Employees About 35 | ||
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Formed 1946; 71 years ago (1946) Preceding agencies Office of Price Administration (World War II)
Council on Wage and Price Stability (Carter era) Headquarters Eisenhower Executive Office Building Agency executives Vacant, Chair
Jay Shambaugh, Member
Sandra Black, Member Parent agency Executive Office of the President of the United States | ||
The Council of Economic Advisers (CEA) is an agency within the Executive Office of the President that advises the President of the United States on economic policy. The CEA provides much of the objective empirical research for the White House and prepares the annual Economic Report of the President.
Contents
Organization
The current chairman of the CEA is vacant. On February 24, 2017, the Trump administration signaled plans to appoint Kevin Hassett as the next chairman of the CEA. Jason Furman, the previous Chairman, was appointed by President Obama on June 10, 2013. The two current Members are Jay Shambaugh and Sandra Black.
The council's chairman is nominated by the president and approved by the United States Senate. The members are appointed by the president. The staff of the council consists of a chief of staff as well as about twenty economists, plus three permanent economic statisticians. Many of the staff economists are academics on leave or government economists on temporary assignment from other agencies.
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 non-traditional neo-keynesian interventions, which provided results later called the "steady fifties" wherein many families stayed in the economic "middleclass" 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.
The 1978 Humphrey–Hawkins Act required each administration to move toward full employment and reasonable price stability within a specific time period. It has made 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.