In Washington, a few words can have ugly consequences. It might not have taken all that much newspaper ink to print the name of CIA operative Valerie Plame for the first time, but the July 2003 disclosure set off a dramatic chain of events that could end up altering the entire course of President Bush's second term in office.

The most immediate result of the tightly held two-year investigation by special federal prosecutor Patrick Fitzgerald is the indictment of Lewis "Scooter" Libby, the influential chief of staff for Vice President Dick Cheney, on charges of perjury, false statements, and obstruction of justice (story, Page 38). In past administrations, where vice presidents tended to play more ornamental roles, this might not have been such big news. But Cheney ranks as perhaps the most powerful vice president in history. As the hand behind the throne, he was central in shaping Bush's approach to national security and, in particular, the controversial decision to go to war with Iraq. Libby, as Cheney's national security adviser, was at the heart of devising the administration's case for the invasion. "If it is proven that a chief of staff of the vice president went before a federal grand jury and lied under oath repeatedly and fabricated a story about how he learned this information . . . that is a very, very serious matter," Fitzgerald said. "That, to me, defines a serious breach of the public trust."

Libby, who denied the accusations, resigned as soon as the indictment was made public, but the crisis for the White House is far from over. Even though deputy chief of staff Karl Rove was not tagged by Fitzgerald--which would have been an even bigger blow to the White House--the prosecutor held open the possibility of more indictments in the continuing investigation. And even if it stops with Libby, the ongoing legal proceedings could be an albatross around Bush's neck. For one thing, Cheney could find himself being dragged before the trial as a witness, along with several other senior officials.

Bungling and doubt. This is all happening to a White House whose stature is plummeting. It was only a year ago when, after winning a second term, Bush boasted, "I've earned capital in this election--and I'm going to spend it." Now, amid the lowest poll numbers of his presidency and rising doubts about his ability to lead the Iraq war effort, Bush is watching his ambitious second-term agenda being swept away by everything from the bungled response to Hurricane Katrina and ballooning budget deficits to this latest indictment (a boost in third-quarter gross domestic product growth was a rare bright spot). "It's seldom in living memory that a presidency has such an array of things," said David Abshire, a former U.S. diplomat who served as a steadying force in the Reagan White House in the wake of the Iran-contra scandal. "When you put them all together, it's the perfect storm."

And it comes at a time when the Republican leadership is groaning under the weight of other ethics inquiries, including an indictment of House Majority Leader Tom DeLay on fundraising-related charges and a Securities and Exchange Commission investigation into the financial dealings of Senate Majority Leader Bill Frist. The combination is allowing Democrats to make charges like one from House Minority Leader Nancy Pelosi last week that this is "another chapter in the Republicans' culture of corruption."

Bush's critics have long been looking for ways to prove that he and his administration manipulated the intelligence to make the original case for war. The irony here is that it was the counterattacks on those who questioned their credibility that led to last week's indictment. Bush can take some comfort that Fitzgerald has not indicted anyone for the leak itself, apparently in part because of the ambiguity of the laws. For one thing, Fitzgerald says that he would need to prove that someone leaked her name intentionally, knowing she was a covert officer. "Whoever talked to all the reporters probably didn't know fully what they were doing," says a former senior intelligence official.

But the perjury charges do present a challenge to the White House's credibility, especially because the case has its origins in the administration's already controversial case for war in Iraq. Coming in the same week as the 2,000th American soldier was killed in Iraq, this indictment rips the lid off of the secretive vice president's office--and the extent of its political machinations over a substantive, if questionable, challenge by a former U.S. ambassador. Fitzgerald painstakingly details how much time Libby spent discussing the mission that Joseph Wilson performed for the CIA regarding allegations of Iraq's interest in uranium in Niger. He recounts at least seven conversations that Libby had about Wilson and his wife, Valerie Plame.

It could have been worse for the White House. During his nearly two-year investigation, Fitzgerald carefully scrutinized the role played by Karl Rove, the president's most important political adviser. Many in Washington had speculated that Rove, widely renowned as the architect of Bush's electoral victories, was in jeopardy of being charged in some fashion. "If we lose Karl Rove, we lose the best political strategist of this generation," says a House Republican leader. "He's a hall-of-fame player, and his loss would be incalculable." Fitzgerald says that he will continue his investigation for an unspecified period, although he added that "the substantial bulk of the work" is complete.

After Fitzgerald announced the indictment, Bush bit his lower lip as he walked to a phalanx of reporters and cameras on the South Lawn and tersely praised Libby's years of government service. Adding, "I got a job to do," he left for Camp David. At the White House, officials hunkered down for a series of meetings on what to do next. Their initial conclusion: Show that Bush remains in charge, and push hard for his goals of winning the war in Iraq, pursuing the war on terrorism, seeking more tax cuts, and arguing for Social Security overhaul and other domestic initiatives.

But for much of official Washington, that won't be enough. Many Republicans are urging the president to, at minimum, shake up his staff and reach beyond his cadre of acolytes to demonstrate humility and show that he understands how beleaguered his presidency has become. "The White House needs new people," says a senior Republican strategist. "Fatigue has set in over there, and it affects people's judgment" (box, below).

Another big question is whether Vice President Cheney might take a lesser role in the government, given that Libby was his chief of staff and alter ego. But White House advisers say Bush retains confidence in his No. 2 and still values his counsel across the board.

Bush's aides are looking to January's State of the Union address as the next best opportunity to demonstrate that his presidency remains viable. That, of course, is a long way off, but Bush strategists, shellshocked from recent setbacks, say they will be content to simply avoid another disaster in the meantime.

With Edward T. Pound and Silla Brush