Obama plans to nominate Housing Secretary Shaun Donovan to be White House budget director.
And the president is considering naming San Antonio Mayor Julian Castro as Donovan's successor.
That's according to people familiar with the selection process. They spoke on condition of anonymity because they were not authorized to discuss the matter by name.
The moves would raise the profile of two men with close ties to the president.
Donovan is an original member of Obama's Cabinet and is well-liked within the White House.
Officials have praised his work overseeing the government's response to Hurricane Sandy. As budget director, he would have significant influence over the administration's policy and spending priorities.
Castro's star has been on the rise since Obama tapped him to deliver the keynote address at the 2012 Democratic National Convention and his is considered a possible vice presidential pick in 2016.