Council of Economic Advisers

Encyclopedia : C : CO : COU : Council of Economic Advisers

The Council of Economic Advisers is a group of economists set up to advise the President of the United States. It is a part of the Executive Office of the President of the United States, and provides much of the economic policy of the White House. The Council's three members are nominated by the President and approved by the Senate.

Its current members are Katherine Baicker of UCLA and Matthew Slaughter of Dartmouth. As of January 31, President Bush has nominated Edward P. Lazear to fill the seat recently vacated by new Federal Reserve Chairman Ben Bernanke. Pending Senate confirmation, the President is expected to designate Lazear as Chairman of the CEA.

The recent past chairs of the Council are:

Ben S. Bernanke 2005-2006
Harvey S. Rosen 2005
N. Gregory Mankiw 2003-2005
R. Glenn Hubbard 2001-2003
Martin Neil Baily 1999-2001
Janet Yellen 1997-1999
Joseph E. Stiglitz 1995-1997 (member since 1993)
Laura D'Andrea Tyson 1993-1995

Other influential past members include:

Paul Krugman 1982-1983
Alan Greenspan 1974-1977 (chair)
Otto Eckstein 1964-1966
James Tobin 1961-1962
Walter Heller 1961-1964 (chair)
Arthur F. Burns 1953-1956 (chair)
Leon Keyserling 1950-1953 (chair)
Edwin Nourse 1946-1950 (chair)

Every year the Council prepares the Economic Report of the President. The staff of the council includes about 20 academic economists, plus four permanent economic statisticians.

History

The Council was established by the Employment Act of 1946 to provide the President with objective economic analysis and advice on the development and implementation of a wide range of domestic and international economic policy issues. In its first 7 years the CEA made five technical advances in policy making: 1) the replacement of a "cyclical model" of the economy by a "growth model," 2) the setting of quantitative targets for the economy, 3) use of the theories of fiscal drag and full-employment budget, 4) recognition of the need for greater flexibility in taxation, and 5) replacement of the notion of unemployment as a structural problem by a realization of a low aggregate demand. [Salant 1973]

In 1949 a dispute broke out between chairman Edwin Nourse and member Leon Keyserling. Nourse believed a choice had to be made between "guns or butter" but Keyserling argued that an expanding economy permitted large defense expenditures without sacrificing an increased standard of living. In 1949 Keyserling gained support from powerful 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 National Security Council Resolution 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." [Brune 1989]

During the 1953-54 recession, the CEA, headed by Arthur Burns deployed traditional Republican rhetoric. However it supported an activist contracyclical approach that helped to establish Keynesianism as a 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. [Engelbourg 1980]

The 1978 Humphrey-Hawkins Act required each administration to move toward full employment and reasonable price stability within a specific time period. It has had the effect of making the 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. [Cimbala and Stout 1983]

References

Brazelton, W. Robert. Designing U.S. Economic Policy: An Analytical Biography of Leon H. Keyserling Palgrave, 2001.
Brazelton, W. Robert. "The Economics of Leon Hirsch Keyserling" Journal of Economic Perspectives 1997 11(4): 189-197.
Brune, Lester H. "Guns and Butter: the Pre-korean War Dispute over Budget Allocations: Nourse's Conservative Keynesianism Loses Favor Against Keyserling's Economic Expansion Plan." American Journal of Economics and Sociology 1989 48(3): 357-371. Issn: 0002-9246
Cimbala, Stephen J. and Stout, Robert L. "The Economic Report of the President: Before and after the Full Employment and Balanced Growth Act of 1978" Presidential Studies Quarterly 1983 13(1): 50-61.
Eizenstat, Stuart E. "Economists and White House Decisions" Journal of Economic Perspectives 1992 6(3): 65-71.
Engelbourg, Saul. "The Council of Economic Advisers and the Recession of 1953-1954" Business History Review 1980 54(2): 192-214.
Leeson, Robert. "The Political Economy of the Inflation-unemployment Trade-off" History of Political Economy 1997 29(1): 117-156. Issn: 0018-2702
McCaleb, Thomas S. "The Council of Economic Advisers after Forty Years" Cato Journal 1986 6(2): 685-693. Issn: 0273-3072
Norton, Hugh S. The Employment Act and the Council of Economic Advisers, 1946-1976 (1977)
Salant, Walter S. "Some Intellectual Contributions of the Truman Council of Economic Advisers to Policy-making" History of Political Economy 1973 5(1): 36-49.
Sobel, Robert. Biographical Directory of the Council of Economic Advisers (1988)
Tobin, James and Weidenbaum, Murray, ed. Two Revolutions in Economic Policy: The First Economic Reports of Presidents Kennedy and Reagan. M. I. T. Press 1988.
Wehrle, Edmund F. "Guns, Butter, Leon Keyserling, the AFL-CIO, and the Fate of Full-employment Economics." Historian 2004 66(4): 730-748.

External links

From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating.
All text is available under the terms of the GNU Free Documentation License See Wikipedia Copyrights for details.