Council of Economic Advisers

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Council of Economic Advisers
Council of Economic Advisers.png
Agency overview
Formed1946;76 years ago (1946)
Preceding agencies
Headquarters Eisenhower Executive Office Building
EmployeesAbout 35
Agency executive
Parent agency Executive Office of the President of the United States
Website www.whitehouse.gov/cea/ OOjs UI icon edit-ltr-progressive.svg

The Council of Economic Advisers (CEA) is a United States agency within the Executive Office of the President established in 1946, which advises the President of the United States on economic policy. [2] The CEA provides much of the empirical research for the White House and prepares the publicly-available annual Economic Report of the President. [3]

Contents

Activities

Economic Report of the President

The report is published by the CEA annually in February, no later than 10 days after the Budget of the US Government is submitted. The president typically writes a letter introducing the report, serving as an executive summary and used for press coverage. The report proceeds with several hundred pages of qualitative and quantitative research by reviewing the impact of economic activity in the previous year, outlining the economic goals for the coming year (based on the President's economic agenda), and making numerical projections of economic performance and outcomes. Public criticism usually accompanies its release, sometimes attacking the importance placed or not placed on particular data or goals. The data referenced or directly used in the report are from the Bureau of Economic Analysis and U.S. Bureau of Labor Statistics.[ citation needed ]

History

Establishment

The Truman administration established the Council of Economic Advisers via the Employment Act of 1946 to provide presidents with objective economic analysis and advice on the development and implementation of a wide range of domestic and international economic policy issues. It was a step from an "ad hoc style of economic policy-making to a more institutionalized and focused process". The act gave the council the following goals:

1. to assist and advise the President in the preparation of the Economic Report;

2. to gather timely and authoritative information concerning economic developments and economic trends, both current and prospective, to analyze and interpret such information in the light of the policy declared in section 2 for the purpose of determining whether such developments and trends are interfering, or are likely to interfere, with the achievement of such policy, and to compile and submit to the President studies relating to such developments and trends;

3. to appraise the various programs and activities of the Federal Government in the light of the policy declared in section 2 for the purpose of determining the extent to which such programs and activities are contributing, and the extent to which they are not contributing, to the achievement of such policy, and to make recommendations to the President with respect thereto;

4. to develop and recommend to the President national economic policies to foster and promote free competitive enterprise, to avoid economic fluctuations or to diminish the effects thereof, and to maintain employment, production, and purchasing power;

5. to make and furnish such studies, reports thereon, and recommendations with respect to matters of Federal economic policy and legislation as the President may request. [4]

In 1949 Chairman Edwin Nourse and member Leon Keyserling argued about whether the advice should be private or public and about the role of government in economic stabilization. [5] Nourse believed a choice had to be made between "guns or butter" but Keyserling argued for deficit spending, asserting that an expanding economy could afford large defense expenditures without sacrificing an increased standard of living. In 1949, Keyserling gained support from Truman advisors Dean Acheson and Clark Clifford. Nourse resigned as chairman, warning about the dangers of budget deficits and increased funding of "wasteful" defense costs. Keyserling succeeded to the chairmanship and influenced Truman's Fair Deal proposals and the economic sections of NSC 68 that, in April 1950, asserted that the larger armed forces America needed would not affect living standards or risk the "transformation of the free character of our economy." [6]

1950s–80s

During the 1953–54 recession, the CEA, headed by Arthur Burns deployed non-traditional neo-keynesian interventions, which provided results later called the "steady fifties" wherein many families stayed in the economic "middle class" with just one family wage-earner. The Eisenhower Administration supported an activist contracyclical approach that helped to establish Keynesianism as a possible bipartisan economic policy for the nation. Especially important in formulating the CEA response to the recession—accelerating public works programs, easing credit, and reducing taxes—were Arthur F. Burns and Neil H. Jacoby. [7]

Until 1963, during its first seven years the CEA made five technical advances in policy making, including the replacement of a "cyclical model" of the economy by a "growth model," the setting of quantitative targets for the economy, use of the theories of fiscal drag and full-employment budget, recognition of the need for greater flexibility in taxation, and replacement of the notion of unemployment as a structural problem by a realization of a low aggregate demand. [8]

The 1978 Humphrey–Hawkins Full Employment Act required each administration to move toward full employment and reasonable price stability within a specific time period. It has been criticized for making CEA's annual economic report highly political in nature, as well as highly unreliable and inaccurate over the standard two or five year projection periods. [9]

