(Updates with OMB spokesman in fourth paragraph, Republican reaction in eighth paragraph.)
Jan. 9 (Bloomberg) -- William Daley is stepping down as White House chief of staff and will be replaced by budget director Jacob Lew, President Barack Obama announced.
Daley submitted his resignation last week and Obama said he didn’t immediately accept it. After thinking it over, Daley said he wanted to return to his hometown of Chicago, Obama said.
“No one in my administration has had to make more important decisions more quickly than Bill,” Obama said. “There is no question that I’m going to deeply miss having Bill by my side.”
Lew “has my complete trust,” Obama said.
Lew will remain at the Office of Management and Budget to finish the administration’s fiscal 2013 budget proposal to Congress, OMB spokesman Kenneth Baer said in an e-mail. The annual budget is presented in the first week in February. Obama didn’t name a replacement for Lew at the OMB.
The change is occurring as the White House gears up for Obama’s re-election campaign with the economy still struggling to gain steam and the unemployment rate at 8.5 percent. Obama also is confronting stiffening resistance from congressional Republicans on his economic proposals and nominations to courts and government agencies.
The job of chief of staff is one of the most powerful in the White House outside of the president. The occupant of the office is the president’s gatekeeper, with power over who does or doesn’t get to see the president, and plays a leading role in interactions with lawmakers.
Daley, 63, has been scaling back his White House role for months. In November, after a protracted fight between the administration and Republicans over the debt ceiling and Obama’s jobs plan, Daley handed off some day-to-day management duties to Peter Rouse, a senior adviser to the president. In October, he said he planned to leave the administration after the 2012 elections.
Daley, a former JPMorgan Chase & Co. executive and U.S. Commerce secretary, was brought to the White House in January 2011 to improve relations with the business community after the 2010 midterm elections, in which Democrats lost control of the U.S. House of Representatives.
Criticism From Republicans
Republican National Committee Chairman Reince Priebus said in a statement that Daley’s departure “makes it even more clear every decision is being made through the lens of re-election” at the White House.
Priebus said that Daley had been hired to bridge a divide between Obama and U.S. business and “found himself trying to defend the indefensible” with the administration’s policies.
In his resignation letter, Daley wrote that he has been “honored to be a small part of your administration. It is time for me to go back to the city I love.”
Lew will be Obama’s third chief of staff. His first, Rahm Emanuel, resigned last October to begin his successful run for mayor Chicago. Daley is the younger brother of longtime Chicago Mayor Richard M. Daley, who retired.
Obama named Lew as his budget office director in July 2010. Lew, 56, previously served in the State Department and was budget chief under former President Bill Clinton. He also has experience in Congress, having served as policy director for the late House Speaker Thomas P. “Tip” O’Neill, a Massachusetts Democrat.
A graduate of Harvard University and Georgetown Law School, Lew’s background also includes academia, as chief operating officer at New York University for five years, and the private sector, as managing director of Citigroup Inc.’s Alternative Investments until January 2009 and chief operating officer of Citi’s Global Wealth Management before that.
Dennis Ross, a former Mideast and Iran policy adviser to Obama, said Lew is well-suited to be chief of staff because “he’s very systematic and he has a very good way with people.” Lew “can see a bigger picture and works effectively” with people, Ross said.
--With assistance from Roger Runningen, Mike Dorning and Margaret Talev in Washington. Editors: Joe Sobczyk, Robin Meszoly
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