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White House May Pick Bernanke

Fed Governor Would Chair President's Economic Council

By Nell Henderson
Washington Post Staff Writer
Friday, December 17, 2004; Page A08

The White House, seeking a strong economic team to craft and sell key features of its second-term agenda, is considering appointing Federal Reserve Board member Ben S. Bernanke to be chairman of the president's Council of Economic Advisers, officials confirmed yesterday.

Bernanke, 51, former chairman of Princeton University's economics department, would succeed N. Gregory Mankiw, who is on leave from Harvard University and expected to return there early next year.

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One administration aide, who spoke on the condition of anonymity, cautioned that the process is at an early stage. The Fed and Bernanke declined to comment on the possibility, which was reported in the Wall Street Journal on Monday. A White House spokeswoman also declined to comment on speculation about Mankiw's successor, noting that he has not yet resigned.

Bush appointed Bernanke to the Fed two years ago. The highly regarded economist has focused most of his research on monetary policy -- adjusting the money supply through the availability of credit, which in turn affects the rates of inflation and economic growth.

His speeches and research since joining the Fed also have addressed primarily the topics of monetary policy and the economy in general. They have not touched the politically controversial subjects of changing the tax code and Social Security, the issues that are Bush's second-term focal points.

If appointed, Bernanke would be one of the top officials involved in explaining and selling the president's economic policies to Congress, Wall Street and the media.

Bernanke has developed a reputation at the Fed as a good communicator of the central bank's thinking and policy, an analyst said.

On Wall Street, Bernanke would "be viewed as a very credible person to take on the role of one of the administration's chief economic spokesmen," said William Dudley, chief economist at Goldman Sachs U.S. Economics Research.

The job of CEA chairman has varied in influence over the decades, depending on the nature of the White House and the economist in the job.

R. Glenn Hubbard, the first CEA chairman under Bush, was perceived as having significant influence on the president's tax cut proposals. But Mankiw has served in a position that appeared somewhat sidelined over the past two years.

Bernanke is largely untried in the political arena. Fed officials do not hold news conferences. And aside from Fed Chairman Alan Greenspan, who is regularly questioned by Congress on a variety of topics, Fed policymakers generally speak on the topics they choose in front of the audiences they select.

If successful in the CEA role, some observers speculated, Bernanke could boost his chances of succeeding Greenspan, who has indicated he will step down when his board term expires Jan. 31, 2006.

Two of the top contenders for Greenspan's job are former CEA chairmen: Hubbard and Harvard University economist Martin Feldstein, who held the job under President Ronald Reagan.

Greenspan was CEA chairman under President Gerald R. Ford.

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