The most important appointment decision Obama will make during the transition, bar none, is who becomes, or remains, Secretary of Defense. As I have noted in the past, the Department of Defense oversees the expenditure of 52% of all discretionary spending, rendering it literally impossible for any other cabinet Secretary to oversee as much federal money. Further, keeping Gates on would only worsen Democratic image problems on national security, as he would be the second consecutive non-Democratic Secretary of Defense nominated by a Democratic President. The message would be clear: even Democrats agree that Democrats can't run the military.
There is a debate about this inside the Obama transition team:
The speculation over Gates' tenure has been most intense inside the Obama transition team. The team received a request from Gates that, were he to stay, he would want to retain some of his top civilian assistants. The request led to concerns among the Obama transition staff: "Gates is not a neo-con or even a hardcore Republican," a person close to the process noted, "but the people around him sure as hell are." A former Bill Clinton administration official who has been deployed by Obama to conduct a series of "meet and greets" with top officials at the Pentagon scoffed at the notion of a continuation of Gates' tenure: "The [presidential] election was a clean sweep," he says, "and that includes Bob Gates. It's called a change in government."
But others inside Obama's close-knit group of advisors think that a continuation of Gates' tenure can provide Obama with a bridge to the nation's military leadership - essential, they say, because of US troop commitments in Iraq and Afghanistan. These advisors point out that Richard Danzig, a former secretary of the navy and reputed front runner for the Pentagon post ("always the smartest man in the room", as retired four-star US Marine Corps General Joe Hoar describes him), supports a continuation in Gates' tenure. Then too, Gates is apparently admired by Obama himself, who has been in close touch with a number of Gates' former colleagues (dubbed "graybacks"), like Brent Scowcroft, from the first George W Bush administration. "The graybacks have weighed in, and they're all for Bob," a defense official says.
This should be an open and shut case. If there was one message that Obama ran on loudly, clearly, and indisputably, it is that he was going to bring "change" to Washington, D.C. If Gates were kept on as Secretary of Defense, it apparently would also mean that all of his top advisors would also stay on, and that it all happened because long-time D.C. operatives said it should. Keeping the same guy and all of his advisors at the behest of old establishment types is about as far from change as possible.
Secretary of Defense is the big enchilada. Arguably, due to the vast percentage of federal spending it receives, it is more important than all other cabinet secretaries combined. The President may be Commander in Chief, but it is the Secretary of Defense who is decides how most federal revenue is spent. We need change in the Department of Defense, and keeping Gates along with his entire team of advisors and assistants doesn't fit the bill.
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