This is a rush transcript from "Special Report," January 10, 2012. This copy may not be in its final form and may be updated.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: These jobs are difficult. Peop le talk about how a year in the White House and the West Wing in particular, you can measure it dog years. This one was particularly jam packed. And as the president said in his announce in the state dining room but also to us in a staff meeting, a senior staff meeting, he is extremely grateful for Bill's leadership and for his friendship.


BRET BAIER, ANCHOR: This week, the big announcement out of the White House, the shakeup that Bill Daley, the chief of staff, was stepping down and that Jack Lew was going to move into that position. It's not getting talked about a lot because frankly we're all here in New Hampshire. But it is a big story.

And we're back with the panel. Steve, what about this, a chief of staff who was brought in after the big Republican wins to kind of really reach out to the business community, essentially, and he lasts one year and then out?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Right, I thought Ed Henry's piece on this was terrific, setting up exactly that contrast between Jack Lew and Bill Daley, because it came as you suggest, at a time when Democrats wanted to emphasize that they were not -- even if they weren't going to be sort of business friendly, they were not hostile to the business community. And they were open to reaching out, bridging divides, whatever you want to say about it. So they emphasized Bill Daley, they emphasized his biography. This is someone who understands the business community and has relationships with the Chamber of Commerce. You will get a hearing here in this White House through Bill Daley. That is in effect what the message was to the business community.

With Jack Lew, who has in some ways a similar profile, similar backgrounds, they are obviously not emphasizing that because they don't want to be. Going in the election year, they want to talk about Mitt Romney and Bain Capital. And Jack Lew has, in his background, certain things to make him susceptible to those same kinds of attacks or at least make it more difficult for the White House to launch those kinds of attacks on Romney. The Deal magazine talked about Jack Lew and his involvement in subprime mortgages and said Lew was in the center of the storm of the credit crisis investing in hedge funds that bet on the decline of the housing market that helped precipitate the downfall. That is a pretty significant charge.

BAIER: Jeff, the inside reporting is that the president was surprised by Daley's move and that this really kind of was a shock. But we had seen a lot of discomfort inside the White House or heard about it with Daley at that position.

JEFF ZELENY, NEW YORK TIMES: I think, I heard the same thing as well from my sources, that he was surprised. I'm not sure why he was surprised because they essentially had sidelined Bill Daley. And his responsibility was only a fraction of what it was at the beginning here.

He is a former cabinet member, a former CEO. He is bigger than his position ended up being, I think. So he still had the real estate in the corner office of the West Wing, but that was about it. So I'm not sure why there was much surprise on this. I still think the feelings are friendly between them. He is going to help raise money for the re-election campaign. But I really think it speaks to the fact that the real power in the West Wing is through David Plouffe. I mean he has --

BAIER: The political side.

ZELENY: Right, because we are entering political season here. It's not that big of a surprise, I don't think. Going forward, everyone always thought there was a Chicago relationship between President Obama and Bill Daley. They hardly knew each other before this. And I think we are seeing that because it ended up not being a good choice.

BAIER: Juan, I want to put this in context of where we are sitting in this environment. This new book has come out, "The Obamas" by Jodi Kantor. And it is a book that by all accounts says some interesting things. The book features the Press Secretary Robert Gibbs cursing the first lady after Valerie Jarrett told him Mrs. Obama was not happy with the way he handled the reporting suggesting that she hated being in the White House. Quote, "You don't know what the [expletive] you are talking about," Gibbs said. Jarrett responded, "The first lady would not believe you're speaking this way." Gibbs fired back, "Then [expletive] her, too." Here is what Jay Carney said about it.


CARNEY: Books like these tend to overhype and sensationalize things, and I think that is case here.


BAIER: What about this?

JUAN WILLIAMS, SENIOR EDITOR, THE HILL: Well, I don't think there's any question that there are various power centers within this White House. People who say, oh the president is surprised. There is a kind of cliche about the no-drama Obama. They try to hold that line. It has been a long time. This feels to me like old news to say that Bill Daley was being pushed out. These routes had been put in a position to actually do the day-to-day operation, this is three months ago, and Daley was told you're gonna offer vision and you can do liaison.

But the fact is, if you look at the track record, if you look at the track record in terms of the budget negotiations this past summer, you look at what has been going on, on the Hill, they were not satisfied with his ability to negotiate with them or to bring Wall Street into the fold.

BAIER: What about this book? What about this book?

WILLIAMS: On the book, to me, it's a lot of gossipy stuff. I mean, I think everybody has fights and disputes. Michelle Obama, though, emerges as someone who is trying to now to form herself as a larger part of the policy operation. I think you will remember when she came in the idea she would deal with the military families and obesity. Here she is now trying to make an imprint on the president and oftentimes as a center of power herself schooling aides that she feels are underperforming for her man.

BAIER: Next up, some final thoughts from our panel on the New Hampshire primary as the votes will start coming in, 8:00 p.m. ET. Keep it here.

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