Lael Brainard, vice chair of the US Federal Reserve, speaks during an Urban Institute panel discussion in Washington, D.C., US, on Friday, June 3, 2022.
Ting Shen | Bloomberg | Getty Images
The White House has tapped Federal Reserve Vice Chair Lael Brainard to lead the National Economic Council and Jared Bernstein to head the Council of Economic Advisors, two critical roles for shaping U.S. economic policy as the country grapples with persistently high inflation.
The announcement is the latest in a series of staff shakeups in the administration after the midterms and halfway through Biden’s term as he begins to look toward a potential re-election bid. In recent weeks, Jeff Zients has replaced Ron Klain as White House chief of staff. Current NEC director Brian Deese announced he was stepping down and on Friday. Kate Bedingfield, White House communications director, said she plans to leave at the end of the month.
“Cecilia Rouse and Brian Deese are trusted advisors that I have relied on to help craft my economic agenda, and our country owes them a debt of gratitude for their service,” Biden said in a statement. “As they transition out of the White House, I am pleased to announce new leaders who will continue to deliver on my economic vision and help finish the job.”
CNBC reported earlier this month that Brainard and Bernstein were being considered for the positions, and in January that Brainard was a top contender for the job.
The pair will have tremendous influence over economic policy at a tricky time for the United States. Unemployment is at a near-54 year low while GDP data shows robust growth, but the data is paired with inflation at a four-decade high and aggressive interest rate hikes to contain consumer prices. The Federal Reserve has raised rates eight times over the last year, upping the benchmark rate from effectively zero a year ago to a target range of 4.5% to 4.75%, the highest since October 2007.
In a statement announcing the decision, Biden called Brainard “one of the country’s leading macroeconomists.”
“She is a trusted veteran across our economic institutions, and understands how the economy affects everyday people,” he said.
Brainard will help lead Biden’s negotiations with House Republicans in what promises to be a contentious and tricky fight over raising the U.S. debt ceiling later this year. The White House had drawn a hard line on the matter, saying it won’t negotiate over the critical funding move, while the GOP has insisted on reducing spending to win its backing.
Brainard has been floated as a possible Treasury secretary or as a replacement for Federal Reserve Chair Jerome Powell. She currently serves as Powell’s vice chair. Her appointment would help burnish ties between the West Wing and the Treasury Department, which at times have been at loggerheads on policy, people familiar with the matter say. Brainard served with Treasury Secretary Janet Yellen on the Fed together for three years. She also served as under secretary of the Treasury from 2009 to 2013 and held deputy NEC roles.
Yellen has said she intends to remain at the Treasury until the end of Biden’s term.
Brainard is known as a tough critic of Wall Street, opposing proposals to lift regulations created in the wake of the Great Recession. She’s also discussed the effect climate change is having on the financial sector. As NEC director, Brainard will be tasked with crafting the president’s economic agenda and coordinating economic responses between various agencies.
The position of NEC director is seen as a stepping stone to other top Cabinet roles. Robert Rubin, who ran NEC from 1993 to 1995, was later appointed Treasury secretary by then-President Bill Clinton. Larry Summers, who succeeded Rubin at Treasury, took the reverse path: he returned to government to run the National Economic Council in 2009 for former President Barack Obama.
Bernstein, a former social worker and longtime Biden ally who served as his chief economist and economic advisor during the Obama administration, is currently a member of the board he will helm.
“Jared is a brilliant thinker and one of my closest and longest-serving economic advisers,” Biden said. “He is an expert on worker empowerment and a worker-centric economic policy, which has long been the heart of my economic vision.”
Bernstein’s position requires Senate confirmation, which is not expected to be difficult with the Democrats’ 51-seat majority.