THE BATTLE FOR WASHINGTON : Leon Panetta’s Burden : Ernest and Obsessive, Bill Clinton’s Chief of Staff Is Plotting the Counterattack. But Can Anyone Save a Weakened President?

Amid the landscape photographs, official certificates and mementos that clutter the wall, the picture is neither the biggest nor the flashiest. Yet it draws the eye as if Leon Panetta’s West Wing office had been laid out with every intention of making the photo the room’s centerpiece. In its shiny frame, a bulky, silver-haired figure stands elbow-to-elbow with a shorter, dark-haired man, both peering soberly downward--reading news of a death, perhaps, or financial calamity. The dedication, in a left-hander’s boxy scrawl, seems to confirm the impression: “To Leon,” President Clinton has written, “who taught me things that turned my hair gray.”

Theirs is a relationship built on trial and travail. And this December day has brought more yet. Surgeon General Dr. Joycelyn Elders, a favorite target of conservative attack, has overstepped the line again, creating the necessity--or is it the opportunity?--for the Administration to fire her. She is an old Clinton friend, an Arkansan and a black woman with the sympathy of many Democratic believers--all reasons that her ouster is a more than a little sensitive, and more than a little disagreeable.

It is the kind of task that inevitably falls upon Chief of Staff Leon E. Panetta. Far from trying to tidy this mess from arm’s length, Panetta has chosen to announce Elders’ dismissal from the most intimate vantage points, amid the flags and ministerial trappings of his own office. With the President conveniently in Miami, Panetta himself takes on the job of expelling a woman who many in the Administration now believe should never have been hired in the first place.

Panetta sits at one end of his work table in a customary pose, shoulders squared, arms braced as if he half expects the ceiling to crash down upon him, yellow pad and blue felt-tip pen arranged neatly before him. Panetta’s political success, as a congressman, federal budget director and now chief of staff, owes much to his ability to convey two qualities: earnestness and warmth. The warmth is irresistible, bubbling out of him in a tumbling, cascading laugh, at the humor or absurdity of the situation. The earnestness resides in Panetta’s eyebrows. Thick and bushy, they tilt upward as they rise toward the center of his face, suggesting that this is a man who mourns and forgives the sins and tragedies of a wicked world.

But there is something else there, too, today, in Panetta’s comfortably rumpled face. As he undertakes to explain why Elders must be removed for suggesting masturbation might be taught to schoolchildren, there is a trace of embarrassment, a suggestion of unease and even a fleeting hint of confusion. Surrounded by questioners, partly obscured by a thicket of tape recorders and boom microphones, he shifts uneasily. He reddens. From time to time he looks down at his sheaf of papers.

Since Elders has a long history of explosive statements, he is asked, why was she fired now? Would she have been fired before a Republican electoral rout had raised pressures to move to the right? And why was she brought to Washington in the first place? Her comment, Panetta explains steadfastly, was just “one too many.”

After eight minutes, he herds the reporters out, with self-deprecating asides and heavy sighs. One man tells him, “You’re just lucky, Leon--’masturbation’ is too long to fit into a tabloid headline.” Panetta shakes with a silent laugh, blinks and playfully slaps the man’s back. This is a terrible, woeful thing, his manner says, but we can do our duty and still try to get out of this with our dignity, too.

Leon Panetta’s six months as chief steward of the Clinton Administration have been full of days that have been nearly as ugly as this one, and some that have been far worse. The requirements of his job are clear: Set right the mistakes. Remedy problems that have lingered for months or years. Turn the incoming fire away from the President, if necessary, by absorbing it yourself. But now, at the halfway mark of Clinton’s term, these daily tactical questions are eclipsed by the looming strategic imperative. After the pratfalls and calamities, the victories and half-forgotten achievements of two years, this White House must set a course for the remaining half-term that can reelect a President severely weakened by an electoral disaster.

At a moment when Clinton needs to prove himself with deeds, the other side has seized Congress’ power to initiate and act. When the President needs to make full use of the White House’s control of publicity, his adversaries, all menacing flash and dazzle, have riveted the nation’s attention. And when he needs, more than ever, the support of the public, Americans’ confidence in him is again sliding downward.

