One person, speaking on condition of anonymity, said Kushner was now not inclined to pursue the position. Referencing Trump's opponent Hillary Clinton, Mulvaney added: "But the choice on the other side is just as bad". He was the Assistant to the President in charge of the White House Office of Political Affairs and the White House Office of Intergovernmental Affairs and deputy chief of staff during the Reagan administration.
His experience on Capitol Hill as a congressman could prove valuable next year as Democrats take control of the House, creating a split government.
The decision came suddenly.
Those angling for Mr Kushner include some of the President's outside advisers and some administration officials, the source said.
"This is a tremendous honour", Mulvaney tweeted. "I mean, it's what the president wanted for right now, and if we have changes we'll let you know". "It's going to be a great 2019!"
The mere suggestion of Kushner as a candidate triggered scorn and nepotism jokes from Trump's critics, like incoming Democratic congresswoman Alexandria Ocasio-Cortez who tweeted sarcastically: "Classic Republican "bootstrap" meritocracy".
The person that President Donald Trump has selected to become his next "acting" chief of staff may have some explaining to do on the first day of the job.
White House press secretary Sarah Sanders said Mulvaney is not resigning as OMB director.
All of this is important as President Trump moves into the most hard time of his term in office. But his knowledge of Congress and how government works is likely to be an asset in the coming months. As recently as Friday morning, former New Jersey Governor Chris Christie was the frontrunner.
Christie shares Trump's reputation for a pugnacious approach to politics. He has built a reputation in the West Wing for hiring competent staff and presiding over an organized and responsive office.
Having grown increasingly tired of aides who would tell him no, Trump felt aligned with the man he had appointed OMB director.
As the search dragged on after Ayers bowed out, the void had been filled with Trump's specialty: drama.
Interested in Trump Administration?Speculation has swirled around an array of Trump associates, prompting some to distance themselves from the job.
Trump met with Christie in the White House residence on Thursday after a holiday reception.