Lael Brainard, the Fed’s vice chair, will become a top economic adviser along with Jared Bernstein, who would head the Council of Economic Advisers.
WASHINGTON — President Biden said Tuesday that he had selected Lael Brainard, the vice chair of the Federal Reserve, to direct the National Economic Council, choosing a veteran economist to oversee his administration’s transition from passing big economic laws to carrying them out.
Mr. Biden also chose Jared Bernstein, a longtime member of his inner circle dating back to Mr. Biden’s tenure as vice president, to be the next chair of the White House Council of Economic Advisers. Mr. Bernstein is currently a member of the council.
Ms. Brainard, whom Mr. Biden previously considered appointing as Treasury secretary and Fed chair, will replace Brian Deese, who is stepping down this month after two years as the president’s top economic adviser. She joins Mr. Biden’s economic team as his administration is shifting its focus to carrying out the multitrillion-dollar economic agenda that Mr. Biden signed into law in his first two years in office.
The move adds another seasoned policy expert to Mr. Biden’s close circle of aides, but it could create headaches for him at the Fed, including a potentially bitter fight in the Senate to confirm Ms. Brainard’s replacement as vice chair.
Mr. Bernstein, whose role requires Senate confirmation, would succeed Cecilia Rouse, the current chair, who is departing to return to her faculty position at Princeton University. Mr. Bernstein would almost certainly become the most outspoken supporter of labor unions to ever helm the council, and he would continue to serve as an economic sounding board for a president who relies on a small — and typically long-serving — circle of aides for policy advice.
The move would also give Mr. Biden a trusted spokesman on economic issues as the president gears up for his expected announcement that he will seek another term in 2024, a campaign in which the economy will take center stage. Mr. Bernstein has long been a frequent liberal voice on cable news and other media outlets, including throughout his tenure in the Biden administration.
Ms. Brainard will immediately become a new public face for the president’s efforts to sell Americans on the progress the economy has made on his watch, including record job growth, even as polls show voters remain anxious about the economy.
In a statement released by the White House, Mr. Biden called Ms. Brainard “one of the country’s leading macroeconomists” who “understands how the economy affects everyday people.”
He stressed his closeness to Mr. Bernstein, calling him “a brilliant thinker and one of my closest and longest-serving economic advisers.”
“He is an expert on worker empowerment and a worker-centric economic policy, which has long been the heart of my economic vision,” Mr. Biden said.
The appointments would leave Mr. Biden, who pledged to build the most diverse cabinet and circle of core White House aides in history, with one white man and two white women in the three most important economic policy jobs in the administration. Janet L. Yellen, the Treasury secretary, has indicated she will stay in her position through Mr. Biden’s four-year term.
Mr. Biden also announced on Tuesday that he would make Joelle Gamble, the chief economist at the Labor Department, a deputy director of the National Economic Council. Another deputy, Bharat Ramamurti, will also take on a role as an adviser for strategic economic communications, Mr. Biden said.
Ms. Brainard is seen as the most liberal top official at the central bank and a potential brake on the Fed’s campaign to raise interest rates to tame inflation. Raising interest rates cools consumer and business demand, slowing the labor market in an effort to restrain rapid inflation. Ms. Brainard has at times been more focused on keeping the job market strong, a position that Wall Street typically calls dovish.
That means that removing her from the Fed at a critical moment could take away a potentially powerful proponent for moving more cautiously and patiently.
“I think this should cause you to upgrade your expectations for interest rates a little bit; Lael Brainard was on the dovish end of the spectrum, and very respected,” said Jason Furman, an economist at Harvard University and an economic adviser during the Obama administration. “One potential voice for restraint is going to be absent.”
Whoever is appointed as the new vice chair will need to be confirmed by the Senate, which could push the White House toward nominating someone who either can attract broad bipartisan support or would not face a challenge among Democrats.
“She will leave a hole,” said Laura Rosner-Warburton, a senior economist at MacroPolicy Perspectives. “She was a leading voice on international economics, macroeconomics, on inequality, climate change — she spanned a lot of areas.”
Economists on Wall Street and in academia had begun to speculate on Tuesday about who could replace Ms. Brainard. Some suggested that a current Fed governor — perhaps Lisa Cook or Philip Jefferson, both former academic economists — could be elevated into the job.
There was also speculation that one of the Fed’s 12 presidents from across the country could be picked, such as Mary C. Daly, the president of the Federal Reserve Bank of San Francisco. Academic economists, such as Janice Eberly from Northwestern University or Karen Dynan from Harvard University, could also be in the running.
Ms. Brainard, 61, has been vice chair at the Fed since May and was a governor at the central bank’s board in Washington starting in 2014. Before that, she was an official at the Treasury and worked in the Clinton White House.
While it may shift the dynamic at the Fed, her appointment also underscores how Mr. Biden has elevated climate change into the heart of the White House’s economic policymaking.
In her Fed tenure, Ms. Brainard gained notice for her speeches and statements calling for regulators to treat climate change as a significant risk to the financial system. In 2020, the Fed for the first time assessed climate change risks in detail in a financial stability report. “Climate change poses important risks to financial stability,” she wrote at the time, and addressing such concerns “is vitally important.”
Mr. Bernstein serves on the Council of Economic Advisers with Heather Boushey, who Mr. Biden said Tuesday would also become the chief economist to his so-called Invest in America cabinet. Mr. Bernstein did not need Senate confirmation for that appointment. Ascending to the chairmanship would force him to take a difficult road in the Senate, where Mr. Biden’s party commands a slim 51-to-49 majority when accounting for three independent senators who typically vote with Democrats. Ms. Rouse won confirmation two years ago in a landslide, 95 to 4, becoming the first Black chair of the Council of Economic Advisers.
Mr. Bernstein comes from a very different branch of economic research from Ms. Rouse — and from most of the chairs before her. His doctorate is in social welfare. He has spent most of his career not in academia but in Washington think tanks, with a longtime focus on economic inequality and on policies meant to lift wages and living standards for American workers.
He worked 16 years at the liberal, pro-labor Economic Policy Institute before Mr. Biden hired him to be the chief economist for the vice president when Mr. Biden and President Barack Obama took office in 2009. In announcing his departure, E.P.I. officials called Mr. Bernstein “a tireless advocate for middle- and low-income families and for greater equity in the U.S. economy.”
In 2011, after serving as the executive director for Mr. Obama’s middle-class task force, Mr. Bernstein left government to join the Center on Budget Policy and Priorities, another liberal think tank in Washington. He helped give Mr. Biden regular economic briefings in his 2020 campaign before the president appointed him to serve on the Council of Economic Advisers.
This article was originally published by NYTimes.