1980–present

Since 1980, the CEA has focused on sources of economic growth, the supply side of the economy, and on international issues. [5] In the wake of the Great Recession of 2008–2009, the Council of Economic Advisers played a significant role in supporting the American Recovery and Reinvestment Act. [10]

Organization

The council's chairman is nominated by the president and confirmed by the United States Senate. The members are appointed by the president. As of July 2017, the Council's 18 person staff consisted of a chief of staff (Director of Macroeconomic Forecasting), 15 economists (5 senior, 4 research, 4 staff economists, 2 economic statisticians) and 2 operations staff. [11] Many of the staff economists are academics on leave or government economists on temporary assignment from other agencies. [10]

Composition

Chairs

  Denotes acting CEA Chair
  Denotes Nominee for CEA Chair
No.OfficeholderTerm startTerm endPresident(s)
1 Edwin G. Nourse August 9, 1946November 1, 1949 Harry Truman
Leon Keyserling November 2, 1949May 10, 1950
2May 10, 1950January 20, 1953
3 Arthur F. Burns March 19, 1953December 1, 1956 Dwight Eisenhower
4 Raymond J. Saulnier December 3, 1956January 20, 1961
5 Walter Heller January 29, 1961November 15, 1964 John F. Kennedy
Lyndon Johnson
6 Gardner Ackley November 16, 1964February 15, 1968
7 Arthur M. Okun February 15, 1968January 20, 1969
8 Paul McCracken February 4, 1969December 31, 1971 Richard Nixon
9 Herbert Stein January 1, 1972August 31, 1974
Gerald Ford
10 Alan Greenspan September 4, 1974January 20, 1977
11 Charles Schultze January 22, 1977January 20, 1981 Jimmy Carter
12 Murray Weidenbaum February 27, 1981August 25, 1982 Ronald Reagan
13 Martin Feldstein October 14, 1982July 10, 1984
14 Beryl Sprinkel April 18, 1985January 20, 1989
15 Michael Boskin February 2, 1989January 20, 1993 George H. W. Bush
16 Laura Tyson February 5, 1993April 22, 1995 Bill Clinton
17 Joseph Stiglitz June 28, 1995February 10, 1997
18 Janet Yellen February 18, 1997August 3, 1999
19 Martin N. Baily August 12, 1999January 20, 2001
20 Glenn Hubbard May 11, 2001February 28, 2003 George W. Bush
21 Greg Mankiw May 29, 2003February 18, 2005
22 Harvey S. Rosen February 23, 2005June 10, 2005
23 Ben Bernanke June 21, 2005January 31, 2006
24 Edward Lazear February 27, 2006January 20, 2009
25 Christina Romer January 29, 2009September 3, 2010 Barack Obama
26 Austan Goolsbee September 10, 2010August 5, 2011
27 Alan Krueger November 7, 2011August 2, 2013
28 Jason Furman [12] August 2, 2013January 20, 2017
29 Kevin Hassett [13] September 13, 2017June 28, 2019 Donald Trump
Tomas J. Philipson June 28, 2019June 23, 2020
Tyler Goodspeed June 23, 2020January 7, 2021
30 Cecilia Rouse March 12, 2021Incumbent Joe Biden

Members

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References

  1. 1 2 Wage and Price Controls Encyclopedia.com n.d.
  2. Council of Economic Advisers
  3. "Economic Report of the President". govinfo.
  4. "History of the CEA". The White House. Retrieved 4 May 2021.(PD-icon.svg Public domain)
  5. 1 2 Remarks by Chairman Alan Greenspan. Receipt of the Truman Medal for Economic Policy. Before the Truman Medal Award and Economics Conference, Kansas City, Missouri October 26, 2005, Council of Economic Advisers website under President Bush
  6. Brune 1989
  7. Engelbourg 1980
  8. Salant 1973
  9. Cimbala and Stout 1983
  10. 1 2 Flickenschild; Michael, Afonso, Alexandre (2018). "Networks of economic policy expertise in Germany and the United States in the wake of the Great Recession". Journal of European Public Policy. 26 (9): 1292–1311. doi: 10.1080/13501763.2018.1518992 .{{cite journal}}: CS1 maint: multiple names: authors list (link)
  11. Council of Economic Advisers. Staff Whitehouse.gov, n.d. accessed 29 July 2017
  12. "Obama names Furman as new White House chief economist", Reuters, 2013-06-10
  13. "Senate Confirms Kevin Hassett as Chairman of the President's Council of Economic Advisers", The Wall Street Journal, 2017-09-12

Sources