The decisions could ripple across policymaking at the White House and the Fed.
Ms. Brainard is seen as the most liberal top official at the central bank and a potential brake on the Fed’s ongoing campaign to raise interest rates to tame inflation. Liberal groups have increasingly warned that continued rate increases could undercut economic growth and, potentially, Mr. Biden’s chances of winning a second term.
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Ms. Brainard, 61, has been vice chair at the Fed since May 2022 and was a governor at the central bank’s board in Washington starting in 2014. Before that, she had been an official at the Treasury and had worked in the Clinton White House.
Her supporters say that experience will help Mr. Biden and his new chief of staff, Jeffrey D. Zients, as they ramp up for Mr. Biden’s expected announcement that he will seek re-election in 2024. That work will including coordinating spending decisions, new regulations and other efforts to put into effect the sprawling industrial policy agenda that Mr. Biden has already signed into law.
Her departure would leave the Fed’s No. 2 position open at a challenging time for the central bank. Officials have been raising interest rates to try to rein in rapid inflation, and 2023 is the year when those adjustments are likely to begin to bite most fully, potentially causing unemployment to rise. Policymakers will need to decide how much pain they are willing to risk to be sure that inflation is truly moderating.
Whoever is appointed as the new vice chair would need to be confirmed by the Senate, which could push the White House toward nominating someone who can either attract broad bipartisan support or who would not face a challenge among Democrats.
Mr. Bernstein is already a member of the Council of Economic Advisers, along with Heather Boushey. He 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 in a landslide, 95 to 4, two years ago, 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 who came 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.