Clinton Will Lean on New Inner Circle

Much has been made of the demographic diversity of President Clinton's new team: Within the traditional 14-member cabinet, he has nominated four women, three African-Americans, one Hispanic, and a Republican.

And within that subset, the president can boast a couple of firsts - first woman secretary of state and first black as labor secretary. In another high-level job with cabinet ranking, Mr. Clinton has named a Puerto Rican to run the Small Business Administration, the first tapped for such a high-level position.

But this bean-counting approach to the cabinet obscures a larger point. For the most part, Clinton has chosen to promote from within rather than bring in new faces associated with bold new ideas.

The result is that the direction of Clinton's second term remains unrevealed - but will ultimately be shaped by the president himself, along with Vice President Al Gore and a new inner circle that is "under construction," according to a White House insider. Erskine Bowles, the new chief of staff, is key, along with his newly named deputies John Podesta, a former assistant to Clinton, and the youthful Sylvia Mathews, a former White House aide dubbed "the female George Stephanopoulos."

Though his Cabinet is diverse, president is expected to consult a small group of advisers.

For some liberals, the realities of the Republican Congress - and the obstacles it will present in any effort to defend or initiate programs that hint of traditional Democratic politics - make the more conservative cast of Clinton's new team understandable. "My threshold of expectations is low," says Bob Carolla, communications director of Americans for Democratic Action.

Gone are the outspoken liberals of the president's first term: Labor Secretary Robert Reich, Housing Secretary Henry Cisneros, and top White House aides Leon Panetta, Mr. Stephanopoulos, and Harold Ickes. In their place, Clinton has chosen Democratic Party and White House insider Alexis Herman to run Labor, Andrew Cuomo to replace his boss at Housing and Urban Development, and businessman Bowles as chief of staff, pointedly passing over Mr. Ickes, who was labor's strongest ally in the White House.

While the high-profile Cabinet selection process unfolded last week, the more substantive work of budget-making proceeded behind the scenes - a process that sheds many more clues to how Clinton II will begin than does the new Cabinet, which must first be confirmed on Capitol Hill.

On the budget, early hints show that Clinton and his aides are working up a proposal to restore about a quarter of the money that would be saved by the massive welfare reform he signed into law in August. At the time, Clinton expressed reservations about the bill and promised to change it in a second term.

Though Clinton's proposal for a fiscal year 1998 budget won't be presented to Congress until Feb. 3, administration officials say they're looking to restore between $13 billion and $16 billion of the $55 billion in projected savings over five years. In particular, the administration wants to restore funding for immigrant children and disabled immigrants, and to provide more funding for food stamps for poor people who have high housing costs.

In short, Clinton is doing what he said he would do. But it remains to be seen what, if anything, he can actually achieve on reforming welfare reform. If it emerges as a high priority at the start of his second term, it is also unclear who in the Clinton II domestic policy team will have sway with the GOP Congress.

As with other important policy initiatives in Clinton's first term, welfare reform was handled out of the White House. Returning Secretary of Health and Human Services Donna Shalala was not a central figure in the back and forth between the White House and Congress over a version Clinton would be willing to sign.

On economic matters, Treasury Secretary Robert Rubin could emerge as a central liaison between Congress and the White House. As a highly successful businessman in his previous career, he plays well with the Republican Congress. And he also has the president's ear.

"He's a model for how to be an effective Cabinet member," says Tom Cronin, a presidential scholar and president of Whitman College in Walla Walla, Wash. "He has ideas, he can keep the president focused, and he can shoot down nonsense."

Clinton II will also provide an opportunity for some of the "youngsters" of Clinton's first-term White House team to spread their wings and show they can handle the top jobs. Domestic policy aide Rahm Emanuel, a tough politico who was a central figure in welfare reform, crime, trade, and immigration, will move into Stephanopoulos's office next to the Oval Office. Bruce Reed, another aide involved in welfare reform, has been promoted to head the Domestic Policy Council.

These and other veterans of both Clinton campaigns have always been important players in the Clinton White House. The difference, says another member of Clinton's youth brigade, is that now the buck can stop with them.

For Clinton insiders who have been promoted to jobs outside the White House, the transition may be a bit trickier. Ms. Herman was named Labor secretary over the strong objections of organized labor, which had put differences with Clinton aside to support his reelection. But her political background has been oriented toward the business community, not labor. Herman, an African American, was strongly supported by Jesse Jackson for the labor job.

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