Newsweek’s Jonathan Alter reports that some Democrats seek to dangle the New York state governorship in front of Senator Hillary Clinton as a consolation prize in the hopes that she won’t battle front-runner Barack Obama all the way to the convention:

Some Democrats terrified that their bloody primary campaign will doom them in November are floating a consolation prize for Hillary Clinton: governor of New York.

The travails of New York Gov. David Paterson have opened up a new potential career path for Clinton, according to well-informed Democratic Party insiders who refused to allow their names to be used when discussing contingencies. They want her to consider the option if she concludes after the April 22 Pennsylvania primary that she cannot overtake Barack Obama for the party’s presidential nomination. Hillary Clinton, while fully committed to continuing her presidential campaign, was said to be open to discussing the idea, while Bill Clinton rejected it out of hand.

With former New York mayor Rudy Giuliani now reported by the New York Post to be weighing a race for governor, voters could see a Clinton-Giuliani matchup after all.

It would be the match-up many expected (a) when Clinton ran for Senator (squelched by Giuliani’s health problems) and (b) when Giuliani ran for President (the conventional wisdom — for a while — was that it would be Clinton versus Giuliani in the general election).

Paterson, a former state senator and lieutenant governor, succeeded Gov. Eliot Spitzer, who was forced to resign earlier this month when he was caught in a prostitution ring. A legally blind African-American with plenty of friends in Albany, Paterson has admitted to extensive drug use when he was young and to having had several extramarital affairs, including one with a New York state employee. The governor has denied using taxpayer money for the affairs, but new rumors are swirling around the scandal-weary state capital.

In the event that Paterson had to resign, the New York State Constitution calls for a gubernatorial election this November. Clinton would be the favorite in that contest if she were interested. Were a politically wounded Paterson to serve out Spitzer’s term, which ends in 2010, Clinton would no doubt be a strong potential candidate to succeed him.

Under the scenario sketched out by the insiders, serving two years as governor would give Clinton the executive experience to become the prohibitive favorite for the 2012 Democratic presidential nomination. Clinton believes that Barack Obama may well lose this year to John McCain, who would be 75 in 2012 and a possible one-term president. Clinton would arguably be better positioned to replace McCain in the White House as a governor than as a senator.

The key to this story is: who sourced it? Did it come from someone sympathetic to the Clinton campaign or a Clinton associate? Or did it come from someone close to the Obama campaign, or Democrats who never really liked Clinton and want her out now ASAP both due the political train-wreck-in-Denver scenario that seems closer every day and the fact that they never really supported her anyway?

It’s not a small question. Because if the story is based on sources that didn’t like Clinton, then it should also be seen as part and parcel of the ongoing attempt to have her quit the race early. For the early part of the campaign the motif was Clinton’s “inevitability.” In this phase, in many quarters, it’s Obama’s “inevitability.”

Apart from that, this is a fascinating report since it again underscores the fears among many Democrats that while Clinton and Obama are battering each other John McCain has a big head start in unifying his party, doing image-enhancing photo-ops, campaigning for the general election, working to raise funds for his party, and blasting the Democratic Party and Obama and Clinton.

The story’s sourcing matters — but so does the political context. Earlier reports also suggested that perhaps she’d be on the fast-track to become Majority Leader — an interesting concept except there are no signs the present Majority Leader is planning to go anywhere. So what would be more beneficial to Clinton IF she cannot get the nomination? Stay in the Senate and, if Obama loses, run as a Senator? Or become governor and get real hands-on executive management experience?

ANOTHER VIEW:–Democracy In America (The Economist):

It is very likely this rumour is being circulated by political foes of Mrs Clinton, hoping to expedite her departure from the primary contest. Would the governorship even make sense for her? She has lost a few friends in the Senate in recent months. And being governor would allow her to demonstrate that hands-on, problem-solving ability she likes to tout.

But there are plenty of downsides: Albany is known as a rough-and-tumble place, not necessarily welcoming to outsiders (as Eliot Spitzer learned). And being governor would seemingly eliminate the possibility for any more of those danger-filled international missions that Mrs Clinton likes to talk about. No, she’s a creature of Washington for now. We could see Rudy Giuliani in the governor’s seat though.