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Council of Economic Advisers

Council of Economic Advisers

The Council of Economic Advisers (CEA) is a group of economists who 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 prepares the annual Economic Report of the President. The current Chairman of the CEA is Edward P. Lazear.

Organization

The council's three members are nominated by the president and approved by the United States Senate. The staff of the council includes about 20 academic economists, plus three permanent economic statisticians. The current chairman is Edward Lazear, on leave of absence from Stanford University.

Recent past chairs include:

Other influential past members include:

History

The council was established by 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. In 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.

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."

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.

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.

References

Sources

  • 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

Council of Economic Advisers

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