The WSJ reports ($): Of the three men assumed to be the leading contenders, Mr. Feldstein may have the edge in economic stature and political experience. As chairman of President Reagan's Council of Economic Advisers, he called for spending cuts and tax increases to reduce the budget deficit. That angered some White House officials but enhanced his public reputation as "someone who was forthright" on fiscal policy, says Stanford University economist Robert Hall, a longtime associate. Mr. Feldstein has been advising Mr. Bush since 1999.Mr. Feldstein's past deficit concerns have some conservatives worrying that as Fed chairman, he would criticize Mr. Bush's fiscal policies, but that seems unlikely. "That was 20 years ago," says Cesar Conda, formerly an aide to Vice President Dick Cheney and now a partner in Navigators LLC, a lobbying firm. "When I was at the White House, he was a solid, free-market economist, always on the side of the president's tax-cutting agenda while there were naysayers in the press and on the Hill concerned about the deficit." In an interview, Mr. Feldstein says the deficit is much smaller today as a share of gross domestic product than it was in the early 1980s, and it will likely decline further even if the tax cuts are made permanent, provided the administration is "even reasonably successful" in controlling discretionary spending. Mr. Feldstein also has provided intellectual heft to the Social Security private-accounts effort, though some admirers criticize him for playing down the scale of the benefit cuts or tax increases needed to restore the program's solvency. Though monetary policy isn't one of Mr. Feldstein's academic specialties, he has written that the economy benefits from an inflation rate close to zero. One area of possible embarrassment for Mr. Feldstein involves his service on the board of American International Group Inc., the New York insurer now under investigation. Mr. Feldstein says he won't discuss the companies where he serves on the board; he says regulators haven't questioned him about AIG. Regulators say AIG's board has moved quickly to address their concerns.

Mr. Hubbard, as chairman of Mr. Bush's Council of Economic Advisers from 2001 to 2003, won admiration for his discipline and work ethic on issues ranging from the West Coast dockworker lockout to the 2003 dividend-tax cut. He was known for getting his staff to quickly draft authoritative policy memos for White House decision makers. "He earned his way into the Oval Office," says a former administration official. Mr. Hubbard was a vigorous promoter of the 2003 Bush tax cuts, in particular on corporate dividends, which he helped shape. Behind the scenes, he quarreled with Mr. Greenspan over the Fed chairman's view that the resulting deficits would push up interest rates. These stands endeared Mr. Hubbard to conservatives but aroused suspicions among some that he is highly political. He has since co-written a lengthy academic study arguing that the link between deficits and interest rates is hard to pin down. Mr. Hubbard has written extensively on the interplay between the Fed and the markets. In a January column in BusinessWeek he said the Fed, "wisely insulated from the political process," deserved a "gold medal" for achieving price stability.

Mr. Bernanke conducted research on monetary policy at Princeton University before joining the Fed in 2002. Since then, his plain-speaking style, numerous speeches and copious research have made him second in prominence at the Fed only to Mr. Greenspan. He recently said the hardest part of moving to the Fed was having to wear a suit: "My proposal that Fed governors should signal their commitment to public service by wearing Hawaiian shirts and Bermuda shorts has so far gone unheeded." He may need to pay more political dues before getting a shot at the chairmanship. Though a libertarian Republican, he displays few partisan leanings. In 2000, as chairman of Princeton's economics department, he hired star economist Paul Krugman, now a vociferous Bush critic, from Massachusetts Institute of Technology. Mr. Bush will get a better feel for Mr. Bernanke's views during his stint at the Council of Economic Advisers, though people close to the process say the post isn't an audition for the Fed job.

There could be several dark-horse candidates. Donald Kohn, a longtime Fed staffer and now governor, is well placed to emulate Mr. Greenspan but he is a political independent. Consultant Lawrence Lindsey has close ties to the White House and was a Fed governor, but his record as Mr. Bush's first National Economic Council director was mixed. John Taylor is a prominent monetary-policy scholar but he didn't leave a big mark in the four years he just spent as Treasury's top international official.

via Roubini Global Economics Monitor