What possible changes to Joe Biden’s team could mean for the economy

Biden’s economic team will look different in 2023. But how different is the question.

On Tuesday night, Axios reported that White House officials are considering the possible departure of three senior economic officials after the November election: Janet Yellen, Secretary of the Treasury; Brian Deese, director of the National Economic Council; and Cecilia Rouse, president of the Council of Economic Advisers (CEA).

In a statement to Yahoo Finance, a White House official denied the report, saying, “Although we are cautiously planning potential transitions after the midterm elections, neither Secretary Yellen nor Brian Deese are part of those plans.” The official also noted that Rouse will finish his stay in the White House “likely in early spring 2023” to return to Princeton, where he is currently on leave.

Either way, the report left economic observers to wonder about the impact the departures could have on the White House’s ongoing response to the turbulent economy, stubborn inflation and a possible recession, all of which will likely still be at the heart of the team. by Biden in 2023.

Treasury Secretary Janet Yellen speaks during a meeting with President Joe Biden and business leaders in October 2021. (REUTERS / Kevin Lamarque)

“It wouldn’t be a surprise if after two years you started seeing some turnover in the cabinet,” economist Austan Goolsbee, former holder of one of those high seats, in an appearance Wednesday with Yahoo Finance Live, noting that such i changes are in line with historical trends.

The former president of the CEA also downplayed the implications of possible departures. “If you look at the historical pattern of legislative activity, in about a year the president will do almost everything he will do legislative on the fiscal side,” adding that subsequent actions tend to be “on a much smaller scale than … in the first few. 100 days of the first year “.

On the agenda for 2023

Biden and his team were very busy on the tax front during his first two years in office, signing bills like the American Rescue Plan, the Bipartisan Infrastructure Law, the Chips for America Act, and the Inflation Reduction Act.

But looking forward, a Republican takeover of one or both houses of Congress could mean that big follow-up bills may be harder to come by. For Biden and his associates, a top economic priority could instead become the work of enforcing the laws that were passed during his first two years. The Inflation Reduction Act, in particular, has some provisions that won’t go into effect for years.

In a note following the Axios report, the Cohen Washington research group suggested that there would be minimal political implications of the potential Treasury revenue, particularly with regards to cryptocurrencies and the drive to control stable currencies. The group noted that the two most likely successors would be Commerce Secretary Gina Raimondo or Federal Reserve Vice President Lael Brainard.

On the one hand, “Brainard would be closer to a continuation of the status quo,” specifically on cryptocurrency, the group wrote. But for the secretary Raimondo, they said: “It is difficult for us to see you radically change Yellen’s approach”.

Rep Patrick McHenry (R-NC) and Rep Maxine Waters (D-CA) listen to Federal Reserve Board Chairman Jerome Powell (not pictured) testifying before a hearing of the House Financial Services Commission in Washington , USA, June 23, 2022 REUTERS / Mary F. Calvert

Rep Patrick McHenry (R-NC) – left – aims to take the House Financial Services Commission gavel from Rep Maxine Waters (D-CA) if Republicans get a majority in the fall. (REUTERS / Mary F. Calvert)

Republicans, meanwhile, aim to derail Biden’s economic agenda if they take power. They largely spent 2022 campaigning that Biden’s policies, especially the US $ 1.9 trillion bailout, led to high inflation.

Rep Patrick McHenry (R-NC 10th District) will lead the House Financial Services Committee in 2023 under possible control of the GOP and recently said, “Thing # 1 is to stop digging” when it comes to fighting inflation. , adding that tight scrutiny of the Biden administration is an almost secondary priority.

‘For the president’s advisers it’s a sprint’

In any case, turnover in the economic team is quite common two years into the start of a new presidency. Indeed, two years later, both Bill Clinton and George W. Bush faced the challenge of replacing all three prominent members of their business teams.

But if Secretary Yellen were to leave, he would be leaving more quickly than two of his predecessors, who also served the newly elected presidents. Both Timothy Geithner (Obama) and Steven Mnuchin (Trump) joined the Treasury Department and remained for the entire term of their bosses.

In total, four of the last six Treasury Secretaries to take office with a new president remained for the entire term. The two who left earlier, Lloyd Bentsen under Bill Clinton and Paul O’Neill under George W. Bush, left shortly after the semester.

US National Economic Director Gary Cohn (L) and Treasury Secretary Steven Mnuchin unveil the Trump administration's tax reform proposal in the White House meeting room in Washington, United States on April 26, 2017. REUTERS / Kevin Lamarque

Gary Cohn (left) and Steven Mnuchin – seen in 2017 as two of the top economic advisors at the start of the Trump administration. (REUTERS / Kevin Lamarque)

Others have had even shorter runs in the meantime. Yellen has already served longer than Larry Summers, who settled in the Treasury Department in July 1999 and walked away with George W. Bush’s inauguration in 2021. Summers has remained prominent as an economic commentator who has spoke just this week on issues such as tax cuts in the UK and the potential for a ‘hard landing’ for the economy.

Several sources in the Axios report also pointed out that Yellen’s departure is far from sculpted and the outcome of the November elections will influence the decision. Lily Adams, one of Secretary Yellen’s main aides, told Yahoo Finance that “Secretary Yellen is not going to leave.”

President-elect Bill Clinton (center) answers questions from the media after announcing the business team for his administration on December 10, 1992 in Little Rock, Arkansas.  The appointees are (LR) Alice Riwlin, Deputy Director of the Office of Management and Budget, Robert Rubin, President of the National Economic Council, Vice President-elect Al Gore, President-elect Clinton, Leon Patta, Office of Management and Budget, Lloyd Bentsen, Secretary of the Treasury, and Roger Altman, Department of the Treasury.  REUTERS / Gary Hershorn (US POLICY) BEST AVAILABLE QUALITY

President-elect Bill Clinton announces his business team in 1992 in Little Rock, Arkansas. (REUTERS / Gary Hershorn)

Meanwhile, the terms of office for the other two prominent economic posts – the director of the Director of the National Economic Council and the chairman of the Council of Economic Advisers – are often historically much shorter. There is only one example in the past 30 years – Gene Sperling’s first run to the director of the NEC during Bill Clinton’s second term – of someone who held one of these positions for 4 years.

Sperling, who also held the title under Obama, could be in line for a third run to the top of the NEC if Deese leaves.

For his part, Goolsbee led Barack Obama’s CEA for about a year and remarked Wednesday: “For the president’s advisers, it’s a sprint, and for the president himself, it’s a marathon.”

Ben Werschkul is a Washington correspondent for Yahoo Finance. Jennifer Schonberger helped report this article.

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YoutubeAnd red.

Leave a Reply

%d bloggers like this: