretary--will represent a clean sweep of the troika that shaped White House policy and strategy for Reagan during his first term. Last week Deaver announced that he will take a job in the private sector in March, and White House counselor Edwin Meese III is scheduled to leave after his expected confirmation by the Senate as attorney general.

Reagan, declaring that he is confident that the Baker-Regan swap can be accomplished smoothly, said the move would “contribute substantially” to the success of his second term. Both men, he said, have compiled “outstanding records of achievement.”

“Each has indicated to me that while willing to serve in whatever capacity I would wish, each would welcome an opportunity to assume new responsibilities and new challenges,” he said. “After four grueling years in their current positions, their desire for change is completely understandable.”

Baker had made no secret of his desire to be named as Treasury secretary or another top Cabinet officer. But as recently as Monday, he had indicated to reporters that he probably would remain indefinitely as chief of staff.

The idea for the swap was initiated by Regan, who said he first read in newspapers that Baker was interested in several Cabinet posts, Treasury among them. Regan then told Baker that he would be interested in being named chief of staff--but only if Deaver had no interest in the job. After Deaver said he had none, the plan was presented to the President.

As Treasury secretary, Baker, a wealthy 54-year-old Houston lawyer, will become the Administration’s chief economic spokesman, while Regan, a 66-year-old former Wall Street broker, will keep his status as a Cabinet member in his new White House post. Both men still will be members of the top-secret National Security Council.

‘Golden Opportunity’ The exchange is expected to touch off further shake-ups in the Administration, with both Baker and Regan bringing in some of their own personnel choices to their new offices. Indeed, a senior White House official suggested that a general housecleaning may be in order in both the White House and Treasury Department.

“There are duds in Treasury and in the White House, and this is a golden opportunity to clean house in both places,” the official said. “I know Don Regan will tell Baker that X, Y and Z are a disaster and Baker will tell him the same thing about the White House.”

At least two highly regarded senior aides on Baker’s staff--Richard Darman and Margaret Tutwiler--are expected to leave the White House. Darman probably will follow Baker to the Treasury Department, sources said, while Tutwiler is weighing a similar offer or may take a position in the private sector.

Some White House and congressional sources suggested that David A. Stockman, director of the Office of Management and Budget, may leave after Regan takes office. Baker and Stockman have worked closely on budget matters, but Stockman and Regan have often clashed over policy.

However, Ed Dale, a spokesman for Stockman, said the clashes with Regan are “in the past” and that the budget director has told him that he intends to remain in his job.

Reaction on Capitol Hill to the move was mostly favorable, with House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) declaring: “Jim Baker and Donald Regan are very able and talented public servants who always do a job well. I am looking forward to working just as constructively with them in their new positions as I have in their previous assignments.”

Similarly, Senate Majority Leader Robert J. Dole (R-Kan.) called the exchange “a good switch with no losers.”

California Rep. Robert T. Matsui (D-Sacramento), a member of the House Ways and Means Committee, which deals frequently with the Treasury secretary, called the exchange “a very smart move by the President.”

Nevertheless, he said Baker has a better relationship with the committee than does Regan, who has engendered some hostility from the panel because he “has a way of testifying before us and a way of dealing with the members that was somewhat arrogant.”

Fear Business Bias

Congressional Democrats also expressed some concern that Regan would bring a pro-big business bias to the White House.

“God help us!” exclaimed Rep. Bill Alexander (D-Ark.). “Don Regan, the lion of Wall Street, has already fleeced the lambs of Main Street, and now that he is managing the President he will be in a more formidable position to favor big business.”

But business leaders generally said they thought that the White House shuffle would have relatively little impact on economic policy.

“I don’t think it’s going to make much difference on the big issues,” said Allen E. Sinai, chief economist of Shearson Lehman/American Express in New York. “The President really is his own man (on taxes and budgets), and whatever happens will be more President Reagan than either Jim Baker or Don Regan.”

Sinai suggested, however, that the business community is going to wonder why the switch was made, “because on the surface it looks odd.”

Robert E. Linton, chairman of the investment firm of Drexel Burnham Lambert, said: “I’m a big fan of Jim Baker. He is easy to talk to, he listens, he is frank at giving the Administration view.” Linton was much more reserved in discussing Regan, however, saying: “We are very concerned with the way the tax program has been handled.”

Richard H. Jenrette, chairman of the Wall Street brokerage house of Donaldson, Lufkin & Jenrette, was more blunt, declaring that “the regulators better run for the hills with Don Regan in the saddle” at the White House.

Jenrette expects Regan--who he says is “totally committed to free markets and free trade”--to press his free-market agenda more vigorously in his new post.