WASHINGTON, Jan 7 (Reuters) - U.S. President Barack Obama’s appointment of Treasury aide Gene Sperling as his new top economic adviser is the latest in a flurry of changes marking his biggest staff shake-up since taking office two years ago.
The mid-term realignment could give Obama fresh thinking from his inner circle as he grapples with newly emboldened Republicans in Congress while pushing a jobs and recovery agenda seen as vital to his 2012 re-election chances.
Sperling’s selection -- together with the naming of JPMorgan Chase executive William Daley, a former commerce secretary, as White House chief of staff on Thursday -- will mean a bigger role for veterans of the Clinton administration, which presided over a growing economy.
Their Wall Street connections could also help repair Obama’s frayed relations with the business world.
Here is a rundown of the staffing moves under way:
Sperling’s appointment, which a White House official said Obama would announce later on Friday, gives the president a new director of the National Economic Council, the coordinator of economic policy across the administration. He replaces Larry Summers, who returned to teaching at Harvard University.
Sperling led the council under President Bill Clinton from 1997 to 2000, when he navigated battles with opposition Republicans during a time of balanced budgets. He is also a former corporate consultant.
A trusted Obama aide, he will now face the challenge of helping reinvigorate an anemic economy and reduce nearly 10 percent unemployment.
Obama will also announce the promotion of Jason Furman, who served as a White House staff economist under Clinton, to the number two slot at the council. He will nominate Katharine Abraham, a University of Maryland professor who served in Clinton’s Labor Department, to the White House Council of Economic Advisers.
Obama tapped Daley, 62, as his chief of staff, bringing a politically seasoned manager with Wall Street credentials into the most powerful non-elected job at the White House.
Daley, whose appointment was welcomed by the U.S. business community, was Clinton’s commerce secretary and campaign manager for then-Vice President Al Gore in his 2000 presidential campaign.
By picking Daley, Obama is reaching outside his original inner circle. Some supporters had urged the president to bring in people with new ideas in response to the Republican rout of his Democrats in the November congressional elections.
Daley is the brother of Richard Daley, outgoing mayor of Obama’s adoptive hometown of Chicago, and the permanent replacement for Rahm Emanuel, the hard-charging former chief of staff. Emanuel left to run for the Chicago mayor. Interim chief of staff Pete Rouse was named counselor to the president.
Still to come: the resignation of former Federal Reserve Chairman Paul Volcker as head of a panel advising the president on economic recovery, sources close to the decision have said.
Volcker, 83, will leave the President’s Economic Recovery Advisory Board, but is ready to advise Obama on an informal basis, one source said. The decision was Volcker‘s, and an announcement could come as early as Friday.
Volcker became a legend on Wall Street when as Fed chief he broke the back of double-digit inflation in the early 1980s. He was also the driving force behind the “Volcker Rule,” a provision in last year’s financial reform law that limited big banks’ proprietary trading, despite Wall Street objections.
Robert Gates has signaled his intention to resign as defense secretary sometime in 2011. Analysts said he probably will not leave until late spring or even the middle of the year. Top contenders include Democratic Senator Jack Reed, an Army veteran whose counsel Obama has sought out on issues like Afghanistan, and Chuck Hagel, a former Republican senator.
Senior adviser David Axelrod, Obama’s main message man, is leaving within the next several weeks and will begin working on the president’s re-election campaign in a few months. David Plouffe, Obama’s 2008 campaign manager, will take up a new advisory role at the White House next week.
Press Secretary Robert Gibbs, one of the administration’s highest-profile faces, said he would leave in early February but made clear he would continue appearing on Obama’s behalf to make the argument against his 2012 Republican challengers.
A successor is expected to be named in a couple of weeks. The short list: Vice President Joe Biden’s spokesman, Jay Carney, and two Gibbs deputies, Bill Burton and Josh Earnest.
Summers was the latest departure from an economic team that has seen wholesale turnover. Austan Goolsbee, longtime adviser to Obama, replaced Christina Romer as head of the Council of Economic Advisers in September. Jack Lew was confirmed as budget director, replacing Peter Orszag, who left in July. (Additional reporting by Caren Bohan, Alister Bell, Steve Holland; editing by Mohammad Zargham)