Council of Economic Advisers Totally Explained

Everything about Council Of Economic Advisors totally explained

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.

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 four permanent economic statisticians. The current chairman is Edward Lazear, on leave of absence from Stanford University.
Recent past chairs include:

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
Michael J. Boskin 1989-1993

Other influential past members include:

Edwin G. Nourse 1946-1949 (chair)

Leon H. Keyserling 1949-1950 (acting chair); 1950-1953 (chair)

Arthur F. Burns 1953-1956 (chair)

Raymond J. Saulnier 1956-1961 (chair)

Walter W. Heller 1961-1964 (chair)

Gardner Ackley 1964-1968 (chair)

Arthur M. Okun 1968-1969 (chair)

Paul W. McCracken 1969-1971 (chair)

Herbert Stein 1972-1974 (chair)

Alan Greenspan 1974-1977 (chair)

Charles L. Schultze 1977-1981 (chair)

Murray L. Weidenbaum 1981-1982 (chair)

Martin Feldstein 1982-1984 (chair)

Beryl W. Sprinkel 1985-1989 (chair)

John D. Clark 1946-1953

James Tobin 1961-1962

Otto Eckstein 1964-1966

Hendrik S. Houthakker 1969-1971

William D. Nordhaus 1977-1979

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 wouldn't 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.

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