Obama chief of staff Bill Daley steps down, budget chief Jack Lew steps up

President Barack Obama finishes speaking about the resignation of White House Chief of Staff Bill Daley, right, and his replacement, budget director Jack Lew, left.

/ Susan Walsh

UPDATED 4:56 p.m. ET

With less than a year to go before voters head to the polls to decide whether President Obama deserves another term in office, White House chief of staff William Daley is stepping down at the end of the month, paving the way for budget director Jack Lew to take his place.

"Obviously this was not easy news to hear," Mr. Obama told reporters at the White House in the official announcement in the State dining room with both men at his side.

"Bill has been an outstanding chief of staff during one of the busiest and most consequential years of my administration," Mr. Obama said, adding that Daley said he wanted to spend more time with his family.

Daley was named chief of staff in early 2011 after serving as a top executive at JP Morgan Chase. Daley is the brother of former Chicago Mayor Richard M. Daley and the son of Richard J. Daley, the legendary mayor who ran the city from the mid 1950s through the mid 1970s. Daley replaced Rahm Emanuel, who left the White House for Chicago, where is now the mayor.

Daley has also served as Commerce Secretary under President Bill Clinton and was the campaign manager for then-Vice President Al Gore's run for the White House in 2000.

Jack Lew became director of the White House Office of Management and Budget in late 2010 after serving as a top official in the State Department under Secretary of State Hillary Clinton for the first two years of the Obama administration. Lew was also White House budget director in the final two and a half year of the Clinton administration. In the interim, Lew worked at New York University and Citigroup.

"Over the last year he has helped strengthen our economy and streamline the government at a time when we need to do everything we can to keep our recovery going," Mr. Obama said, noting Lew's history of public service, including time working for former House Speaker Thomas P. "Tip" O'Neill.

Mr. Obama said Daley recommended Lew as his replacement. Daley was not considered to be effective in dealing with lawmakers on Capitol Hill, a key role for the chief of staff.

Lew is well regarded on Capitol Hill. And the president's relationship with Congress could determine whether he wins or loses in November.

Facing tough re-election odds, Mr. Obama last week decided to pick a high-profile fight with Republicans by bypassing Congress when he named former Ohio Attorney General Richard Cordray to head the newly established Consumer Financial Protection Bureau.

And the White House and Republicans are on track for a bitter fight on extending a beyond February a payroll tax cut that affects more than 160 million Americans. Lew's role will be critical in that fight.

The move comes just two months after Pete Rouse, a senior adviser to Obama since his 2004 election to the Senate, took on an expanded operational role running the White House bureaucracy, a role traditionally taken on by the chief of staff. Rouse served as interim chief of staff after Emanuel left and before Daley joined the White House staff.

Daley submitted his resignation last week and Mr. Obama said he asked Daley to think it over before it would be official.

"I have been honored to be a small part of your administration. It is time for me to go back to the city I love," Daley wrote in his January 3 letter.

[Idiosync]

Not telling the whole story as usual. What is a former ceo from jp morgan chase doing in the presidents cabinet in the first place? If we have to live under a bank regime, I'd just as soon vote for Romney this time around, at least Romney doesn't pretend he's a democrat. Scum in the white house, scum in the congress, who cares who's president? They're all criminals.

[wfw3536]

The best thing Obama could do is step down and let Mrs Clinton run for president this year. Her approval rating is over 60% and she would do well in the rust belt states which any dem must win.

[joe1022joe]

Obama the Great...community activist.

[gep1955]

Another one not radical enough for our Marxist in chief. Imagine, a guy who is the very essence of the Chicago political machine isn't leftist enough. Guess he doesn't want to be on the names list of those dragged before congressional commitees when they finally bankrupt the country.

[involved_indi]

I think he probably stepped down because today for the first time the national debt is larger than the U.S. GNP and the current administration is adding to the debt at a clip of 4.3 billion dollars a day. He wants to get off the Titanic before it hits an iceberg in November.

[tsigili]

Working for Obama is a highly questionable, thing to do.

[RichZubaty]

Good riddance. We want Wall Street prosecutions and Obama chooses investment banker Rahm Emanuel for chief of staff then replaces him with a JP Morgan guy. Oh wait? Lew is a Citigroup guy. Good grief. The gap between what Obama says and what he does is appalling.

[melbatom]

This sounds like a political folk dance. Remember that Daley family has a very negative and potential dishonest record in voting incidents. You can bet that this is an attempt to remove any potential political slap in the face at election time to the Radical Democratic Party attempt at reelection. LOOK UP THE DOLEY HISTORY IN CHICAGO FOR YOUR OWN KNOWLEDGE!!

[cbs_bull]

How honest are the Bush and Cheney's families? They're on record for using made up 'facts' to send this nation into an unjustified war, and much more ... (Just look up the history of them.)

[DebbieCorona]

Obama has a guy that worked at Citi, Bush had Goldman Sachs Hank Paulson. And whoever wins in 2012 will have another Wall Street/Banker. The system has always been this way Alexander Hamiliton was all about the money. If you are looking for a politician that doesn't have a Wall Streeter you are going to wait for a very long time.

[stephand]

4th one in his 1st term - that's a modern day record!