ABC News is reporting that President-elect Barack Obama has offered Illinois Congressman Rahm Emanuel, a former Clinton White House aide, the key position of the White House chief of staff in the new Democratic administration that is beginning to take shape.

A formal announcement by Obama of his chief-of-staff pick is expected this week. The name of former South Dakota Senator Tom Daschle, an early and ardent Obama backer, has long been high of the list of prospects. So, too, has that of Emanuel, although his divided loyalties–he was a close friend of Bill and Hillary Clinton and a congressman from Obama’s hometown of Chicago–sidelined him during the Democratic primary campaign season.

Emanuel has wrestled with the question of whether to remain in the House, where he would eventually like to serve as Speaker, or to take a definitional position in the Obama White House.

If Obama really wants him, however, it will be hard for the congressman to say “no.”

But should Obama really want him?

Emanuel’s strengths have been well-documented: He knows his way around Washington, on the executive and legislative ends of Pennsylvania Avenue. He is a savvy political player, with a reputation for getting things done and for defending his boss against all comers.

Unfortunately, Emanuel is a militant advocate for free-trade policies; he was a point man in the White House in the fight to pass the North American Free Trade Agreement and similar deals that have been passionately opposed by the very labor, environmental and farm groups that were essential players in electing Obama. When he ran for Congress in 2002, major unions supported his Democratic primary opponent, former Illinois State Representative Nancy Kaszak.

Picking Emanuel would reassure Wall Street, but it won’t give much comfort to Main Street.

It will also cause some head-scratching among Democrats who thought they were making a break not just with the Bush administration but with the compromises of the Clinton era.

Emanuel, a fearsome fund raiser, is closely aligned with the corporate-sponsored Democratic Leadership Council, the most “insider” of Washington-insider groups.

And, while Obama established his credentials with progressive Democrats by opposing the 2002 congressional resolution authorizing President Bush to go to war with Iraq, Emanuel supported it.