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`The Deficit Cutters Have Gotten Their Way'

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Washington's hottest summer entertainment isn't The Lion King, Disney's new animated epic. It's the unfolding political drama that wags dub "The Triumph of the Bean Counters."

In a startling White House shakeup, President Clinton on June 27 tapped Budget Director Leon E. Panetta, a genial Californian with strong deficit-fighting credentials, as his Chief of Staff. To make room for Panetta, first friend Thomas F. McLarty III relinquished the staff chief's job for a new role as Presidential counselor. Inheriting Panetta's green eyeshade at the Office of Management & Budget: Alice M. Rivlin, a fierce foe of spending who has often tangled with Clinton's political aides. To complete the shuffle, spinmeister David R. Gergen was sent to the State Dept. to do damage control on the Administration's foreign policy.

The move has all the hallmarks of another flailing response to a dive in the polls. "Unless Panetta has been given the clout to make major changes," says Democratic consultant Joe Trippi, "this may amount to rearranging the deck chairs on the Good Ship Clinton." Indeed, the plan is very Clintonesque: No aides lost their jobs; they all got promotions.

But don't sell the President short. The staff shuffle could mark a sea change in his thinking about the Presidency. By turning away from a life-long Arkansas friend in favor of a veteran Washington hand, Clinton has decided that loyalty has its limits. With the dollar plunging, health-care reform in trouble, and market-opening talks with Japan stalled, the President has finally opted for a strong, politically astute staff boss who can advance his agenda.

In ideological terms, Clinton's White House shift continues his transformation from campaign populist to cautious New Democrat. Panetta and Rivlin will stiffen Administration resolve to keep spending in check. Both back a modest "investment" agenda and contend that the Administration's health plan should be financed with real money instead of iffy administrative savings. "When Panetta links up with [White House economic coordinator Robert E.] Rubin, you'll see the kind of domestic dominance that was exerted by [former Bush aides] Dick Darman and John Sununu," says one Clinton staffer.

That prospect hasn't escaped traditional Democrats, who see the budgetary writing on the wall. "The deficit-cutters have gotten their way" over Clinton's liberal advisers, says an aide to the House Democratic leadership. Ted Van Dyk, a moderate party consultant, predicts that Panetta may urge a serious look at another round of deficit reductions. "The markets will be heartened by the new rationality at the White House," says Van Dyk.

BIG CHANGES. In coming days, though, Panetta has one main mission: He'll try to salvage Clinton's embattled health plan. Van Dyk predicts that Panetta & Co. will "try to convince Clinton to accept an incremental health bill." Beyond that, Panetta is weighing major changes in White House personnel and is being urged to rein in outside political consultants James C. Carville, Paul E. Begala, Stanley B. Greenberg, and Mandy Grunwald, who enjoyed unfettered access to the Oval Office under McLarty. "Panetta has bigger problems than us," says Carville. "We're the after-dinner mints in the food chain."

Nonetheless, Carville and most Clintonites wish Panetta well. In The Agenda, author Bob Woodward reports that Begala once attacked the deficit-obsessed Panetta as "the Poster Boy for economic constipation." Now, the man with the weary smile and the sheaf of spreadsheets has become something else: the best hope for stabilizing Clinton's Presidency.Commentary/by Lee Walczak and Susan B. Garland

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