Disputed Handling of Arms Scandal : Aide Who Clashed With Regan Will Resign Soon

Mitchell E. Daniels Jr., President Reagan’s chief political assistant who clashed with White House Chief of Staff Donald T. Regan over the handling of the Iran arms-and-hostages scandal, plans to resign soon, sources close to Daniels said Tuesday.

Daniels’ position at the White House has been increasingly untenable since he told Regan privately on Dec. 5 that he agreed with Republican congressional leaders that Regan had become a political liability. He told Regan that he should resign, to give Reagan a chance for a “fresh start” in the final two years of his presidency.

Although Reagan has said he will not fire Regan, and the chief of staff insists that he will not resign, some Administration sources say that Regan’s delay in filling several key White House offices that are vacant or soon becoming vacant indicates that he is uncertain of his future.

“The hypothesis is that he’s taking the responsible course by delaying choices until he’s clear about what his own situation is going to be,” one senior Administration official said.

Regan Unavailable

Regan, vacationing in Florida during the holidays, was not available for comment.

Daniels would not comment on his plans. He has told one friend that his own resignation will come shortly, regardless of Regan’s plans, but that he would be willing to stay on for a brief period to assist a successor in an orderly transition.

“He said he’s had it and he’s going back to Indianapolis, probably to join a law firm that offered him a partnership a couple of years ago,” a friend of Daniels said.

Even before the Iran-arms sales scandal, Daniels had talked about eventually returning to Indianapolis, where he served during 1974-76 as chief aide to then-Mayor Richard G. Lugar, now the Republican senator from Indiana. During 1977-82, Daniels also was administrative assistant to Lugar.

Lugar, who is chairman of the Senate Foreign Relations Committee, has urged that Regan be ousted for his handling of the Iran-arms controversy.

Daniels refused to give details of his Dec. 5 conversation with Regan, but said a report that Regan had countered that he should resign was “totally incorrect.”

Denies Repercussions

“We had an objective discussion, and I’ve been treated very well before, during and after that episode,” Daniels said.

The Daniels-Regan conversation took place in Regan’s White House office a month after a report on Iran-arms dealings had appeared in a Beirut magazine.

By that time, the arms sale had mushroomed into a full-blown scandal, with the President and Atty. Gen. Edwin Meese III disclosing that $10 million to $30 million from the arms sales had been diverted to the Nicaraguan rebels and that, as a result, two officials had lost their White House posts--Vice Adm. John M. Poindexter, the national security adviser, and his aide, Marine Lt. Col. Oliver L. North.

Regan had sought to portray the arms sale as an effective way of establishing contact with “moderates” in Iran, and played down the political significance of the controversy, a stance that troubled Daniels and his staff.

Sources said that Daniels aide Ed Rogers plaintively asked his White House colleagues: “Can’t we even think of a good reason for the arms sale--not one to justify it, but a reason good enough that people wouldn’t think we’re crazy?”

Disagreement on Scandal

Regan had backed the President’s decision to authorize selling weapons to Iran and, once the Beirut magazine disclosed the action, he vehemently defended it. He rejected aides’ advice that Reagan would fare better by admitting he had made a mistake.

Daniels and his deputy, Haley Barbour, also had urged that the President call much earlier than he did for the naming of an independent counsel.