“It’s hard to imagine the White House and the Administration being at a lower point,” says Roy Neel, who served as deputy chief of staff for the first year of the Administration, “and it’s hard to imagine the Republican opposition being in a stronger position than they are now. It’s going to turn. (But) whether it turns enough to get the President reelected is another question.”

After six weeks of painful, sometimes angry deliberations that migrated among the Cabinet Room, the Roosevelt Room, the Oval Office and the presidential quarters, the White House senior staff has drawn up a short list of goals: Raise the President’s stature. Show resolve. Trade a sprawling agenda for a short one. Act decisively and act irrevocably.

There is no mystery what this means. The White House needs to stick to the central themes of its governance, yet Clinton has often strayed from them, stepped on them, countermanded them. The policies need to reflect core convictions, yet the President moves from issue to issue as each captures his wide-ranging attentions. The Administration needs clear lines of authority and well-laid assignments, yet Clinton’s eagerness to seek the counsel of many makes this difficult.

Most troubling, all of this sounds familiar. These goals and declarations have echoed throughout the West Wing since the boxes were unpacked on Jan. 20, 1993, and have been reiterated in a half a dozen “new beginnings.” And they all have one thing in common: They may be addressed at the Administration as a whole, but they are aimed directly at the President himself.

Of all the tasks before Panetta, the most formidable is the most obvious. He must manage the boss. He must help the President save himself. “Leon,” says Roy Neel, “is the key to making that work.”

No one comes fully equipped to be chief of staff, but Leon Panetta brought many points that recommend him for the job. In eight terms in Congress, he had proven his bipartisan skill by consistently winning huge margins in a Monterey area district that was split between Republican and Democratic voters. For four years, he chaired the House Budget Committee, a thankless and in many ways fruitless exercise that required bringing together liberals and conservatives on an outline of the annual spending plan.

Panetta’s best friends in town were other Democratic congressmen, and they knew him best for his obsessive work habits. Panetta lived for years in a Capitol Hill townhouse with three other congressmen, sleeping on a portable bed in the first-floor living room. None was a slouch, but Panetta always came home the latest and then complained if the others were making too much noise.

Clinton’s choice of Panetta to head up the Office of Management and Budget came as a surprise. Known as a fiscal conservative, Panetta had been critical of Clinton’s budget plan during the Democratic primaries. Three months into his term, he lamented before several reporters that the political outlook for Clinton’s economic plans was dark--a burst of honesty that earned him a brief trip to the doghouse. Those scrapes, and the gloomy budget advice he dispensed in 1993 as the Administration’s leading deficit hawk, were the reason for the inscription on Panetta’s photograph with Clinton.

But Clinton liked Panetta’s manner. Long respected by House Democrats as someone who would grind away unflaggingly for their interests, not just his own, he brought the same qualities to the Administration. He also had another surprising, even startling qualification: In his long years in Washington, his candor had earned him almost uniformly favorable press notices, even from some of the grouchiest reporters in town.

Panetta has tangible achievements to show for his half-year at the White House. Where the President’s meetings were once free-form, under Panetta they have a defined agenda, duration and cast of participants. They are carefully mapped out in advance on Panetta’s yellow pad or that of a subaltern. Aides, who formerly assigned themselves to various projects with Clinton’s encouragement, now need top-level clearance to do so.

“He has added a discipline to the process that wasn’t there,” says Tony Coelho, an old friend and former congressional leader who is now an outside adviser.

Eager to give Clinton the dignity and reserve of Ronald Reagan, Panetta has persuaded him not to extemporize at photo sessions and to conceal his legs under long pants when he jogs. In a White House that was pummeled for the ill-executed firings of travel office staff, Panetta has learned how to deflect any blame toward the federal bureaucracy.

And he has largely taken over the role of TV spokesman for the Administration. Although he has shed some of the openness that was his trademark as a congressman, Panetta radiates maturity for a White House that too often has projected callowness. This has enabled him to eclipse other top officials as the Administration’s face on television.

At the same time, insiders worry that with other aides leaving, and his role as spokesman, policy-maker and business manager still expanding, Panetta may be stretched too thin. On the day after Clinton announced his middle-class tax cut, Panetta did seven television appearances. One sign of the conflict: Members of Congress, who had been delighted with the better communications since Panetta’s promotion, are suddenly finding it harder to reach him.

