According to a breaking news alert from MSNBC, Judd Gregg has withdrawn from his nomination as Commerce Secretary.  If so, this makes the third Cabinet appointment from Barack Obama to fail, and the second one at Commerce.  Tom Daschle withdrew at HHS over his tax evasion, and Bill Richardson preceded Gregg as Commerce Secretary-designate before withdrawing over a pay-for-play corruption scandal in New Mexico.

Gregg took a bit of heat from fellow Republicans for resigning from the Senate during a point when conservatives needed every ally they can find.  What touched off Gregg’s withdrawal?  He couldn’t support the stimulus:

“I want to thank the President for nominating me to serve in his Cabinet as Secretary of Commerce. This was a great honor, and I had felt that I could bring some views and ideas that would assist him in governing during this difficult time. I especially admire his willingness to reach across the aisle.

“However, it has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census there are irresolvable conflicts for me. Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy.

“Obviously the President requires a team that is fully supportive of all his initiatives.

“I greatly admire President Obama and know our country will benefit from his leadership, but at this time I must withdraw my name from consideration for this position.

“As we move forward, I expect there will be many issues and initiatives where I can and will work to assure the success of the President’s proposals. This will certainly be a goal of mine.

“Kathy and I also want to specifically thank Governor Lynch and Bonnie Newman for their friendship and assistance during this period. In addition we wish to thank all the people, especially in New Hampshire, who have been so kind and generous in their supportive comments.

“As a further matter of clarification, nothing about the vetting process played any role in this decision. I will continue to represent the people of New Hampshire in the United States Senate.”

Wow.  This is an embarrassment for Obama, and might imperil the stimulus package, if Gregg has any influence over the waverers.  The decision to strip him of authority over the census looks like the last straw, however — as it should have been.

Update: Barack Obama will take another big hit to his transition, but the man who really deserves the obloquy this time is Rahm Emanuel.  The census ploy was a transparent attempt to hijack the data for political purposes, and pulling that stunt after Gregg’s appointment made Gregg look like a political eunuch.  It was classic overreach, and it’s classic Emanuel.

Now he’s embarrassed himself, made his boss look impotent, and managed at the same time to damage Obama’s most critical piece of domestic policy legislation.  If Gregg hits the media circuit to criticize Porkulus, his credibility as an Obama appointee will create a lot of heat on other Republicans and even a few Democrats to stop the runaway train of this bill and force it back into debate.

Update II: Gregg never resigned as Senator; that usually happens after confirmation.  He is still and will continue to be the senior Senator from New Hampshire.

Update III: One of the commenters makes a good point.  Democratic governor John Lynch had to agree to appoint a Republican to the seat and take some political heat for it — and now it’s all for nothing.  I’m sure he’s happy with Rahm Emanuel and Barack Obama today, too.

Update IV: According to the AP, no one in the Obama administration saw this coming:

The withdrawal appeared to take the White House by surprise, with members of the president’s media operation learning of Gregg’s decision from reporters. An administration official said Gregg dropped out without warning for a position that he had expressed interest in just a few weeks ago.

They heard about it from reporters?  Wow again.  Gregg apparently got so incensed that he didn’t bother to apprise them, or the people he did tell didn’t get the word to the media-relations folks.  What a breakdown, and an embarrassment as well.