Daley resigns as White House chief of staff

After a frustrating year of setbacks and bruising fights with Republicans, President Obama accepted the resignation of Chief of Staff William Daley and turned to a Washington veteran in an attempt to improve White House operations and the administration’s dealings with Congress.

Obama announced Monday that Daley, who three months ago said he would remain in the post until after the 2012 election, would be replaced by budget director Jacob Lew, whose White House experience dates to President Clinton’s administration.

Daley’s sudden departure was a surprise, and came after he went to Chicago and Mexico over the holidays to spend time with his wife and grandchildren. Democratic Sen. Richard J. Durbin of Illinois, a friend who spoke to Daley on Monday, said Daley told his family he was ready to “come back to Chicago.”

When he returned to Washington, Daley asked to talk with the president right away, and he told Obama in a meeting last week that he had decided to leave. The president asked Daley to take 24 hours to think it over.

“It was surprising to all of us,” said one senior official, speaking on condition of anonymity to discuss an internal matter.

Appearing in the State Dining Room on Monday flanked by Daley and Lew, Obama said that “in the end, the pull of the hometown we both love, a city that’s been synonymous with the Daley family for generations, was too great. Bill told me that he wanted to spend more time with his family, especially his grandchildren, and he felt it was the right decision.”

If the timing of Daley’s departure was unexpected, the decision was not. From the start of his tenure, Daley struggled to find a comfort zone in an insular White House, where Obama relies heavily on trusted advisors held over from the 2008 campaign and his Illinois Senate office.

In November, Obama announced a change in management that left Daley with a reduced role. Daley kept his title, but many of the day-to-day operational duties shifted to Peter Rouse, a trusted Obama confidant who had also worked for him in the Senate.

Daley had little in the way of a personal relationship with Obama. Though he served as Commerce secretary in the Clinton administration, he lamented that the culture in Washington had changed greatly since the 1990s — more polarized, partisan and gridlocked.

“He’s been through one of the roughest years any president or chief of staff has ever been through politically,” Durbin said. “The tea party, divided Congress, and threats to shut down the government have created more tension than most people go through in that position. I can understand fully why he wants to go home.”

Daley had difficulty adapting to the new environment. The White House touted his pro-business credentials and hoped he would improve relations with conservative lawmakers and the corporate sector, but the chill persisted.

His efforts to help Obama strike a “grand bargain” with House Speaker John A. Boehner (R-Ohio) on deficit reduction last summer fell apart, and Democrats on Capitol Hill bristled when Daley lumped them in with Republicans as he criticized the perpetual stalemates in Congress.

In August, a standoff with Congress over raising the nation’s debt ceiling brought the U.S. to the brink of an unprecedented default. Lawmakers ultimately approved the increase, but the impasse contributed to a downgrade of the U.S. debt rating.

When it was over, Daley called Boehner and requested a date for Obama to present his jobs proposal to a joint session of Congress. Daley believed that Boehner had agreed, and a White House aide announced the speech.

Boehner subsequently said he had never agreed to that date. Obama accepted a different date, giving the appearance he had capitulated to the House speaker. The episode proved an embarrassment to the president, while demonstrating that Daley was not succeeding at improving relations with Congress.

Daley reached out to congressional Republicans in an effort to smooth relations between the White House and Capitol Hill. He personally called Boehner and Majority Leader Eric Cantor, hoping to build a rapport with GOP leaders who controlled the House.

As the months wore on, though, Daley’s role on Capitol Hill became less and less prominent and he focused on more modest accomplishments. Obama praised him for helping secure passage of free-trade agreements with South Korea, Panama and Colombia.

Obama also noted that Daley was at his side for the mission that killed Osama bin Laden and the end of the war in Iraq, and was a key figure in the effort to preserve a payroll tax cut for workers.

Critics grumbled that Daley failed to court key congressional players or understand the hardball played by leaders of both parties in Congress.

Norman Ornstein, a resident scholar at the American Enterprise Institute, a Washington think tank, said he was not shocked by Daley’s decision but had expected the chief of staff would have “soldiered on” until after the election.

“The demands of the job are such that you’re not going to do it for very long if there’s not great satisfaction,” Ornstein said.

The White House’s last shakeup took place a year ago, when Daley was brought in to succeed Rahm Emanuel. In a flurry of moves, Obama also replaced outgoing senior advisor David Axelrod with David Plouffe, who had managed Obama’s 2008 campaign. Axelrod returned to Chicago to work on Obama’s reelection campaign.

Lew’s arrival will be welcome on Capitol Hill, especially among Democrats who were frustrated by Daley’s unfamiliarity with Congress. Lew was a senior policy advisor to former House Speaker Tip O’Neill. He also served as budget director under President Clinton, and as deputy director of the State Department under Hillary Rodham Clinton before taking the budget job.

Rep. Nancy Pelosi (D-San Francisco), the minority leader, called Lew “a proven leader.”

After Obama announced Daley’s resignation, Senate Majority Leader Harry Reid (D-Nev.) said in a statement: “I wish Bill well in his future plans, and look forward to a close collaboration with Jack Lew and his staff.”

peter.nicholas@latimes.com

cparsons@latimes.com

Lisa Mascaro and Katherine Skiba in the Washington bureau contributed to this report.