Trump has become increasingly concerned in recent weeks about what his administration is facing come January, when newly empowered Democrats are expected to unleash the full force of their oversight powers on the Trump administration.
Those include compelling Cabinet secretaries to testify, requesting the President's tax returns and scrutinizing some of his most controversial policy decisions. Trump often complained that Kelly, a retired four-star Marine general, was not politically shrewd enough for the task.
The details of the President's discussions, which have not been reported on previously, reveal how close Ayers was to becoming chief of staff. He and Trump huddled several times over the last week in the residence of the White House, where they were afforded more privacy than in the staff-filled West Wing, but they ultimately could not agree to terms and Ayers declined the job.
Multiple sources familiar with Trump's mood told CNN he's frustrated with the Ayers process. One source described his mood as "super pissed." A second added he feels humiliated, a position he doesn't like to be in, because the President did not have a backup candidate prepared like he typically does when he's fielding people for jobs.
One source said Ayers got the benefit of being seen as the next chief of staff "without any of the headaches."
However, Trump's anger seems to be limited because Ayers will leave his position as Pence's chief of staff at the end of the year to run the super PAC set up to assist the President's re-election campaign.
Trump has privately told confidants he wants his new chief of staff to shift the goals of the West Wing away from legislation and toward politics, sources said. He did not outline specific things he wanted Ayers to change in the West Wing, but was generally relying on the politically savvy young aide to make changes on his own that could bolster the White House ahead of what is expected to be a tumultuous year.
Trump has remarked on several occasions that his West Wing needs aides who are more politically adept. That problem is only exacerbated by the departures of two White House aides in recent days: the political director Bill Stepien and Justin Clark, the director of the office of public liaison. Both are leaving the administration to work on Trump's re-election campaign.
And multiple White House officials have complained privately that Shahira Knight, the legislative affairs director, is more focused on the policy than navigating the political realities of Washington, including managing relationships with lawmakers.
Trump is now embarking on a hasty search for a new chief of staff with no obvious choice in mind.
He predicted Ayers would budge on his demand to be chief of staff on an interim basis, with a set departure date of this spring, and was not prepared with a second option. Kelly, who attended a holiday party at the White House Sunday night and reported to work Monday, is expected to leave at the end of the month.
CNN's Dana Bash, Jim Acosta and Gloria Borger contributed to this report.
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