Why Leon Panetta?
Indeed, Obama might have considered Rep. Jane Harman (D, CA) once the senior Democrat on the House Intelligence Committee, but she backed Bush policies such as the wiretapping. Of course, after opposing it, candidate Obama changed his mind and endorsed it himself. But clearly, he feels appointing someone like Harman would ignite old wounds and debates and give the Left another reason to not stand united with him in the first difficult months of his new administration.
Panetta was also a member of the Iraq Study Group. To some people, that proves he had solid foreign policy credentials. To others, however, the Study Group's conclusions- particularly its recommendations for negotiations with Iran and Syria- and its negative assessment of the possibility of a positive outcome- was proof of its dovish and "realist" outlook. Since it was published, the surge changed conditions on the ground in Iraq, and made much of its recommendations obsolete.
My prediction: Panetta will get tough questioning, but in the end, will win Senate approval for the appointment.