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Jan. 23, 2014: San Antonio Mayor Julian Castro speaks about President Barack Obama's signature health care law at the Families USAs 19th Annual Health Action Conference in Washington. (AP)

President Obama is expected to nominate San Antonio Mayor Julian Castro for housing secretary on Friday and will nominate Shaun Donovan, his current housing chief, to run the budget office, a White House official said.

Obama is expected to announce the latest Cabinet shuffle at the White House after returning from an overnight trip to Chicago. He will be joined by Castro, a 39-year-old Democratic up-and-comer, and Donovan, 48, who has led the Department of Housing and Urban Development since the start of Obama's presidency in 2009.

The moves would raise the profiles of two men with close ties to Obama.

Obama chose Castro to deliver the keynote address at the 2012 Democratic National Convention and he has been a rising star in the party ever since. Donovan is highly regarded inside the White House, where officials have lauded his work overseeing the federal government's response to the devastation Hurricane Sandy unleashed on the East Coast in October 2012.

As budget director, Donovan would have significant sway over the administration's policy and spending priorities.

If he is confirmed by the Senate, the three-term mayor would become one of the highest-ranking Hispanic officials serving at the pleasure of the president. Castro has been talked about as a possible Democratic candidate for vice president in 2016. Donovan, already confirmed for the HUD job, would be expected to win confirmation a second time for the new post.

Donovan would replace Sylvia Mathews Burwell as director of the White House Office of Management and Budget. Obama recently nominated Burwell to become secretary of health and human services following the resignation of Kathleen Sebelius after the disastrous rollout of the federal website for consumers to buy insurance coverage under Obama's health care law.

Obama has previously tried to offer Castro a Cabinet post, but the mayor decided to stay in San Antonio and handily won a third term last year.

"This was a job I really did look forward to growing up, when I thought about politics," Castro said in 2011 about being mayor. "So I'm not in a hurry to leave."

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Obama to name San Antonio mayor for housing post

ABC US News | ABC International NewsCopy

In a second-term Cabinet reshuffle, President Barack Obama tapped San Antonio Mayor Julian Castro on Friday to be the nation's next housing secretary, giving a prominent national platform to one of the Democratic Party's most celebrated up-and-comers.

Joined by Castro and Vice President Joe Biden, Obama also announced he was nominating current Housing and Urban Development Secretary Shaun Donovan to run the White House budget office an opening Obama created when he asked his former budget chief to take over the Health and Human Services Department last month.

"Just because you are of modest means does not mean that your aspirations or your opportunity ought to be limited, and it certainly means you can have the talent to succeed and achieve the American Dream," Castro said as he accepted the nomination in the State Dining Room of the White House.

The 39-year-old Castro was propelled into the national spotlight two years ago when Obama chose him to deliver the keynote address at the Democratic National Convention a political baptism by fire not unlike the president's own rise to prominence when Obama keynoted the 2004 convention. Friday's announcement gives another major boost to Castro's profile, just as Democrats are eyeing him as a potential vice presidential candidate in 2016.

As a Democrat, Castro's options for climbing the political ladder were severely constrained in Texas, where every statewide office is held by a Republican and Democrats haven't won a statewide race in 20 years. In elevating Castro to a Cabinet-level post, Obama gives Castro perhaps his best chance to establish his credibility nationally as Democrats seek to shore up a bench of promising candidates for future races.

"The national scene in Washington is where politicians go to cut their teeth for any sort of national aspirations," said Maria Cardona, a Democratic strategist who advised Hillary Rodham Clinton's 2008 presidential campaign. "This will give him an opportunity to show off what he can do."

Castro, who is Mexican-American, would become one of the highest-ranking Hispanic officials in government if confirmed by the Senate. He comes to Washington with a compelling personal narrative: The son of a single mother, he attended Harvard Law School before serving three terms as San Antonio's mayor. His identical twin brother, Democrat Joaquin Castro, represents Texas in Congress.

Referring to Castro as an "all-star," Obama urged the Senate to confirm both Castro and Donovan quickly and without games.

"They are proven leaders. They are proven managers. They are going to be effective and most importantly, they've got huge heart," Obama said.

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Obama Taps Castro for Cabinet, Boost to Democratic Party

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