By the way, here is a New York Times report back from 2009 on why Rahm Emanuel didn’t want Sid Blumenthal working for Hillary at the State department:
As White House chief of staff, Rahm Emanuel was the one to bring the hammer down on Sidney Blumenthal.
Secretary of State Hillary Rodham Clinton wanted to hire Mr. Blumenthal, a loyal confidant who had helped her promote the idea of a “vast right-wing conspiracy” more than a decade ago. But President Obama’s campaign veterans still blamed him for spreading harsh attacks against their candidate in the primary showdown with Mrs. Clinton last year.
So Mr. Emanuel talked with Mrs. Clinton, said Democrats informed about the situation, and explained that bringing Mr. Blumenthal on board was a no-go. The bad blood among his colleagues was too deep, and the last thing the administration needed, he concluded, was dissension and drama in the ranks. In short, Mr. Blumenthal was out.