Can He Fix It?

By Romesh Ratnesar with James Carney and John F. Dickerson

On May 22, as President Bush flew to Berlin for the start of a weeklong diplomatic tour, White House chief of staff Andrew Card briefed the President in his private office aboard Air Force One. But Card wasn't there to prepare Bush for his meetings in Europe. Instead, he presented the President with a 1.5-in.-thick binder of eight policy options for reorganizing the Federal Government to guard against terrorist threats. Included was an idea Bush had resisted for months: the creation of the Department of Homeland Security, the first new Cabinet-level department in more than a decade. Card walked Bush through the proposals and showed him a case study of how Harry Truman created the Pentagon in 1947. One option Bush rejected, Card says, was to move the National Guard from the Defense Department to the new department. And the overhaul did not encompass the agencies most in need of reform--the FBI and the sprawling U.S. intelligence community. Taking on those powerful bureaucracies would have meant a bigger war than Bush was ready to wage. "The options were gradations from do nothing to do it all," says Card. The President chose "pretty close to do it all."

For the past month, as the rest of Washington soul-searched and second-guessed about the biggest intelligence failure in the history of the republic, the White House assured the country that the President wasn't losing any sleep at all. The FBI and the CIA would sort out their problems; those who collectively missed the clues that might have led to the hijackers were "fine people who loved America"; and nothing, as Bush told the nation again last week, "could have prevented the horror of Sept. 11."

Behind the scenes, a very different story was unfolding. With public confidence in the war on terrorism waning, the White House was plotting to get back in the game. Beginning in late April, a small working group--led by Card, budget director Mitchell Daniels and Homeland Security czar Tom Ridge--met secretly to design a plan for a new homeland-security system. Hyped as the most sweeping overhaul of the Federal Government in more than 50 years, the proposal put before Bush was drafted in just over a month. An official describes the clandestine enterprise as "sort of like the Manhattan Project," and paranoia about leaks ran so high that meetings were moved to the secure bunker beneath the White House where senior officials had taken cover on Sept. 11. Bush intended to roll out the plan in July, but disclosures about FBI and CIA lapses ratcheted up the pressure to go public now. Says a White House official: "Was the attitude sooner rather than later, more rather than less? Yes."

Just days after Bush approved Card's plan, speechwriter Michael Gerson was told to begin work on an address to be delivered the following week. Gerson went through 14 drafts, with editing provided by Card, presidential counselor Karen Hughes and National Security Adviser Condoleezza Rice. In an Oval Office meeting Tuesday, the advisers decided Bush should also confront the pre-9/11 intelligence failures and provide a progress report on the war against al-Qaeda. "We recognized the President had to address what's on the nation's mind," Hughes says. Cabinet members were not told of the plan for the new department until Wednesday, 24 hours before Bush spoke to the nation.

The White House had been considering a plan for homeland security for months, but Bush aides admit that he gave the 11-min. speech ahead of schedule. "We wanted to strike while the iron was hot," says an aide. But in truth, the heat was on Bush. For the first time since the war began, the White House was struggling to remain in control of the agenda. Bush went before the cameras only hours after the televised congressional testimony of FBI whistle-blower Coleen Rowley, the Minneapolis agent who ripped the bureau's pre-9/11 bunglings in a letter to director Robert Mueller last month. A no-nonsense Midwesterner with a grim, credible tale of field agents being smothered by layer after layer of self-protecting bureaucrats, she told her story Thursday on Capitol Hill, where multiple inquiries into last summer's intelligence failures opened to the rumble of an early-season thunderstorm.

