The White House focuses on its next chief economist

President Biden is close to naming the next head of the National Economic Council, the top economic post in the White House, and Federal Reserve Vice Chair Lael Brainard has emerged as a top contender, according to three people familiar with the deliberations.

The choice of Brainard, 61, would be welcomed by liberals, given his support for strict regulation of Wall Street and his attention to the effects of climate change on the financial world. If selected, she would assume the influential post after current NEC head Brian Deese leaves the White House., the people said, speaking on condition of anonymity to discuss personnel matters.

Deese, who helped guide the White House through a turbulent recovery from the Covid-fueled economic downturn, is expected to leave soon, though he has not set an official departure date.

The White House declined to comment.

In addition to Brainard, Biden is also considering Commerce Secretary Gina Raimondo; Wally Adeyemo, Assistant Secretary of the Treasury; Gene Sperling, a senior adviser to Biden who led the NEC under President Bill Clinton and President Barack Obama; Sylvia Burwell, former Secretary of Health and Human Services and current president of American University; and Bharat Ramamurti, deputy director of NEC.

People familiar with the process say Biden has not made a final decision and is still conducting interviews, but Brainard has emerged as the favorite.

Biden had previously considered Brainard, who is well regarded in Democratic circles, to serve as Treasury secretary or to replace Jerome Powell as Federal Reserve chairman. When Biden decided to renominate Powell last year, he bumped Brainard up to number two.

Brainard was the only Democrat on the Fed board for much of the Trump administration, and he was unusually influential. He rose to prominence as the central bank’s leading voice in favor of tighter supervision of Wall Street. She consistently opposed policies that would have loosened restrictions imposed after the Great Recession, and while Fed board members’ votes are usually unanimous, Brainard issued roughly 20 dissents on regulatory issues.

He has also focused on how climate change may pose a threat to economic activity, arguing that large banks’ exposure to weather-related risks could jeopardize the broader financial system. And he led the modernization of the Community Reinvestment Act, which was designed to encourage banks to lend in low-income neighborhoods.

The next NEC director will face a variety of decisions critical to Biden’s economic legacy, the most pressing of which may involve a potentially catastrophic showdown with congressional Republicans over the nation’s debt limit that, if not resolved, it could push the US economy into a recession. NEC is expected to lead those negotiations with Republican lawmakers.

Biden advisers want to force the GOP to drop the debt limit threat

Biden’s economic team will also face crucial questions about how to implement the Inflation Reduction Act and the infrastructure bill and will play a key role in managing economic policy in China as tensions with Beijing escalate. The NEC is also currently working to set new national housing policies, advance Biden’s antitrust agenda, and coordinate policy to prevent US energy prices from skyrocketing amid the war in Ukraine.

While he often aligns himself with progressives, Brainard is no stranger to mainstream economics or politics. A Harvard-educated economist and former professor at the Massachusetts Institute of Technology, she has extensive experience at a variety of federal institutions, holding senior positions at the Treasury Department, the Federal Reserve, and NEC.

Still, his selection would likely at least partially assuage growing fears among liberals that the president would attract more conservative Democrats to senior posts ahead of the 2024 presidential election. White House, Ron Klain, who was seen as close to the party’s liberal flank, has sparked an intense dispute between factions of the Democratic Party over White House staff.

Klain will be succeeded by Jeff Zients, a former management consultant who spent most of his career in the private sector. Liberal White House advisers have made clear their opposition to selecting a Wall Street executive as NEC director, particularly given Zients’ new role, according to two people familiar with the matter, who spoke on condition of anonymity to reflect private conversations.

“Zients could be fine, but if it results in a cascade of decisions by Wall Street personnel in key positions, things could fall apart very quickly for progressives,” said one of the outside advisers, speaking on condition of anonymity to discuss issues. staff sensitive. .

If Biden picks Brainard, it could create new complications for the Biden administration, as it would open up the number two job at the Federal Reserve. Brainard had been widely seen as closer to the “dove” faction at the central bank, wary of raising interest rates quickly to combat inflation, and her departure would confront the White House with the need to find a replacement who would could secure Senate confirmation.

In the fall of 2021, as Biden debated whom to appoint as Fed head, some close to the White House and the central bank argued that Brainard was more aligned with the White House agenda than Powell, who is a Republican.

Brainard made comments recently focused on the risks involved in the Fed’s all-out fight against inflation and its push in recent months to rapidly raise rates. He pointed out that the Fed’s mission is not only to stabilize prices but also to minimize unemployment.

“As we move further into restrictive territory, the risks around our dual tenure become more two-sided,” Brainard said Thursday. “Now we are in an environment where we manage risks on both sides.”

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