At a White House staff meeting yesterday, chief of staff Bill Daley made a surprising announcement: his role in the administration going forward will be reduced, and veteran aide Pete Rouse will take over day-to-day management of the West Wing. The Wall Street Journal notes, “It is unusual for a White House chief of staff to relinquish part of the job.”

It’s unusual, but it is good news for progressives. There is no doubt that Daley’s hiring represented a tack to the right, and towards a more corporate-friendly approach, and this demotion could reflect at least a partial retreat by the White House from that approach.

Daley was a troubling hire for progressives from the start. Only weeks before taking the job, Daley wrote an op-ed for the Washington Post about Democratic defeats in the midterm elections. His solution: “Either we plot a more moderate, centrist course or risk electoral disaster not just in the upcoming midterms but in many elections to come.”

At his introduction to the press, President Obama noted that Daley would bring valuable business experience to the White House because he’s “led major corporations”—notably, Daley was a vice-chairman at too-big-to-fail bank JPMorgan Chase. The Chamber of Commerce lauded his hiring, while MoveOn and Public Citizen bashed it.

The results were exactly what everyone predicted: under Daley, the White House made deficit reduction a top priority, and infuriated liberals by offering repeated concessions to Republicans in order to achieve it. Democratic leaders in Congress weren’t fond of Daley, either: Senate majority leader Harry Reid was reportedly “livid” with Daley for cutting side deals with Republicans during the debt negotiations, and for telling Politico recently that “both Democrats and Republicans” were to blame for Obama’s governing troubles. That sounds like something straight out of a David Brooks column, but does not even approach the reality of Republican intransigence and Democratic over-compromise—something Daley must have known given his role in those very negotiations.

Daley’s touted affinity for business interests led to some disastrous executive branch decisions. In early September, the White House ordered the Environmental Protection Agency not to enforce stricter standards on smog emissions—even though the EPA itself called the current standards “legally indefensible.” During the deliberation process, Daley got personally involved in meetings with representatives from Business Roundtable, the Chamber of Commerce and other groups. His unique influence in that debate shifted the outcome, according to all involved:

“We saw that as a positive—his level of interest, him sitting in on these meetings, him weighing in on this issue within the administration,” Johanna Schneider, executive director of external relations for the Business Roundtable, told The Hill. “I think it’s emblematic of his role in the administration as part of the outreach to the business community.”

“It moved the issue up to the top of the agenda for the president. That is what happens when you have a White House chief of staff getting involved,” Schneider said. “You have one of the two or three people in government who can control the agenda.”[…]

Rena Steinzor, president of the Center for Progressive Reform, a liberal-leaning regulatory think tank, said it was “astounding” and “really, really unusual” that Daley participated in the OIRA meetings. “You hear rumors of him having meetings like this, but you never see him trundling down to their office in the Old Executive Office Building,” Steinzor said. “I think what this did is elevate this EPA rule to the highest levels of the White House. It shouldn’t go unremarked that the president’s top political guy was sitting in meetings with interest groups about what is essentially [EPA Administrator] Lisa Jackson’s responsibility.” [Emphases added.]

Daley’s new responsibilities haven’t been fully defined, according to the Wall Street Journal. But there’s no question his profile has been lowered. It’s important to remember that the cossacks work for the czar—in other words, Obama is the boss and always has been, and Daley can’t be blamed for every bad White House decision.

But Obama may now want to go in a different direction, as evidenced by his increasingly confrontational approach to Congressional Republicans for blocking the jobs bill, and now by Daley’s apparently reduced influence.

And while few know the true motivations of the White House, it’s not hard to imagine that while facing a mass popular movement against big banks and predatory capitalism, not to mention the increasingly likely possibility it will face a Republican opponent in 2012 best known for starting Bain Capital, it’s not ideal to have the most important non-elected person in the White House be from JPMorgan Chase.