With 400,000 pages of documents collected by the Joint Intelligence Committee ready to be made public, new revelations are already tumbling out. U.S. counterterrorism officials told TIME that by January 2001, the CIA had briefed officials at the White House's Counterterrorism Security Group (CSG) about a crucial January 2000 meeting of al-Qaeda agents in Kuala Lumpur--the first indication that the CSG knew about the meeting well before Sept. 11. (The officials would not specify whether the briefing took place in the last days of the Clinton Administration or the early days of Bush's term. White House official Richard Clarke, who will testify before Congress this week, ran the CSG during both terms.) In early 2000 the CIA identified two attendees of the meeting as Nawaz al Hamzi and Khalid al Midhar. The pair would eventually help hijack Flight 77 and crash it into the Pentagon. In 2000, while tracking the two, the CIA failed to refer them to the INS's terrorism watch list, allowing them to enter the U.S. A congressional intelligence source told TIME that there is "a significant possibility" that members of the CSG knew about the suspects' movements prior to Sept. 11.

The Administration hopes its proposal for the new Cabinet department will bolster sagging public faith that the government can prevent attacks. "Now we're on offense," says an aide. In Congress the plan will probably touch off a furious battle whose outcome could define Bush's presidency. But the story of how the Administration decided to stage its megamerger--and yet not take on the dysfunctional intelligence agencies--is a case study of the decision-making process of America's first M.B.A. President. George W. Bush likes to think of himself as a CEO who makes the big decisions but leaves the implementation to his hand-picked team of hands-on deputies. How that model has played out over the past few weeks reveals much about what's going wrong and right in America's war on terror. Here are the five management techniques at the heart of Bush's method.

1 DELEGATE RESPONSIBILITY

Unlike Bill Clinton, Bush has never been one to sweat the details; he prides himself on setting clear goals and letting his lieutenants achieve them. The Administration is loaded with veteran Washington operatives like Card, who launched the drive to create the new Homeland Security agency in mid-April. At the time, Ridge's prestige was at a low ebb: his proposal to consolidate the country's border-control agencies was eviscerated by bureaucratic interest groups, and Ridge was embroiled in a spat with West Virginia Senator Robert Byrd over Ridge's refusal to testify before the Senate Appropriations Committee. Card realized that he had to give Ridge's office broad new powers to mollify congressional critics. "This was a sideshow [we] didn't want to have continue," says a White House adviser. Ridge told Card that any reform needed to be wholesale. At that point, Card took the idea to Bush. The President's instructions were simple: "Come to me with what you think is right," he said.

Bush received only one formal briefing on the working group's progress before May 22, when Card presented him with the final options. "He's not paid to work out the technical details of policy proposals," says a senior White House adviser. Another senior official who worked on the plan says Bush peppered his aides with questions about how the new agency would function in practice. "Have you thought about how putting these different cultures together is going to work?" the President asked.

But by that point, Bush was only fine-tuning a machine whose design had already been determined. By handing the task of devising a vast new Cabinet agency to a few trusted aides, Bush ceded much of his own power to shape the policy. He could have picked the lesser of the options that Card provided him, but his reliance on his aides made it almost certain that he would approve their recommendation. "There were options throughout this paper, and frankly I guided him toward options," says Card. Consolidation of the intelligence agencies, for example, was on the working group's table early but was dismissed as too ambitious--without ever getting to Bush. A senior White House official says, "You aren't going to win that one."

As Bush's style makes him more dependent on his subordinates, it also makes him less willing to get rid of them when they underperform. It's telling that while Bush is proposing a major reshuffling in an attempt to make up for intelligence failures, he has yet to remove any of the officials responsible for them.

2 FIGHT THE BUREAUCRACY

During his campaign for President, Bush cast himself as an outsider tilting against the capital's political establishment. Since becoming President, he has continued to make rhetorical hay against his own employees--and to work around them whenever possible. Last week he shrugged off a report from the Environmental Protection Agency and five other departments and agencies that warns of the dangers of global warming. "I read the report put out by the bureaucracy," Bush said, before declaring that it did not reflect White House policy.

After Ridge tried and failed to push through his border-control merger, Bush warmed to the idea of taking on the bureaucracies directly by creating the new Homeland Security department to pick off some of their functions. "Let's take something away from all of them," he told aides. The White House is now practically boasting about the tangle Ridge got into trying to reorganize one single branch of the varicose Homeland Security structure. "When Tom Ridge had to call a meeting, he needed a conference room," says Hughes. "There were so many different people."

