WASHINGTON -- President Bush's surprise pick to chair the Republican Party, William J. Bennett, unexpectedly backed out of the job yesterday, apparently after concluding that he had been lured into a post where his influence would be severely limited.
His decision was a major embarrassment to Mr. Bush and to an already badly split Republican Party. It also was a potentially serious blow to White House Chief of Staff John H. Sununu, who had pushed the former "drug czar" to take the position.
Mr. Bennett, who personally informed Mr. Bush of his decision Wednesday, hand-delivered his resignation letter yesterday to Mr. Sununu.
In it, he told the president that he had decided "with the deepest reluctance" not to accept the Republican National Committee chairmanship. He cited potential problems with government ethics laws that, he said, might limit his outside earnings during his first year as party chairman.
But a senior administration official said that the money problems could have been resolved if Mr. Bennett had not already been "rethinking" his acceptance of the party post.
"I think he, in his own mind, decided he didn't want the job," said the official, who spoke on condition that he not be identified.
Mr. Bennett was "seduced" by Mr. Sununu into believing that he would play a central role in shaping the Republican agenda, the official explained. But the White House chief of staff failed to consult with Mr. Bennett before delivering a National Press Club address this week outlining the Bush agenda for 1991 and, in the speech, omitted any mention of Mr. Bennett's pet issue, racial quotas.
The Bennett imbroglio raised damaging questions about the White House decision-making process, aides said.
At the time he agreed to take the job, Mr. Bennett was assured by White House aides that he would be able to earn outside income to supplement his pay as RNC chairman, which is tied to the congressional salary of $125,000 next year.
However, that "green light" became a "yellow-to-red" light two days ago, Mr. Bennett said, after White House counsel C. Boyden Gray informed him that federal ethics laws "could be interpreted" to limit his outside earnings during his first year as party chairman, a post that would put him in close regular contact with top administration officials.
One source described the situation as a "cosmic White House staff foul-up."
Several administration aides blamed Mr. Gray for failing to alert Mr. Bennett at the outset to possible ethics problems.
They also criticized Mr. Sununu and his top assistant, Edward M. Rogers Jr., for pushing Mr. Bennett's selection without consulting top Republican Party officials and for failing to warn party leaders that Mr. Bennett had changed his mind.
Mr. Bush formally announced his selection of Mr. Bennett, 47, to head the party at a White House ceremony Nov. 30.
Mr. Bennett was to assume the title next month, and he made his first public appearances as chairman-designate this week.
His decision to withdraw was "a judgment call," said Marlin Fitzwater, the chief White House spokesman.
"There still is no clear-cut decision" on whether ethics laws would have limited Mr. Bennett's ability to earn money outside his RNC salary, he said.
In brief remarks to reporters, Mr. Bennett said he had been told by his publisher, Simon and Schuster, that he could not receive an extension on a 1988 book contract, for which he had reportedly received a $220,000 advance.
He said he was worried that ethics laws might prevent him from earning money from speeches and consulting contracts that would allow him to repay the advance, a portion of which had already been spent.
Mr. Bennett defended Mr. Sununu as "a close friend of mine." He said there had been no "substantial disagreements" between him and Mr. Sununu since he accepted the party job four weeks ago.
His withdrawal from the party job shocked Republicans, many of whom were equally surprised when Mr. Bennett was chosen in the first place. Despite having served in the past two Republican administrations, he was a registered Democrat until five years ago and had no political campaign experience.
Democrats, predictably, crowed over the GOP's latest internal political problem.
"I look forward to debating the nation's future with whomever the president now chooses to manage the chaos in his own camp," Democratic Chairman Ronald H. Brown said in a statement.
Mr. Bennett's selection had been viewed as an effort to placate conservative Republicans still smarting over Mr. Bush's decision last summer to abandon his no-new-taxes pledge.
Some right-wingers had advanced Mr. Bennett as a possible challenger to Mr. Bush in the 1992 GOP primaries, a notion he firmly rejected.
A few of Mr. Bennett's conservative allies had advised him not to take the job, on grounds that he would find himself in a subordinate role to Mr. Sununu.
But Mr. Bennett was typically "headstrong" about his ability to overcome any such limitations, one of them said yesterday.