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] The council is made up of its chairperson and generally two to three additional member economists. Its chairperson requires appointment and Senate confirmation, and its other members are appointed by the President.
Activities
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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.[4] The president typically writes a letter introducing the report, serving as an executive summary. The report proceeds with several hundred pages of qualitative and quantitative research reviewing the impact of economic activity in the previous year, outlining economic goals for the coming year (based on the President's economic agenda), and making numerical projections of economic performance and outcomes.[5] Public criticism usually accompanies its release, sometimes attacking the importance placed or not placed on particular data or goals. The data referenced or 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.[6]
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.[7] 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".[8]
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.[9]
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.[10]
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.[11]
1980–present
Since 1980, the CEA has focused on sources of economic growth, the supply side of the economy, and on international issues.[7] In the wake of the Great Recession of 2008–09, the Council of Economic Advisers played a significant role in supporting the American Recovery and Reinvestment Act.[12]
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 eighteen person staff consisted of a chief of staff (Director of Macroeconomic Forecasting), fifteen economists (five senior, four research, four staff economists, two economic statisticians) and two operations staff.[13] Many of the staff economists are academics on leave or government economists on temporary assignment from other agencies.[12]
^"Economic Report of the President | CEA". The White House. Retrieved 2023-06-04.
^"Economic Report of the President". The White House. Retrieved 2023-06-04.
^"History of the CEA". The White House. Retrieved 4 May 2021.(Public domain)
^ abRemarks 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
^ abFlickenschild; 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. hdl:1887/71157.{{cite journal}}: CS1 maint: multiple names: authors list (link)
^Council of Economic Advisers. Staff Whitehouse.gov, n.d. accessed 29 July 2017
^"Obama names Furman as new White House chief economist", Reuters, 2013-06-10
^"Senate Confirms Kevin Hassett as Chairman of the President's Council of Economic Advisers", The Wall Street Journal, 2017-09-12
^"Rauh named Principal Economic Adviser". Retrieved March 21, 2024.
^"Tedeschi tapped to be Chief Economist". Retrieved March 21, 2024.
Sources
Brazelton, W. Robert (2001), Designing U.S. Economic Policy: An Analytical Biography of Leon H. Keyserling, New York: Palgrave, ISBN 0-333-77575-9
Brazelton, W. Robert (1997), "The Economics of Leon Hirsch Keyserling", Journal of Economic Perspectives, 11 (4): 189–197, doi:10.1257/jep.11.4.189, ISSN 0895-3309
Brune, Lester H. (1989), "Guns and Butter: the Pre-Korean War Dispute over Budget Allocations: Nourse's Conservative Keynesianism Loses Favor Against Keyserling's Economic Expansion Plan", The American Journal of Economics and Sociology, 48 (3): 357–371, doi:10.1111/j.1536-7150.1989.tb03189.x, ISSN 0002-9246
Cimbala, Stephen J.; Stout, Robert L. (1983), "The Economic Report of the President: Before and after the Full Employment and Balanced Growth Act of 1978", Presidential Studies Quarterly, 13 (1): 50–61, ISSN 0360-4918
Eizenstat, Stuart E. (1992), "Economists and White House Decisions", Journal of Economic Perspectives, 6 (3): 65–71, doi:10.1257/jep.6.3.65, ISSN 0895-3309
Engelbourg, Saul (1980), "The Council of Economic Advisers and the Recession of 1953–1954", Business History Review, 54 (2): 192–214, doi:10.2307/3114480, ISSN 0007-6805, JSTOR 3114480, S2CID 154554637
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, hdl:1887/71157, ISSN 1466-4429{{citation}}: CS1 maint: multiple names: authors list (link)
Leeson, Robert (1997), "The Political Economy of the Inflation-unemployment Trade-off", History of Political Economy, 29 (1): 117–156, doi:10.1215/00182702-29-1-117, ISSN 0018-2702
McCaleb, Thomas S. (1986), "The Council of Economic Advisers after Forty Years", Cato Journal, 6 (2): 685–693, ISSN 0273-3072
Norton, Hugh S. (1977), The Employment Act and the Council of Economic Advisers, 1946–1976, Columbia: University of South Carolina Press, ISBN 0-87249-296-6
Salant, Walter S. (1973), "Some Intellectual Contributions of the Truman Council of Economic Advisers to Policy-making", History of Political Economy, 5 (1): 36–49, doi:10.1215/00182702-5-1-36, ISSN 0018-2702
Sobel, Robert (1988), Biographical Directory of the Council of Economic Advisers, New York: Greenwood Press, ISBN 0-313-22554-0
Tobin, James; Weidenbaum, Murray, eds. (1988), Two Revolutions in Economic Policy: The First Economic Reports of Presidents Kennedy and Reagan, Cambridge: MIT Press, ISBN 0-262-70034-4
Wehrle, Edmund F. (2004), "Guns, Butter, Leon Keyserling, the AFL-CIO, and the Fate of Full-employment Economics", Historian, 66 (4): 730–748, doi:10.1111/j.1540-6563.2004.00094.x, ISSN 0018-2370, S2CID 143607377
External links
Official website
List of recent reports by the Council of Economic Advisors
Records of the Office of the Council of Economic Advisors, 1953–61, Dwight D. Eisenhower Presidential Library
Papers of Arthur F. Burns, Dwight D. Eisenhower Presidential Library
Papers of Raymond J. Saulnier, Dwight D. Eisenhower Presidential Library
Economic Report of the President:
Economic Report of the President White House
Economic Reports 1947 to present on FRASER, St. Louis Federal Reserve
U.S. Bureau of Economic Analysis (BEA) US Gvt
U.S. Bureau of Labor Statistics
Economic Report of the President (1995–present) United States Government Publishing Office
