Here's the official White House statement:
STATEMENT FROM PRESS SECRETARY ROBERT GIBBS“Senator Gregg reached out to the President and offered his name for Secretary of Commerce. He was very clear throughout the interviewing process that despite past disagreements about policies, he would support, embrace, and move forward with the President's agenda. Once it became clear after his nomination that Senator Gregg was not going to be supporting some of President Obama's key economic priorities, it became necessary for Senator Gregg and the Obama administration to part ways. We regret that he has had a change of heart”.
Read that first sentence: "Senator Gregg reached out to the President and offered his name for Secretary of Commerce." Whatever happened here, it wasn't friendly. They're burning him. He approached them and then he wouldn't support their agenda. For his part, Gregg says, “we are functioning from a different set of views on many critical items of policy.” My sense is he's not going to prove a resolute ally in the Senate. Bipartisanship is hard, it turns out. And for a reason. People disagree about stuff, and while civility may render those disagreements more respectful, it doesn't make them go away. Even such a dazzling display of respect as offering Gregg a cabinet post can't overcome the fact that he wants to privatize Social Security and the Obama administration does not.