Who Will Head the National Economic Council?

Today on TAP: Fed governor Lael Brainard’s name has been leaked. It’s more important to keep her at the Fed.

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While the naming of Jeff Zients as Biden’s new chief of staff has gotten more press attention, another key senior appointment is in the offing. Brian Deese, chair of the National Economic Council, is leaving. Press leaks suggest that the front-runner to succeed Deese is Lael Brainard, vice chair of the Federal Reserve.

This idea, to put it politely, is nuts.

Brainard is the most respected member of the Fed’s Board of Governors, and the most dovish on when to stop the rate hikes. She is also the toughest of the current board when it comes to bank regulation. Whether Biden appreciates it or not, he needs her at the Fed, especially if he wants a strong economic recovery in time for 2024.

So why on earth is Brainard being touted as the leading candidate to head the NEC?

More from Robert Kuttner

Evidently, the White House leadership has decided that with Zients coming on as chief of staff, the next head of the NEC can’t be another white male. (Hold on, isn’t the departing NEC director, Deese, a white male? Yup, but that was then.) It’s all the more important that the next chair of the NEC be progressive, both as a counterweight to the more centrist Zients and to offset the departure of Tim Wu, who was in charge of competition policy at the NEC and had a large portfolio.

Reducing the white male dominance of senior government posts is an overdue goal, and another credit to Joe Biden. But let’s not rob Petra to pay Paula. Brainard is more important at the Fed, where females, not to mention effective progressives, are also in short supply.

Moving Brainard would leave a vacancy at the Fed at a crucial moment, when chair Jay Powell and the rest of the governors will either start to take their foot off the brake—or not. And with a Democratic majority of just one in the Senate (which includes the flaky Kyrsten Sinema and the corporate Joe Manchin), confirming a progressive successor to Brainard, and after too long a vacancy, will be no cakewalk either.

In addition, Brainard’s history outside the Fed was in international finance at the Treasury Department, and even before that her academic work involved global trade policy and development. The NEC is more of a domestic-policy position.

Among nonwhite males to head the NEC, how about Bharat Ramamurti, the brilliant and progressive deputy director of the NEC. Or Celeste Drake, the respected NEC deputy in charge of labor issues. Or the current chair of the Council of Economic Advisers, Cecilia Rouse, who is both female and African American.

Affirmative action is both necessary and tricky. Ticking boxes with diverse categories of appointees is only the beginning. The right people have to be in the right positions.

Let’s hope the leak of Brainard was just a trial balloon, and the sound of the air going out goes all the way to President Biden.

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