By Neil Irwin
Washington Post Staff Writer
Saturday, April 2, 2005
President Bush will nominate Federal Reserve Governor Ben S. Bernanke to be chairman of the Council of Economic Advisers, the White House said yesterday, a move that would help fill out the president's economic team as it undertakes an ambitious second-term agenda.
Bernanke, 51, is an MIT-trained economist who taught at Princeton University for 17 years before being appointed to the Fed board in 2002. He is known as a strong speaker, particularly skilled in explaining the Fed's thinking on economic issues, and is generally respected on Wall Street and among economists.
"He's highly regarded and very intelligent," said Richard A. Yamarone, chief economist of Argus Research Corp., a New York consultancy. "I don't think there's anything too political about him. And what you want at that position is a guy who will create some good policy."
The Bush administration has grappled with several significant vacancies in its economic team in recent months, as numerous key jobs in the Treasury Department are unoccupied. Bernanke's nomination comes as the administration seeks a restructuring of Social Security that includes private accounts, an approach that is foundering in opinion polls and in Congress.
Bernanke's speeches in recent years have focused almost exclusively on monetary policy, or the management of the nation's money supply, in pursuit of low inflation and economic growth. Those speeches offer few insights into his views on controversial issues at the forefront of Bush's economic agenda, particularly major changes the president proposes in Social Security or the tax code.
Bernanke will remain at the Federal Reserve while waiting for his nomination to be confirmed by the Senate, a Fed spokeswoman said, but will recuse himself from monetary policy matters and not attend meetings of the Federal Open Market Committee, the policymaking arm of the Fed.
The Council of Economic Advisers was formed to counsel the president on issues facing the nation from the perspective of economists. Its influence waxes and wanes depending on its members and the receptiveness of the White House to its advice.
Until recently, the position was held by N. Gregory Mankiw, a Harvard University professor who is widely respected among academic economists but appeared not to be at the forefront of White House policymaking, analysts said. Mankiw's predecessor, R. Glenn Hubbard, was intimately involved in shaping the president's first-term tax cuts.
If Bernanke does well leading the council, some Fed-watchers say, it would improve his chances of being nominated to succeed Federal Reserve Chairman Alan Greenspan, who intends to vacate the job at the end of his current term on Jan. 31, 2006.