Gregg turns down Commerce Dept. job

Sen. Judd Gregg, R-N.H. (shown), has withdrawn his nomination for commerce secretary.

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WASHINGTON (CNN) -- Sen. Judd Gregg withdrew his nomination as President Barack Obama's commerce secretary Thursday, citing "irresolvable conflicts" over the administration's stimulus bill and the upcoming 2010 census.

"I realize that to withdraw at this point is really unfair in many ways," the three-term New Hampshire Republican told reporters. "But to go forward and take this position and then find myself sitting there and not being able to do the job the way it should be done on behalf of the president, 100 percent, that would have been an even bigger mistake."

Gregg is the third of Obama's Cabinet nominees to pull out of consideration - and the second pick for the Commerce Department to withdraw. Speaking during a visit to his home state of Illinois to plug the stimulus bill, Obama said Gregg's announcement "comes as something of a surprise."

"Mr. Gregg approached us with interest and seemed enthusiastic," he told State Journal-Register in Springfield. "But ultimately, I think, we're going to just keep on making efforts to build the kind of bipartisan consensus around important issues that I think the American people are looking for."

Gregg said Obama had been "incredibly gracious" during the process, and that it was "my mistake, obviously, to say yes." He added that he would "probably not" seek re-election in 2010.

All but three Republicans in the Senate have opposed the now-$789 billion stimulus bill, which Obama argues is necessary to prevent a more severe economic skid. After being nominated, Gregg said he would not vote on the package, which Obama hopes to sign by Monday.

Asked whether the White House was unhappy with his refusal to support the stimulus bill, Gregg said, "I'm sure that's true." But he said, "I gave my word to people."

Republicans in Congress also accuse Democrats and the Obama administration of trying to skew the 2010 census, the results of which will be used to apportion legislative seats and distribute federal money.

African-American and Latino leaders raised concerns that the Census Bureau, which is part of the Commerce Department, might lack sufficient resources under Gregg's leadership to accurately count ethnic minorities. The White House responded by saying it would work closely with the bureau's next director to ensure "a timely and accurate count" in 2010.

That led Republicans leaders in the House of Representatives to accuse the White House of putting the census under the control of "political operatives."

Gregg told reporters the issue was "only a slight catalyzing issue" in his decision to withdraw.

"It was not a major issue," he said.

But a Republican source close to Gregg says the census "tipped things," adding to increasing concerns that he might be marginalized within the administration.

"Basically if on any issue important to Democratic constituencies they are on one side and Judd is on the other, he is muted," the source said.

And a Democratic source close to the White House said the administration "almost humiliated him" by trying to restrict his influence over the count.

A Republican aide familiar with Gregg's decision said he had been consulting with GOP leaders privately about this move for the "past couple of days."

White House spokesman Robert Gibbs said in a written statement that the administration regretted Gregg's "change of heart."

"He was very clear throughout the interviewing process that despite past disagreements about policies, he would support, embrace, and move forward with the president's agenda," Gibbs said. "Once it became clear after his nomination that Senator Gregg was not going to be supporting some of President Obama's key economic priorities, it became necessary for Senator Gregg and the Obama administration to part ways."

But Senate Minority Leader Mitch McConnell welcomed Gregg's withdrawal.

"He is among the smartest, most effective legislators to serve in the Senate - Democrat or Republican - and a key adviser to me and to the Republican Conference. It's great to have him back," announced McConnell, R-Kentucky.

Gregg would have been the third Republican to join the Democratic administration, following Defense Secretary Robert Gates and Transportation Secretary Ray LaHood.

He is Obama's third Cabinet nominee to withdraw, following last week's decision by Health and Human Services Secretary-designate Tom Daschle to quit over tax issues and the withdrawal of Obama's previous Commerce Department pick, New Mexico Gov. Bill Richardson. Richardson withdrew in early January, citing the distraction of a federal investigation into whether he was played an improper role in directing state business to a company that had donated to his political action committees.

Gregg, a leading fiscal conservative, once voted to abolish the Commerce Department. But a GOP source said Gregg "didn't want to be a powerless GOP token, and that's where this was headed."

With Republicans holding only 41 seats in the Senate, Gregg had said he would take the Cabinet post only if his replacement was a fellow Republican. New Hampshire Gov. John Lynch agreed, announcing plans to replace Gregg with the senator's former chief of staff, Bonnie Newman.

CNN's Dana Bash, Candy Crowley, Gloria Borger and Jessica Yellin contributed to this report.