The intelligence reform bill is a fascinating case study of policymaking, or policy un-making, or something. It is a unique bill for the Bush presidency. [IMGCAP(1)]

We have President Bush now invested in the outcome of an important piece of legislation, having used some of his precious political capital to get the bill over the top — and then suffering a rare public setback when two of his own party committee chairmen thumbed their noses at him.

We have the famously disciplined administration seeing members of the Joint Chiefs of Staff publicly joining in the nose-thumbing at the president’s preferred policy — actually rejecting a plan that was drafted by Vice President Cheney’s counsel.

We have the Speaker declining to bring up a bill that clearly would have passed by a very comfortable margin on the House floor — probably by nearly 3-to-1 — because it would have passed with more Democratic than Republican votes.

And we have a bill that has been declared dead more often than Rasputin, yet which is still, somehow, very much alive. How Speaker Dennis Hastert (R-Ill.) and the president deal with the issue starting now will determine its outcome — and its impact on the president’s prestige, momentum and political capital.

The White House clearly never wanted major intelligence reform, and it showed no enthusiasm for the approach of the 9/11 commission. But with the prestige and involvement of the commission’s members and co-chairmen and their willingness to turn up the heat on this issue, there was no way the president could openly oppose reform. Indeed, he issued public expressions of support for it.

But no one who is seriously engaged in the issue believed that the president was doing more than paying lip service to it. The White House — and many House Republicans — hoped that they could drag the issue out long enough to run the clock out. They were relieved when the publicity faded enough during the campaign that the failure to pass reform did not provide the Democrats with a campaign issue.

After the election, momentum picked up again and the White House got more involved, as did Hastert. Concerns about control over the intelligence budget and the military chain of command were negotiated, the latter with language apparently drafted by the counsel to the vice president.

Once it looked as if some version of the plan was going to pass, the president moved more aggressively to get out in front of the parade. Yet his calls for passage — and his visible efforts to push House Members to make it law — backfired when Rep. Duncan Hunter (R-Calif.) and a group of Armed Services Committee conservatives, along with Judiciary Chairman Jim Sensenbrenner (R-Wis.), dug in their heels.

After this internal rebellion, the Speaker and the president came to a crossroads. The bill that emerged from the conference would clearly have passed comfortably on the House floor and would have been adopted by a unanimous or near-unanimous margin in the Senate. But passage in the House would have been with an overwhelming proportion of Democrats and an underwhelming proportion of Republicans. So the Speaker pulled the plug.

Anyone who has listened to Hastert reflect on his philosophy as Speaker — or watched him in the trenches — would not have been shocked. Last year, at a major conference on the Speakership, Hastert made clear that he sees himself primarily as a representative of the majority party, and of the majority of the majority — not as the representative of the whole House.

But the decision to pull a bill with broad bipartisan support, and one in which the Speaker had played a helpful and constructive role during the negotiations, was still striking.

Equally striking is another reality: Can anyone doubt that if the president had called the Speaker and said, “I don’t care what Hunter and Sensenbrenner say, I want a vote on this bill,” the Speaker would have complied? Apparently, the president and his advisers also decided that they did not want to take on portions of their conservative base in Congress.

Bush, fresh off an impressive election victory in which he demonstrated coattails in both houses that carried along a giddy and grateful group of Republicans to Congress, declared that he had assembled a large store of political capital and that he planned to use it. But apparently he could not have anticipated the possibility that he would enter his second term with an embarrassing public setback engineered by his own party members in Congress with the active participation of key members of his own administration.

He can’t let this set of actions be the last word. But that leaves tough choices ahead.

The president and the Speaker can make another run at compromising with Hunter and Sensenbrenner while simultaneously squeezing the Joint Chiefs of Staff chairman, Gen. Richard Myers, and Defense Secretary Donald Rumsfeld. The White House and the Speaker seem far more likely to succeed at compromising with Hunter than they are with Sensenbrenner. (Trust me, I know what it means to seek compromise with Mr. Sensenbrenner.) This would probably require a much more active and enthusiastic effort by the president himself, or at least the vice president.

The compromise could take one of two forms: a fig leaf that would be acceptable to the Senate, which has already compromised mightily on the key issue of control of the intelligence budget, or a deal that bends over backwards to draw in the recalcitrant House conservatives and gets rejected by the key negotiators in the Senate, Susan Collins (R-Maine) and Joe Lieberman (D-Conn.), and other major players such as John McCain (R-Ariz.).

If the former approach works, the president can toast a big victory, leaving behind the bad aftertaste of a temporary setback. If he pursues the latter, we are likely headed for another bruising partisan confrontation with all the rancor and bitterness that suggests — one that turns the rich silk purse of a broad bipartisan victory into the stinky sow’s ear of another divisive battle. Of course, it is also possible that an attempt at compromise would fail — only this time, the Speaker and president would take on their rebels and bring the bill to a vote and to passage where the major division is within Republican ranks.

This bill has huge implications for the future course of policy-making. If the president is really serious about changing his style of governance, moving closer to the way he governed in Texas and further from the approach he took through most of his first term in the White House, it will require many compromises of this sort — ones in which a broad coalition of Democratic and Republican centrists are opposed by passionate Members on the right and perhaps a few on the left. Other than No Child Left Behind, none of these existed in the first Bush term.

On the other hand, the president could revert to the typical first-term form, relying on his base and a dogged partisan leadership to bully bills through the House and then find ways to essentially bypass the Senate or to negate their more bipartisan approach. (The favored way of doing this has been to stack the conference committees, to strip the bipartisan provisions from the Senate’s bill and to force up-or-down votes on the conference reports.)

So watch the rest of the journey on intelligence reform — it may provide major clues for how we will see Social Security, tax reform, energy and other issues treated in the coming Congress.

Norman Ornstein is a resident scholar at the American Enterprise Institute.