Bush's 24-page reform plan aims to "enhance operational efficiencies" and encourage "better asset utilization." To win support for his plan, Bush has to convince Congress that the bureaucracy we have now is part of the problem--while allaying fears that the vast new one he's proposing won't make things even worse.

3 DO IT IN SECRET

Bush doesn't like surprises--unless he's the one doing the surprising. Unlike Clinton, who held freewheeling all-nighters when he had to make an important policy decision, Bush prefers to keep his thoughts to himself, letting only top aides in on his plans. He forbids White House leaks, which enable interested parties to meddle, prepare their reactions and disrupt the Administration's scripted agenda. Following Bush's instructions, says a senior White House aide, chief of staff Card "likes to get a small group of people in the room and keep it very quiet."

Bush's zeal for secrecy was on full display last week--and it irritated the people he now needs to pass his plan. Capitol Hill was left completely out of the loop. Before the speech, the White House kept its plan under wraps as aides fanned out to test elements of the proposal on informal focus groups. At a dinner party thrown by Defense Secretary Donald Rumsfeld early this month, deputy chief of staff Josh Bolten asked guests what they thought about giving Cabinet status to the Homeland Security office. Most of the guests opposed the idea, as they believed the President still did.

4 GO SLOW; THINK BIG

Bush often laments his father's reluctance to wield the power of the presidency to accomplish his objectives. But in his first 18 months in office, the son has shown a similar proclivity for prudence. Bush holds off on using his clout until the facts are in and he can close the deal. And once a plan is in place, he doesn't tinker. In some cases, that has proved a virtue: he didn't rush the bombing in Afghanistan and stayed the course when the battle plan stalled in October. "He runs the presidency on his own timetable," aides like to say.

And yet Bush's cautious management style sometimes leads to procrastination. Critics say he waits too long, resisting change until the last possible moment. Last week he placed his first phone calls to the leaders of India and Pakistan since the current standoff between the two nuclear-armed nations heated up in mid-May. The proposal to give Homeland Security Cabinet rank came after months of White House resistance. On March 19, White House spokesman Ari Fleischer declared that "creating a new Cabinet post doesn't solve anything."

When the President does decide to take a swing, he swings hard. By delivering his reform package with a presidential seal and a prime-time flourish, Bush hopes to propel it through Congress quickly. Last Tuesday morning he met with his aides in the Oval Office to discuss his speech to the nation. Card told him that "here in Washington, this is going to be a huge story." Bush relished the thought of rattling the cages of Washington's institutional bureaucracies; he told the aides that as long as he was announcing something, he wanted it to be dramatic. Said Bush: "As a friend from West Texas used to say, 'If you're gonna borrow $100 million, you might as well ask for $150 million.'"

5 RUN THE NUMBERS

While Bush likes to advertise his grounding in the rules of business, he is a political animal. His advisers have been studying polls that indicate that Americans aren't fully focused on the war against terror or inclined to back an independent commission to study intelligence failures. And last week the Administration nervously monitored the reaction to Bush's plan from his conservative base, which is allergic to any hint of expanded government powers.

The limits of Bush's management style will ultimately be determined by the demands of leadership. Some aspects of his style--such as his penchant for secrecy--reflect the weaknesses that made the country vulnerable on Sept. 11. And his aversion to risk has made him cool to proposals to revamp the FBI and CIA. Richard Shelby, top Republican on the Senate Intelligence Committee, says, "If a lot of information from the FBI, CIA, NSA and Immigration had been put together at a central place, they may have thwarted the attack of Sept. 11." Bush may have to rethink parts of his own management style to keep the system from breaking down again.

--With reporting by Massimo Calabresi, Matthew Cooper, Andrew Goldstein, Karen Tumulty and Michael Weisskopf/Washington

With reporting by Massimo Calabresi, Matthew Cooper, Andrew Goldstein, Karen Tumulty and Michael Weisskopf/Washington