WASHINGTON – President Joe Biden on Tuesday named Federal Reserve Vice Chair Lael Brainard as the new director of his National Economic Council, making the Ph.D. economist a key point person for coordinating policy, talking with business leaders and negotiating with Congress.
Biden also nominated longtime adviser Jared Bernstein to be chair of the White House Council of Economic Advisers. Brainard and Bernstein would be moving into top spots at a crucial juncture for the U.S. economy. Unemployment is at 3.4%, near a 54-year low, but inflation remains persistently high at 6.4% and has contributed to fears of a coming recession.
Brainard will succeed Brian Deese, who helped handle several key legislative wins for Biden, including coronavirus relief, infrastructure spending and investments in computer chip production. Her resignation from the Fed takes effect Feb. 20.
Brainard, 61, holds a doctoral degree in economics from Harvard University. During the Clinton administration, she worked as a deputy director for the National Economic Council. She was also under secretary for international affairs at Treasury during Barack Obama's presidency. Brainard joined the Fed in 2014 as a governor and Biden nominated her to become vice chair.
She also forms half of an administration power couple, with her husband, Kurt Campbell, serving on the National Security Council as the administration's “Asian czar.”
Bernstein, 67, is already a member of the Council of Economic Advisers, where he would succeed current chair Cecilia Rouse, who is returning to Princeton University. With an interest in labor markets and income inequality, Bernstein worked as a vice presidential aide for Biden during Obama's presidency. He received his doctoral degree in social welfare from Columbia University.
Biden said Brainard “brings an extraordinary depth of domestic and international economic expertise” to the role and hailed Bernstein as a “brilliant thinker and one of my closest and longest-serving economic advisers.”
Bernstein must be confirmed by the Senate. Brainard does not need to be confirmed.
The president also expanded the role of Bharat Ramamurti, a deputy director at the National Economic Council who will become an adviser for strategic economic communications. Heather Boushey, a member of the Council of Economic Advisers, will also serve as chief economist to Biden's recently formed cabinet of advisers focused on investing in America. Joelle Gamble, chief economist at the Labor Department, will become a deputy director of the National Economic Council.
Brainard’s departure from the Fed comes at a fraught time, as the central bank seeks to balance its fight against inflation without going so far as to cause a worse recession than necessary. Brainard has been a leading “dovish” voice, meaning she typically supports lower interest rates to bolster employment. (“Hawks” are more likely to push for higher rates to combat inflation).
She has worked closely with Federal Reserve Chair Jerome Powell, and comments from her speeches often find their way into subsequent formal statements by the Fed.
In a speech last month, Brainard argued that taming inflation might not require the job market “pain,” in the form of widespread layoffs, that other Fed officials, including Powell, have warned about. Instead, she said that companies may be forced to reduce prices and cut their profit margins as consumer demand slows, which would help bring down inflation.
However, Biden has appointed three other members of the Fed’s governing board, so Brainard’s departure will not deprive the central bank of dovish voices.
Brainard has also supported tougher financial regulations than Powell. When Randal Quarles was the Fed’s top financial regulator -- appointed by President Donald Trump -- Brainard cast about 20 dissenting votes on regulatory issues.
She has also expressed support for the idea that the Fed could do more to push banks to consider the risks posed by climate change to their financial health. Climate activists warn that increased damage to homes, commercial buildings, and other property will impose greater financial losses on banks and should be considered when evaluating their safety and soundness.
Under Powell, who is not a trained economist, the Fed vice chair has typically been someone with a deep background in monetary economics, such as Richard Clarida, Brainard’s predecessor. Clarida was an economics professor at Columbia University and an adviser to PIMCO, a bond trading firm.
Bloomberg News first reported Monday that Brainard and Bernstein were set to become Biden’s top economic aides.