Biden White House Economic Adviser Also Replaced Ahead of Debt Ceiling Battle

"Fed No. 2 Brainard Likely"
3rd Year of Term Biden White House Economic Team Reshuffle Accelerates

[Asia Economy Reporter Yujin Cho] U.S. President Joe Biden, who has passed the midpoint of his term, is replacing the White House's top economic advisor, the Chair of the National Economic Council (NEC). With major economic agendas such as raising the debt ceiling and averting a U.S. Treasury default crisis looming, the White House is accelerating the reorganization of its economic team.

According to U.S. political media Axios and others on the 2nd (local time), President Biden is expected to appoint Lael Brainard, Vice Chair of the Federal Reserve (Fed), as the successor to Brian Deese, who resigned as NEC Chair that day.

While Commerce Secretary Gina Raimondo and Deputy Treasury Secretary Wally Adeyemo are also mentioned as possible successors to Deese, The Washington Post (WP) reported that "the Fed's second-in-command is the most likely candidate for Biden's top economic advisor position."

Brainard, who was also a candidate for Treasury Secretary at the start of Biden's administration, previously worked at the Treasury Department during the Barack Obama administration. A Harvard Ph.D. in economics and former Massachusetts Institute of Technology (MIT) professor, she has a history of supporting strict regulations on Wall Street and opposing deregulation. President Biden is expected to make a final decision on the successor after delivering his State of the Union address to Congress on the 7th.

Lael Brainard, Vice Chair of the Federal Reserve (Fed). [Image source=Reuters Yonhap News]

Foreign media have noted that this change in the NEC Chair was made amid a chicken game in the U.S. Congress over raising the debt ceiling. The U.S. national debt has exceeded the statutory limit ($31.4 trillion), requiring House approval, but the Republican majority in the House is demanding spending cuts as a condition for raising the debt ceiling, causing negotiation difficulties.

Within the Republican Party, there is strong public opinion to immediately submit a motion to remove House Speaker Kevin McCarthy if he compromises with the Democrats. Meanwhile, the White House is firmly insisting that Congress must raise the debt ceiling unconditionally, resulting in a tense standoff.

Some predict that both sides will maintain a hardline stance until the Treasury's emergency measures are nearly exhausted, similar to the 2011 U.S. credit rating downgrade crisis. The first face-to-face negotiation between President Biden and Speaker McCarthy on the 1st ended empty-handed without any progress.

Axios reported that the successor to Deese, who was replaced ahead of the debt ceiling battle, faces the daunting task of resolving the major challenge of the debt ceiling issue.

President Biden, announcing Deese's resignation, said, "Deese played a key role in passing some of the most significant economic agendas spanning generations, including the Infrastructure Law, Inflation Reduction Act, and CHIPS Act."

Deese, appointed at the start of the Biden administration, served as NEC Deputy Chair and Deputy Director of the Office of Management and Budget (OMB). The New York Times (NYT) reported that "Deese's replacement, who played a central role in Biden's economic policy throughout his term, has been planned since last summer."

President Biden is also seriously considering appointing Jared Bernstein, a member of the Council of Economic Advisers (CEA), alongside the NEC Chair. Established by Congress in 1946, the CEA consists of a chair and two members and advises the president on economic policy.

With Treasury Secretary Janet Yellen's retention confirmed, President Biden is accelerating White House reorganization, including replacing Chief of Staff Ron Klain with Jeff Zients, former White House COVID-19 Response Coordinator, on the 27th of last month.