William Daley is out as White House chief of staff and budget director Jack Lew is taking over President Obama's team as it gears up for the 2012 re-election effort.
Lew is a veteran of Washington and has served in President Bill Clinton's administration, on Capitol Hill and in the State Department.
The path from OMB director to chief of staff is well paved. Leon Panetta did it for Clinton. Josh Bolten did it for George W. Bush.
President Obama made the announcement on Monday afternoon, saying that Daley informed him recently of his decision to resign last week so he can spend more time with his family. Obama said that he asked Daley to reconsider the decision, but ultimately decided he wants to return to Chicago.
"There is no question that I am going to deeply miss having Bill by my side in the White House," Obama said. "Here in Washington I have every confidence that Jack won't miss a beat."
When Clinton tapped Lew to serve as his as his budget director in 1998, he was launched into office as the White House and Congress appeared to corral the government's profligate spending problem. By the time Lew left office in 2001, the nation had a projected $5.6 trillion surplus over the next decade.
When Obama appointed him last summer, he came to office for a second time with a much tougher task of reversing an annual budget deficit that has ballooned to $1.5 trillion. Obama said Daley recommended he appoint Lew to replace him.
"If there was a Hall of Fame for budget directors, then Jack Lew surely would have earned a place for his service in that role under President Clinton, when he helped balance the federal budget after years of deficits,'' Obama said in announcing Lew's appointment as budget director.
Daley's departure comes as a surprise, but was presaged by a narrowing of his duties. In October, he said that he was committed to sticking with the president through his reeelection effort. A month later, some of his duties were shifted to White House senior adviser Pete Rouse.
"I made a commitment to the president through his reeelection, which I'm confident he will do, and then my wife and I will return to Chicago," Daley said in an interview at the White House with NBC's Chicago affiliate, WMAQ-TV.
The next OMB director will have to be confirmed in a Senate currently tied up in knots over the appointment process. Heather Higginbottom, the deputy budget director, took most of 2011 to get confirmed due to broad opposition by Senate Republicans about her credentials.
Contributing: Richard Wolf and Susan Davis
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