An indication of the Clintons’ confidence in Panetta can be seen in how the First Lady has reduced her behind-the-scenes administrative role. In the last days of Panetta’s predecessor, Thomas F. (Mack) McLarty, Mrs. Clinton held her own planning meetings on Saturday, fearing that otherwise the work would not get done. Now “she’s pulled back,” according to an aide.

A boyhood friend, McLarty has a relationship with Clinton that is as comfortable as an old sofa. In contrast, Panetta’s relationship with Clinton, though congenial, is carried on at a greater distance. Only infrequently do they see each other in relaxed settings; Panetta has been invited--but apparently has never gone--to the Friday evening screenings at the White House theater that Clinton usually reserves for his closest friends. Panetta himself says that their relationship isn’t as close as, for example, the Arkansans’. “There’s a depth of knowledge there,” he says, “that’s sometimes hard to replace by a few months of working with him,”

But that distance may be a strength, some aides believe, if it makes their relationship more businesslike. Clinton’s indulgence of his friends, after all, has produced problem after problem for this Administration. Yet there are some who think the newness of this relationship resulted in the most conspicuous personnel failure of Panetta’s term--his effort last September to reorganize the staff. Among other changes, Panetta wanted to divide the job of press secretary Dee Dee Myers and shift some duties to a new spokesman, Michael D. McCurry from the State Department.

Some aides believe that if Panetta had known Clinton longer, he would have anticipated that Myers would go over his head and protest the proposal. Which is exactly what she did, and when Clinton partially countermanded Panetta’s orders, he felt “humiliated,” according to one friend. Panetta saw this as a breach in the agreement he had with Clinton when he became chief of staff. (In mid-December, Myers announced that she would be leaving her post by the first of the year.)

The other criticism lodged at Panetta focuses on his role as supervisor of the 300-person White House staff. He has, some insiders argue, ignored talented staff (liaison Alexis Herman or staff secretary John Podesta) and failed to reverse the sharp drop of women in the senior staff. Indeed, aides complain that after moving too slowly to redefine the press secretary’s job, he never fully delivered on Clinton’s pledge to give Dee Dee Myers complete access during her final three months at the White House.

Despite the Myers incident, Panetta has moved with authority in reorganizing the staff, reducing the access between the President and some of the Arkansans who joined him in the White House. He sent Bruce Lindsey, Clinton’s former law partner and longtime confidant who was given a free-floating role, to the White House counsel’s office--a clear demotion. “There’s been a shove there,” says one official. “(Lindsey’s star) has definitely fallen.”

As the influence of the Arkansans has receded, so too has the presence of outside political consultants such as James Carville and Mandy Grunwald, who helped lay broad strategy in the Administration’s first year. George Stephanopoulos, senior presidential adviser, continues to counsel the President on a wide range of issues. But now his contacts with Clinton are arranged through Panetta, and some aides have seen signs that Stephanopoulos sometimes has chafed under the new arrangement. All of this points to the growing power of Panetta’s office. “Leon” says Stephanopoulos, “is totally in charge.”

Panetta spent a climactic 11 days of 1990 closeted in featureless brick military buildings at Andrews Air Force Base, southeast of Washington. Republican and Democratic budget leaders had exiled themselves to work out the now-infamous budget deal that capped federal discretionary spending and led President George Bush to his politically fatal agreement to raise taxes. With Republicans in one trench and congressional Democrats in another, Panetta displayed a stubbornness that still defines him for many of his House colleagues. Panetta had one refrain, numbingly unvaried. The calculations of Bush budget boss Richard G. Darman “were ‘smoked,’ he was always saying,” remembers Rep. Norman Y. Mineta, (D-San Jose). “I never heard the phrase ‘smoke and mirrors’ as much as I did in those days.”

Panetta’s iron-pants obstinacy hasn’t been reserved only for the Republicans in his Washington career. As budget director, he exasperated Democrats with his stony refusal to make room for public works and social spending. When Rep. Robert T. Matsui, (D-Sacramento), an old friend, called Panetta in 1993 to appeal for legislation aimed at helping troubled families, the budget director ended the conversation before it began. “He was not at all helpful,” says Matsui. “He could be a real pain.”

