Deficit Hawks Rise to the Top In White House

Clinton picks US capital insider Panetta as chief of staff, Rivlin as budget director

PRESIDENT Clinton has been accused of many things, but never of being an organization man.

His campaign staff admitted that he took little interest in questions of management and organization as a candidate. As president, he runs a White House that has been struggling from the beginning with a free-form staff relatively inexperienced in Washington's ways, several competing power centers, and an indiscipline acknowledged to begin with Mr. Clinton himself.

The latest and largest shake-up of the White House staff, announced June 27, is expected in many quarters to bring some improvement. The changes promote Washington savvy and experience in a White House that has been adding it slowly.

The main change, the replacing of Chief of Staff Mack McLarty with budget director Leon Panetta, puts a veteran Washington hand with years of experience in Congress at the heart of the White House operation.

Since health-care reform - the biggest initiative of the Clinton presidency - is moving into its final months on Capitol Hill, Mr. Panetta's congressional know-how is increasingly critical, according to a senior administration official.

Mr. McLarty, who was the chief executive of a Fortune 500 corporation based in Arkansas, worked hard as a liaison to conservative Democrats and moderate Republicans in Congress. He will continue to play that role in his new position as senior counselor to the President.

But it was unclear, says an aide to a conservative House Democrat, how well McLarty could follow through on his dealings with members of Congress. By contrast, Panetta ``knows who to talk to and where the bodies lie,'' the aide says. ``He's going to be able to follow through.''

Although Panetta was hardly considered a conservative in Congress, he has long been a hawk on cutting the deficit. He is well liked and respected by conservatives as well as liberals on the Hill, says the aide, who adds that conservatives have often felt Panetta ``was more sympathetic to us than was the administration as a whole.''

Panetta's hawkishness on the deficit and of his deputy at the Office of Management and Budget, Alice Rivlin, brought them under sharp attack early in the Clinton administration from advisers who saw the deficit focus as unpopular and elitist, a betrayal of the Clinton campaign.

The promotion of both Panetta and Dr. Rivlin, who now replaces him as budget director, is a clear triumph for the deficit hawks within the White House.

Not only did they win the battle inside the administration last summer to keep deficit-reduction as a first priority, says an administration official, ``but they were right.'' Long-term interest rates dropped after the Panetta-Clinton budget was announced, as the deficit hawks said they would, and the economy experienced a surge.

Panetta's nuanced knowledge of the niceties of congressional negotiation is more certain than his ability to bring more order and strategic thinking to the running of the White House.

Panetta is a cheerful fellow who brings a ready laugh to his obsession with the intricacies of the budget and policy. He is replacing a chief of staff who was considered too nice and too friendly to sharpen discipline at the White House.

But if Panetta is also nice, he brings more intensity to the job than McLarty. Some suspect he will bring a stronger and tougher style of management as well.

Staff shake-ups are an almost routine occurrence in White House history. This one, presidential experts note, was a little slow in coming. ``This administration got off to a horrible start in setting up the White House,'' says Thomas Mann, a political scientist at the Brookings Institution. Disarray marked both the President's personal style and his White House organization. Staffers pull all-nighters and operate under crisis management conditions day in, day out.

``I think the President didn't have a conception of the White House,'' says Dr. Mann.

The administration began oddly before even taking office, when Clinton started putting together a Cabinet during his transition. He named his chief of staff toward the end of the transition operation, instead of putting his senior staff together at the beginning.

HIS campaign manager, Mickey Kantor, who had headed up preparing for the transition, was expected to be chief of staff. But a revolt among some of the young campaign staff members helped to bump Mr. Kantor.

The next changing of the guard came a year ago, when David Gergen, veteran ``messagemeister'' of Republican regimes, joined the Clinton team. At the same time, an overworked George Stephanopoulos left his post as communications director so that he could play his stronger role as the adviser and strategist most constantly at Clinton's side.

Gergen has increasingly focused his attention on foreign policy this year, where Clinton is judged weakest even by members of his own staff. The latest reshuffling makes Mr. Gergen a senior adviser to both Clinton and the Secretary of State Warren Christopher.

The White House sees its greatest foreign policy weakness as a failure of communications.

Although Gergen acknowledges that he lacks foreign affairs expertise, he is adept at honing and communicating messages to the public.

``They need a lot of help,'' says a senior administration official about the foreign policy team.

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