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The White House is targeting its next top economist

Remark

President Biden is about to name the next head of the National Economic Council, the top economic position in the White House, and Federal Reserve Vice Chairman Lael Brainard has emerged as one of the top contenders, according to three people who familiar with the deliberations.

The choice of the 61-year-old Brainard would be welcomed by liberals, given her support for strict regulation on Wall Street and her attention to the effects of climate change on the financial world. If selected, she would take the position of influence after current NEC executive Brian Deese leaves the White House, the people said, speaking on condition of anonymity to discuss human resources.

Deese, who helped the White House through its turbulent recovery from the covid-driven 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 Secretary of Commerce Gina Raimondo; Wally Adeyemo, the deputy secretary of the treasury; Gene Sperling, a senior adviser to Biden who led the NEC under Presidents Bill Clinton and Presidents Barack Obama; Sylvia Burwell, former secretary of Health and Human Services and current president of American University; and Bharat Ramamurti, the 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 a frontrunner.

Biden had previously considered serving Brainard, who is highly regarded in Democratic circles, as Secretary of the Treasury or replacing Jerome Powell as Chairman of the Federal Reserve. When Biden instead decided to nominate Powell again last year, he elevated Brainard to the number two role.

Brainard was the sole Democrat on the Fed board for much of the Trump administration and was extremely influential. She distinguished herself as the central bank’s leading voice for tighter supervision of Wall Street. She consistently opposed policies that would have eased restrictions imposed after the Great Recession, and while Fed board members often vote unanimously, Brainard issued about 20 dissenting opinions on regulatory issues.

She has also focused on how climate change could threaten economic activity, arguing that large banks’ exposure to climate-related risks could jeopardize the wider financial system. And she spearheaded the modernization of the Community Reinvestment Act, which was designed to encourage banks to lend to low-income neighborhoods.

The next NEC director will have to make a series of decisions critical to Biden’s economic legacy, the most pressing of which could involve a potentially catastrophic standoff with congressional Republicans over the country’s debt limit that, if left unresolved, could US economy could plunge into recession. The NEC is expected to lead those negotiations with GOP lawmakers.

Biden aides want to force GOP to drop debt cap threat

Biden’s economic team will also face crucial questions about how to implement the Inflation Reduction Act and the Infrastructure Act and will play a key role in handling economic policy toward China as tensions with Beijing mount. The NEC is also currently working to enact new national housing policies, push Biden’s antitrust agenda and coordinate policies to prevent US energy prices from rising during the war in Ukraine.

While often aligned with progressives, Brainard is no stranger to mainstream economics or politics. An economist trained at Harvard and a former professor at the Massachusetts Institute of Technology, she has extensive experience at various federal institutions and has held senior positions at the Treasury Department, Fed and NEC.

Still, her selection would likely at least partially allay growing fears among liberals that the president would attract more conservative Democrats to senior positions before the 2024 presidential election. The recently announced departure of White House Chief of Staff Ron Klain, widely regarded as close to the party’s liberal flank, has sparked intense feuding among Democratic Party factions over White House staff .

Klain is replaced by Jeff Zients, a former management consultant who spent most of his career in the private sector. White House liberal advisers have made it clear they are opposed to selecting a Wall Street executive for NEC director, especially given Zients’ new role, according to two people familiar with the matter who spoke on the condition of anonymity to display private conversations.

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

If Biden elects Brainard, it could create new complications for the Biden administration as it would open up the number two role at the Fed. Brainard was widely seen as closer to the “pigeon” faction at the central bank, wary of raising interest rates quickly to fight inflation, and her departure would confront the White House with the need to find a replacement that could get confirmation from the Senate.

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

Brainard recently commented on the risks associated with the Fed’s all-out battle against inflation and its push in recent months to raise rates quickly. She noted 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 surrounding our dual mandate become more two-sided,” Brainard said Thursday. “Now we’re in an environment where we manage the risks on both sides.”

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