Because of that fiscal conservatism, Panetta was lumped with a group of moderate Democrats who resisted expensive Great Society solutions. Behind those convictions were his parents, who had emigrated from the Calabria region of Italy to Wyoming and then to Carmel Valley to run a restaurant and, later, a walnut farm. Fervent Republicans, they had scolded him for any sign of wastefulness in his youth. But Panetta has always had another set of impulses, more liberal ones, that these days sets him apart from such obvious allies as the Democratic Leadership Council.

Panetta began his Washington career as a liberal Republican, running the civil rights office for the Department of Health, Education and Welfare during the Richard M. Nixon Administration. For his determination to press ahead with minority rights as Nixon embarked on his Southern strategy, Panetta was abruptly canned, a decision that ultimately led him to join the Democrats. As a congressman, he was a die-hard partisan of food stamp and nutrition programs, an advocacy that was also politically advantageous because of his district’s big agricultural interests. Even now a passionate, some might say self-righteous, tone creeps into his language when he talks about the need to preserve programs for the poor.

For a month after the election, the White House staff grappled with strategic questions in a free-wheeling, shifting debate. Increasingly heated, these arguments burst into the open as staff members wrote--and leaked--memos that argued for more drastic staff changes, sharper strategy and a return to the principles of the 1992 campaign. The early meetings took place Saturdays in the office of communications director Mark Gearan, but the stormy climax came in sessions that Panetta directed in his own office suite.

At an early stage, Panetta argued that the White House should push for areas of legislative compromise with the Republicans, to establish that this President could rise above partisanship and get things done. That alarmed some colleagues, who feared that this approach had too much the air of appeasement and signaled Panetta’s tendency, as former budget committee chairman, to look for a deal. Ultimately, Panetta came around to the general view that the House Republicans just wouldn’t take any offer of compromise; they had everything to gain by simply shutting the Democrats down.

On the broader, final arguments, Panetta lined up with Vice President Al Gore and some economic advisers to push the idea of making government reform and cutbacks the top item on the agenda, while continuing to push for deficit reduction. The election’s message was about the need to make government more responsive, they argued, and the worst thing the Administration could do to the suffering middle class was to start a tax-cut bidding war with the Republicans that would trigger a spurt in interest rates.

But the other side was bigger and louder. Stephanopoulos and Deputy Chief of Staff Harold M. Ickes joined Labor Secretary Robert B. Reich and a scattering of lower-level officials in arguing that the first need was to do more for the middle class, including tax cuts and breaks for education and retraining. The weight of their side became overwhelming when the Democratic Leadership Council, often focused on deficit-cutting, abruptly shifted ground and joined in the call for tax breaks.

Some aides saw signs that, just barely out of view, Mrs. Clinton was again arguing that relief for the distressed classes, not deficit-cutting, must be this Administration’s foremost goal. Alarmed at the outcome of the election, she was again raising her voice on policy.

At a final, decisive meeting, in mid-December, Alice Rivlin, Panetta’s successor as director of the Office of Management and Budget, made a final plea for the cautious fiscal course. And Panetta, who had so often joined her, was now on the other side--the side he had come to believe better suited his role as chief of staff. The President’s political well-being was now Panetta’s foremost concern. Though he went along, says one aide, “you’ve got to believe, deep down, he still had those feelings for the other side of the argument, too.”

Few held Panetta responsible for the Democrats’ November massacre, but that didn’t spare the chief of staff from having to sit patiently as strategists, state officials and a host of congressmen tramped through the White House to leave the blame at the feet of a numbed President and staff. By a mid-December meeting with state chairs of the Democratic National Committee, Panetta had had enough. He rose to say “he just didn’t want to talk about it--he didn’t want to hear about it anymore,” recalls Bill Press, the California party chairman. “He wanted action.”

And it was coming, because before the end of December, the new Panetta-supervised strategy was in place.

