The Brainard Effect: Will Biden 's new economic czar also be his political savior?

• Author: Ullmann, Owen

"The economy, stupid."

--Strategist James Carville, explaining a key message to focus on during Bill Clinton's successful campaign for president in 1992.

Modern U.S. presidents win re-election when the economy is doing well and are thrown out of office during difficult economic times. Just ask Herbert Hoover, Jimmy Carter, George H.W. Bush, and Donald Trump. Joe Biden is keenly aware of that track record, which is why he has chosen former Federal Reserve Vice Chair Lael Brainard to be his economic policy signal caller as director of the White House National Economic Council going into the 2024 election.

Brainard is amply skilled in all the areas needed to coordinate smart policies that increase the prospects for good times in an election year. She is exceedingly bright, has extensive experience in a range of economic issues, and has a unique ability to forge a consensus on thorny problems among warring parties, a talent particularly helpful in a job that requires coordination with a myriad of headstrong agency leaders. Her deft abilities combined with the luck of good timing in a most uncertain economic cycle may well help Biden win a second term. In the process, her success will earn her a well-deserved promotion as the next secretary of the Treasury, a job she has long coveted.

Brainard already proved her value to Biden in less than a month on the job when she became the White House point person working with the Federal Reserve and Treasury to rush together a financial bailout plan in March to help stem a spreading banking panic following the collapse of two regional banks: Silicon Valley Bank in California and Signature Bank in New York. Her eight years at the Fed, where she played a key role in banking regulation, served her well as top officials spent a weekend hammering out an emergency rescue program that promised to protect every depositor of the banks, including corporations and those with multi-million-dollar accounts. Some White House officials worried about the political optics of a bailout of wealthy depositors, but those concerns were trumped by worries that a financial contagion could send the overall economy into a nosedive ahead of an election year. Brainard also was at the center of an emergency government effort to persuade major banks to stabilize First Republic with a $30 billion infusion.

The banking crisis put Brainard's skills on display. "She's very data-driven, very analytical, looking at a broad range of facts, whether it's monetary policy or financial regulatory policy or financial stability issues," said former Fed colleague Randal Quarles, who was vice chair for supervision from 2017 to 2021. "Her views were always very informative."

Quarles, now executive chairman of the Cynosure Group, a financial services company based in Salt Lake City, Utah, was a Trump appointee with a very different outlook than Brainard, a lifelong Democrat. "She and I disagreed about almost everything, including what to have for lunch," he said with a laugh, "but it was always a very useful discussion with Lael because of how grounded in the facts she was and how analytical she was as opposed to purely reverse engineering her conclusions. Lael and I were friends despite our disagreements. We were sort of like the Scalia and RBG of the Fed [the friendship between conservative Supreme Court Justice...