There’s good news and bad news in the decision to shift Leon Panetta from CIA to Defense and replace him with General David Petraeus. Let’s start with the bad news first.

Most disappointing are the signals from the White House that the changes represent merely personnel shifts and don’t represent policy changes. Maybe it’s too much to expect President Obama, already preparing for his 2012 re-election bid, to admit that he has to oversee a drastic retooling of his foreign policy, and that putting new people in new positions is a way to start the ball rolling. Certainly, given the upheaval shaking the region from Morocco to Afghanistan and the free-fall decline of American power and influence throughout that part of the world, you’d think that Obama might want to rethink the direction of US policy. But in preparing the world for the appointments of Panetta and Petraeus, the White House is insisting on continuity, not change. Vis-à-vis Afghanistan, in particular, that’s a bad mistake, since Obama seems intent so far on walking a middle course between supporters of a withdrawal from Afghanistan and the stay-the-course hawks who insist that the Taliban and its allies can be defeated militarily. The result of that cautious, typically Obama-led approach is likely to be a gradual pullout of about 30,000 troops over the next eighteen months, a slow, grinding drawdown through the end of 2014, and an intensive effort to maintain US forces there in smaller numbers for years to come.

Other bad news: putting Petraeus at CIA puts an exclamation point on a twenty-year trend at the intelligence agency to shift its focus from intelligence-gathering to military action and covert operations. Off and on during that period, the CIA—and its new overseer, the office of the director of national intelligence—has been run by a series of generals and admirals, and its forces and mission radically re-routed into support for the armed forces, even at the tactical level, and away from its civilian-led analytical function. Today, the CIA is best known for its intensive campaign of drone-fired missile attacks in Pakistan and Afghanistan, and it’s become harder and harder to distinguish the CIA from the Pentagon. At the same time, the CIA has increasingly been a junior partner to the Pentagon-funded and Pentagon-led parts of the intelligence community, including the National Security Agency, the DIA, the National Reconnaissance Office and the National Geospatial-Intelligence Agency, all of which control the bulk of the $80 billion spent annually on intelligence. Petraeus is unlikely to challenge that trend, and he’ll no doubt enthusiastically support the drone wars.

Good news? Well, putting Petraeus at CIA sidelines a politically ambitious general and puts him in a position where he’ll be less likely to involve himself in policy, although the polite fiction that the CIA director refrains from policy debates is a mostly a canard. Still, Petraeus is likely to find himself confronting a mostly civilian staff that has been known to grind up and spit out bosses they don’t like, as the case of James Schlesinger in 1973 and the more recent case of Porter Goss prove. If I had to bet on who’d win a fight between Petraeus and the CIA bureaucrats and its entrenched operatives, I’d pick the CIA staff.

Other good news: Petraeus, the counterinsurgency specialist, won’t be around to command the Afghanistan war any longer. His replacement, Lt. Gen. John R. Allen is, by some accounts, less enamored with counterinsurgency doctrine and an ally of Obama’s new national security adviser, Tom Donilon, who was reported (including in Bob Woodward’s book Obama’s Wars) to be a backer of Vice President Biden’s support for a lighter footprint in Afghanistan. In the good news category, too, are reports the Leon Panetta, the new secretary of defense, was a backer of Biden and Donilon, too. So, if the president decides to accelerate the drawdown of US forces in Afghanistan in response to pressure from the American people, who’ve turned sharply against the war, he’s less likely to get pushback from the likes of Donilon, Panetta, and General Allen than from Petraeus and Gates.

Finally, on the (possibly) good news front: Panetta, during his years in Congress, was a budget hawk. If ever there was a time when the Pentagon needs a budget hawk in charge, it’s now. As I wrote in a recent feature for The Nation, the Department of Defense faces huge pressure to cut spending, reduce troop strength, shut bases overseas and cancel weapons systems. While there are no guarantees that Panetta is sharpening his budget axe, if Obama decides to enforce DOD cuts, Panetta could be the right butcher-in-chief.