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Gerry, I have a unique perspective on this, since I worked as a Special Assistant to President Reagan for Legislative Affairs and I also served as the Chief of Staff to the Deputy Secretary of Energy during the Bush I years.
You are absolutely correct as to how the system works. When I was at the WH, we were always complaining about Cabinet Secretaries "going off the reservation" and not carrying out what POTUS wanted to do. This caused lots of friction and strong Cabinet Secretaries could really manipulate the system. I still remember how HHS Secretary Bowen (led by his liberal Chief of Staff) pushed Catastrophic Health Insurance, even though we hadn't given him the okay to make a deal with the Congress. Rosty passed it and as a result got beat in the next election when the seniors rioted in his district.

On the other hand, when I was at DOE, the Cabinet officers couldn't really make big decisions unless Dick Darman at OMB blessed them. That drove some of them crazy. Others were happy they didn't have to make any decisions and live with them. Some were political hacks who couldn't manage thir way to the bathroom. We always felt that the WH didn't have any clue as to how the government really worked because the Economic Policy or Domestic Policy Councils in the WH were made up of eggheads and abstract thinkers who could not appreciate the real world of DOE.

I expect this new system will turn into a quagmire one of these days, because not only do you have the WH and Cabinet Secretaries butting heads, but the Democratic Committee Chairmen think they are the king bees and they tell the WH and the Cabinet what to do. This has already made for some blood on the floor (witness the current CIA debacle with Panetta and Pelosi and now Reyes). More will follow, I am sure, if the media will report it. Even if they don't the conflicts will still rage and government will suffer. What happens is that the WH or the Secretary will try making their best deal with Congress without the other one knowing what they are doing. This makes for great inside baseball fireworks.

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