It called for Clinton to elbow his way into the debate with proposals that appeal to anxious working families and reform-minded Ross Perot sympathizers, but with a fiscal and social restraint that would position them closer to the center than the Republicans. Congressional Republicans would thrust with demands for, say, radical welfare reform; the White House would parry with charges that orphanages were cruel and Dickensian. As the year passed, the Administration would gradually assemble compromise victories on bills that almost cleared the 103rd Congress: on air pollution, toxic waste, telecommunications, maybe even the line-item veto. Clinton would pursue issues such as lobby and campaign-finance reform to show that he was now taking his cues directly from the public, rather than from the tarnished congressional Democrats. He would refine his communications through ideas that were clear, simple and few, and through actions that conveyed his central beliefs.

“If there were a silver lining in the dark cloud of the election, it’s that we are going to be better able to define ourselves by the battles we fight,” says Panetta. “(Now) the Republicans have to be tested as well.” While insisting that the election rebuff was not entirely because of failed communications, he acknowledges that it is essential that the White House start getting across its message. “We’re at a time when it is not enough to just do good government,” he says.

Still, serious obstacles stand in the way of every one of these objectives. The White House communications effort has been under almost constant revision, yet the same mistakes continue to creep in. Officials vow they have learned not to obscure their own message by doing too much in one day. Yet, on the same day in December that the Senate passed the General Agreement on Tariffs and Trade treaty, Clinton announced plans to spend an additional $25 billion on defense on the same day “They’re still moving from issue to issue like a horned butterfly moving from flower to flower,” says a former Administration official.

Panetta’s efforts to get the President to focus on a short agenda have been hampered by Clinton’s habit--perhaps laudable but counterproductive--of adding more and more items to his short list of goals. Even Clinton’s much-praised speech to the Democratic Leadership Council in early December drifted from his focus on middle-class assistance to a discussion of his objectives in education, early childhood and national service program.

More worrisome to Democrats is the White House’s seeming inability to craft a long-term strategic plan, stick to it and followup with actions that the electorate are likely to remember. In contrast, the new Republican leadership has seized on a range of simple deeds that illustrate their views, from selling a congressional office building to slicing staff. The White House, says Democratic pollster Peter D. Hart, needs one 24-month plan, not “24 one-month plans.”

Panetta was hired in part to improve the White House’s congressional tactics, and he has. In the aftermath of the election, however, this will be much trickier. Indeed, while White House aides exult that they are now freed from the burden of following the Democratic leadership of Congress, there are signs that congressional relations are devolving into a three-way war between the White House and the two parties in Congress. Rep. Richard A. Gephardt (D-Mo.), the House minority leader who has strong personal ties to such White House aides as Stephanopoulos, stole the White House’s thunder by coming out with his own version of a middle-class tax cut two days ahead of the President’s announcement.

Relations with the GOP are likely to be ugly, even by historic standards. It is Panetta’s bad luck that the new House Speaker is a man who has nourished a grudge against him since the two battled over a contested Indiana House seat in 1985. Rep. Newt Gingrich has accused Panetta of presiding over vote fraud when he chaired a committee that recommended the seating of Democratic Rep. Frank McCloskey. Gingrich frequently refers to “Panetta stealing it.” Asked on one occasion if he personally blamed Panetta, Gingrich replied: “Panetta--personally, I mean he . . . deliberately stopped counting the votes when we had enough outstanding to win.”

But maybe greater than any of these specific complications is another threat: irrelevance. As the Republicans unfurl their budget and agenda this month, the White House budget may be soon overshadowed. White House proposals on health and welfare, for example, could well be ignored, caught between competing Republican and Democratic ideas. The White House-backed legislation that does pass on compromises may be too insubstantial to register at all with voters who were apparently unimpressed with the beefier trade, budget and social legislation of Clinton’s first two years.

Panetta’s friends in Congress, still among his closest pals, survey a wintry future and fret for him. The reaction of some, says one former Hill staffer, is “poor Leon--what a shame.” But Neel, the former White House deputy chief of staff, says Panetta might actually benefit from having joined the White House when its fortunes were already at low ebb. By jumping in then, he may be shielded from catastrophe, like investors who buy stocks after a market crash. “There are few people who expect him to succeed, despite their respect for him,” Neel says. “And in a weird kind of way, it’s a liberating opportunity.”