Bush Weighs Shake-Up--May Replace Sununu : White House: Chief of staff would be asked to take another post, sources say. Change could come next week.

President Bush, shaken by a dramatic drop in his popularity and by growing discontent within his own party, is considering a shake-up in his Administration that would include replacing John H. Sununu as chief of staff.

Several Bush advisers say they expect the changes to take place before the end of the year, perhaps as early as next week, although the timing may depend upon finding another position for the controversial chief of staff. Sununu may be asked to move to another post within the Administration or to take a key position in the President’s reelection campaign, they said.

Although Bush has continued to publicly voice support for Sununu, behind-the-scenes pressure to replace him has come from Cabinet members, other presidential advisers and key Republicans in Congress. The pressure has intensified as conservative Republicans have broken publicly with the White House over the question of when the government should act to stimulate the ailing economy.

Several prominent Republicans--using the President’s son, George Bush Jr., as an intermediary--have told the President that they consider Sununu to be a serious political liability as he embarks on his reelection campaign. The younger Bush, owner of the Texas Rangers baseball team, has conveyed the message several times recently, including during a visit with his father this week, sources said.

The President continues to feel beholden to Sununu for the key role he played in Bush’s crucial New Hampshire GOP primary victory in 1988, sources said. Yet even Bush has come to realize that Sununu’s continuing presence as chief of staff would hurt him politically in 1992, they said.

One source said it remained possible that Bush would decide to leave Sununu in his job as chief of staff, while transferring some of his responsibilities to longtime loyalists expected to take charge of his campaign.

But several knowledgeable sources, including some who have looked favorably on Sununu in the past, said the mounting dissatisfaction with Sununu among Bush’s closest advisers makes it more likely that he will be replaced as chief of staff. All of the sources spoke on condition of anonymity.

Sununu’s brusque, imperious manner has alienated other Administration officials and Republicans on Capitol Hill from the earliest days of Bush’s presidency. But not until recent weeks, when many Republican critics began linking Sununu with what they characterized as the White House’s lack of sensitivity to the nation’s economic ills and the need for quick action on a stimulus package, has there been such intense pressure for his removal.

Bush was stunned earlier this week when 81 Republican members of the House sent a letter to the President urging him to name Housing and Urban Development Secretary Jack Kemp as the “domestic policy czar” of his Administration.

Although the letter did not mention Sununu, the criticism was implicit. As chief of staff, Sununu has acted as the President’s right-hand man on many domestic policy matters, and he has feuded with Kemp on several occasions.

Marlin Fitzwater, Bush’s chief spokesman, dismissed the idea proposed by the House Republicans and said Kemp was expected to remain at HUD. But another Bush adviser said the letter was such “a gesture of no confidence” in Sununu that it “really shook the President.”

The timing of Sununu’s possible replacement as chief of staff, according to one Bush adviser, may depend in part upon when the President picks his reelection campaign team and decides who will hold which position.

“Sununu won’t be left standing out there alone; it’ll be part of a package that will include announcing officials of the campaign,” the adviser said.

Bush was described as being “preoccupied” with the task of resolving key personnel questions, involving both the reelection campaign and the White House staff. Sununu’s future, said one source familiar with Bush’s thinking, is “the top order of business.”

“I think he’s going to go--it’s (a question of) how as much as when,” said this source, referring to Bush’s traditional reluctance to remove an aide who is under fire, and his desire “to do it gracefully” if he feels compelled to act.

Bush’s private deliberations over what to do about Sununu, said one senior White House official, is “an eerie reminder of (Donald T.) Regan,” who was dismissed as White House chief of staff during the Iran-Contra scandal that rocked the Ronald Reagan Administration.

“It’s pretty bad--the general mood around here,” he said.

Sources said that one of Bush’s problems, as he simultaneously tries to mold his campaign staff and reshape his Administration, is that several key figures have told him they do not want to be involved in the campaign if Sununu is going to play a leading role.

Commerce Secretary Robert A. Mosbacher, a longtime friend of Bush, is widely believed to be the President’s choice to serve as chairman of his reelection campaign. And Bush advisers say that Transportation Secretary Samuel K. Skinner is expected to be tapped to either manage the campaign or replace Sununu as White House chief of staff.

And several Bush advisers said they would not be surprised to see another Cabinet member and long-time Bush friend, Nicholas F. Brady, resign his post as Treasury secretary.

“Nick has got to be frustrated because with the economy doing so poorly and the President facing a reelection campaign, this is not a good time to be the Treasury secretary,” said one longtime Bush adviser. “He doesn’t take to the political scene very well anyway, and he’s got to deal with two other economic ministers--both strong personalities--in the White House: Sununu and (Budget Director Richard G.) Darman.”

Neither Brady nor Mosbacher has been “bashful” about letting the President know they would like to play major roles in the campaign, said a senior White House aide who speculated that Brady might return to Wall Street and serve as finance chairman of the campaign.

The increasing prominence of Kemp, the housing secretary, as a spokesman for Republican critics of the White House’s economic policy reflects in part Sununu’s diminishing ability to retain control over the Administration’s public policy statements.

Despite objections from Sununu, Kemp publicly advocated immediate action on an economic “growth package” proposed by House Republicans during the final days of the congressional session. The plan called for a capital gains tax cut and other tax reductions.

Bush initially opposed taking any action before he unveiled his own economic proposals in his State of the Union address in January. But under mounting pressure from congressional Republicans, Bush reversed course and urged Congress, just before it adjourned this week, to take action on the proposal before going home.

Democratic congressional leaders called the President’s action a political ploy and offered to remain in session, if requested by the President, to consider possible tax legislation to address the continuing recession. Bush declined to make the request.

Kemp, in an interview, said that Bush’s decision to delay unveiling his own economic package was “very painful for me.”

“I like the President a lot,” he said, but added that Bush was not being “served well” by advisers who urged him to delay action until he addresses Congress.

One of those advisers is Sununu. The chief of staff--along with Treasury Secretary Brady, Budget Director Darman and Michael J. Boskin, chairman of the President’s Council of Economic Advisers--counseled Bush to delay unveiling an economic stimulus program.

Calling “the hour very late,” Kemp said that if Congress waits until March or later to act on an economic package, “that’s an eternity for people losing farms, homes and their jobs while we’re waiting for the economy to turn around.”

He said the recession “is going to continue,” and “even if there’s a slight recovery, it is going to be so weak that it will fail to give us the revenues and generate the jobs necessary to meet both our fiscal and social goals for America.”

Although Kemp sought and received Bush’s blessing before speaking out publicly against waiting, the President’s other advisers have complained that he is not a team player and is being disloyal by opposing White House policy.

Fitzwater explained that Kemp told the President that he felt strongly about the need to act earlier to combat the recession and that he wanted to make his position known. “He said he was loyal, but these are issues he feels deeply about,” Fitzwater said, “and we said go for it . . . go right ahead.”

While it is extraordinary for a Cabinet member to speak out in opposition to his President’s policies, Fitzwater said that Kemp and other key conservatives “represent a very important new element for the Republican Party.”

“For the last decade they have brought a sense of concern for the poor and lower levels of working-class people,” Fitzwater said. “They have shown how conservatives can be responsive to human needs. We’ve got to let them be outspoken in their beliefs to keep those ideas alive, although sometimes it’s not so pleasant when they speak out.”