White House chief of staff quits in staff shake-up

WASHINGTON - President Barack Obama said Monday his chief of staff Bill Daley, brought into the White House to repair tarnished ties with big business, was stepping down in an early election-year staff shake-up.

"Obviously, it wasn't easy news to hear," Obama said, as he announced Daley wanted to leave for their mutual hometown of Chicago, and unveiled that Budget Director Jacob Lew would take over the powerful position.

Daley's position had been a point of conjecture for months, after the Wall Street Journal revealed in November that he had ceded some of his duties and amid signs other top officials were dictating Obama's political direction.

But Daley, part of a storied Chicago political dynasty, had been expected to stay on in the White House until after November's election, in which Obama is seeking a second term in a challenging economic environment.

The former Bill Clinton-era commerce secretary was appointed just a year ago as the administration sought to bounce back from a Republican triumph in mid-term congressional polls in 2010 and to show a friendlier face to business.

His contacts in the financial sector and propensity for the political center however caused distrust among some liberal members of Obama's base.

Daley shouldered much of the blame when the White House failed to clinch a deal on cutting the deficit and taxes with Republicans last year, and the Obama administration has since returned to a more confrontational posture.

He steps down as Obama gears up for another showdown with Republicans over extending a payroll tax cut and amid a constitutional showdown after he bypassed Congress to appoint several key officials to his administration.

Obama said Daley told him last week that he wanted to return to Chicago to spend more time with his family, especially his grandchildren.

"No one in my administration has had to make more important decisions more quickly than Bill and that's why I think this decision was difficult for me," he said, adding he did ask Daley to reconsider.

Obama said Daley, expected to leave by the end of the month, played important roles in the decision-making which led to the operation to kill Osama bin Laden in Pakistan last year, among other crucial issues.

In a letter to Obama, Daley said he was "honored to be a small part of your administration. It is time for me to go back to the city I love."

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