A dimly lit room, with space for just a small meeting table and a desk, may not sound like a nerve centre of the American economy. But the office for the director of the National Economic Council (nec), located in the White House’s west wing, is crucial to charting the country’s direction. Its occupant for the past two years, Brian Deese, has crafted the Biden administration’s response to the covid-induced slowdown, the rise in inflation and challenges from China. In the coming days Lael Brainard, who has been a board member of the Federal Reserve since 2014, will take over the poky but powerful office.
Amid all the formidable political machinery in Washington, at first glance the institution of the nec also seems puny. It is young—having been founded three decades ago—and has only 30 staff. But it is the clearing-house for the White House’s economic debates, helping the president decide on strategy. It then co-ordinates departments in the design and implementation of policy. With power concentrated in Joe Biden’s White House, the nec has gained extra clout compared with cabinet agencies, notably the Treasury.
After a tenure of 25 months, Mr Deese steps down at a natural time for a reshuffle, following midterm elections. He has had a productive run. Congress passed four big pieces of economic legislation, adding up to trillions of dollars of spending: a covid-recovery package, plus hefty investment in infrastructure, semiconductors and clean technologies.
Legislative success stems from many officials working together. But Mr Deese was consistently at the centre of the action, meaning Ms Brainard has big shoes to fill. “He had a commanding understanding of every issue,” reports Jason Furman, an economist and deputy director of the council under Barack Obama. Mr Deese worked with Republicans to secure the passage of the infrastructure bill and with Joe Manchin, an obstreperous Democratic senator, to enact the climate law.
Yet this legislative success has not always produced real-world success. The pandemic package contributed to inflationary pressure, which America is still struggling to rein in. Meanwhile, America’s industrial policy has annoyed its allies, who see it as rampant protectionism. The task falls to Ms Brainard, an experienced economic policymaker, to see through the wide-ranging plans and to remedy the missteps. “She has the skills to roll up her sleeves and get that done,” says Wendy Edelberg of the Brookings Institution, a think-tank. There is scant prospect of anything more ambitious over the next two years, since Congress is divided.
Her experience may help President Biden mollify allies who worry about the new industrial subsidies. As the country’s top financial diplomat under President Obama, Ms Brainard worked effectively with other countries, a quality that will again be in demand. At the same time, she will also have a role in ensuring that America dodges calamity and raises the debt ceiling this year. With a background both as a central banker and a Treasury official, Ms Brainard is well placed to navigate the budgetary shoals. She will still need all the heft the nec can offer to get her own way. ■
Source: Finance - economist.com
