Biden's pick for top WH economist faces Senate grilling

President Joe Biden’s next pick to lead the Council of Economic Advisers is bracing for a barrage of political attacks centered on how the White House has tackled inflation

Biden Economic Aide (Copyright 2022 The Associated Press. All rights reserved)

The job of chief White House economist is typically a wonky, low-profile one, with its occupant mainly tasked with producing analyses and poring over charts and graphs. But President Joe Biden's next pick to lead the Council of Economic Advisers is bracing for a barrage of political attacks centered on how the White House has tackled inflation.

Jared Bernstein is a longtime member of Biden's inner circle who has served in top administration roles as well as progressive think tanks focusing on economic policy. Working first under vice president Biden and now in the Biden White House, Bernstein has long had an unparalleled ability to channel the president's economic values.

In his February statement announcing Bernstein’s nomination, Biden said, “He is an expert on worker empowerment and a worker-centric economic policy, which has long been the heart of my economic vision."

But that also makes Bernstein a target for Republican lawmakers.

Frequently appearing on TV, Bernstein was one of the most visible White House proponents that the inflation first seen in 2021 was “transitory" and would soon fade. He was a chief advocate of the sweeping, $1.9 trillion COVID-19 relief package, which critics say triggered the persistent high prices that have become a political and economic headache for Biden. Bernstein and other White House officials contend the aid jumpstarted hiring at a historic scale.

Bernstein's confirmation hearing before the Senate Banking Committee on Tuesday is one of the few opportunities GOP senators will have to directly go after Biden's handling of inflation and publicly put the White House on defense.

“The committee needs to hear from Bernstein on how he will advise President Biden on the economy," said Ryann Durant, a spokeswoman for South Carolina Sen. Tim Scott, the committee's top Republican. "Inflation is the top concern for American families, and the country deserves someone who takes the issues seriously –- not just working to advance progressive policies through a partisan tax-and-spend agenda.”

Bernstein is seeking to replace Cecilia Rouse, an economist who is returning to Princeton University after a two-year stint in the Biden administration. Bernstein currently serves on the three-member Council of Economic Advisers, but to become its chairman, he will need approval from the Senate, where Democrats hold a narrow majority. Several moderate Democrats are up for reelection next November and have been unafraid to torpedo Biden picks if it could be politically advantageous for them back home with voters, although it's unclear whether that dynamic will occur with Bernstein's nomination.

Republicans hope that it will. GOP aides have spent weeks poring over Bernstein's public writings and media appearances dating back at least a dozen years, finding a slew of statements they believe could be damaging to his confirmation prospects, according to two officials involved in crafting the strategy.

For instance, Bernstein repeatedly stressed since early 2021 that any increases in inflation would be modest and “transitory.” Then in July 2022 — amid soaring price hikes — he said the use of the transitory description and its lack of specificity “led to a level of ambiguity that wasn’t serving the debate very well.”

Republican senators are preparing to ask Bernstein what his economic advice will be for Biden, as well as making the case that he is largely a partisan academic, said the officials, who spoke on condition of anonymity to discuss internal strategy deliberations.

Though much less of a focus than inflation, Republicans will also focus on Bernstein's climate views, including his contention that fossil fuels are “severely underpriced” and his argument that “we really should take the Green New Deal seriously."

Puncturing the Senate Republicans' argument somewhat is an endorsement from seven former chairmen of the Council of Economic Advisers under GOP presidents, who say Bernstein is well-qualified to take the job. The letter, obtained by The Associated Press, also says Bernstein was one of the first to come up with the concept of “Opportunity Zones," which use tax law to promote private investment in poor communities and are one of Scott's chief legislative achievements.

Scott, whose Opportunity Zones initiative was part of the 2017 tax overhaul, is exploring a run for the 2024 Republican presidential nomination.

“He is a collegial and inquisitive policymaker who enjoys substantive engagement with other policy experts, including those with whom he disagrees, a vital characteristic not always shared by economists involved in policy matters,” reads the letter, first reported by The New York Times. “Dr. Bernstein values inputs from a diverse set of views.”

Meanwhile, Democrats led by Senate Banking Committee Chairman Sherrod Brown, D-Ohio, are dismissing Republican attempts to politicize the traditionally noncontroversial job, noting that senators have generally deferred heavily to presidents of both parties on whom they wanted as their chief in-house economist.

Democrats have also noted that inflation has eased from its peak last year. And administration officials are paying attention to a key metric: Are wages rising faster than inflation?

There was a major gap between average hourly earnings and inflation in June of last year, but that gap has narrowed in ways that will allow Bernstein to potentially tell lawmakers that the administration is making progress against inflation.

Wages have risen 4.2% from a year ago, compared to prices rising 5%. That gap of roughly 0.8% has narrowed from a peak of 3.5% last June, an indication that income growth could turn positive this year as inflation rates decline.

Ahead of his hearing, Bernstein, 67, has met with Democratic and Republican senators, both on and off the Banking Committee. He has also prepared with briefings and mock hearings, according to a White House official who insisted on anonymity to discuss preparations. Since his nomination to head the CEA, Bernstein has not done media interviews.

Much of Bernstein’s research and analysis has focused on improving the lives of workers and he has worked at both the Economic Policy Institute and the Center on Budget and Policy Priorities, two liberal think tanks based in Washington. His ability to clearly lay out Biden's thinking is unique compared to his predecessors, who often hailed from academia and could struggle to catch the president’s attention.

Bernstein has a simple definition of what he has called “Biden-nomics.” The theory is that if you’re helping to make a pie, then you should get a fair slice for the effort. There is a respect for the free market, and Bernstein often quotes outside economic forecasts from Wall Street analysts to back up his arguments. But the government exists to ensure the bounty of the market gets shared as broadly as possible, he argues.

When Biden put forward his pandemic relief package, Bernstein said the president’s economic team did consider the risks that the spending could push up inflation. But, backed by comments by Federal Reserve Chair Jerome Powell, Bernstein said the more severe threat was an underwhelming amount of aid.

“We’ve constantly argued that the risks of doing too little are far greater than the risk of going big, providing families and businesses with the relief they need to finally put this virus behind us,” Bernstein told reporters in February.

Biden has rejected claims that his aid contributed to higher inflation, even though independent economic analyses suggest it did.

The economy has added 12.6 million jobs so far during Biden’s presidency, the highest total of any White House term, and the administration has vowed to bring down down inflation without sacrificing most of the job gains — as efforts by the Fed to combat high prices can lead to slowdowns and layoffs.