[Economic Report of the President (1997)]
[Administration of William J. Clinton]
[Online through the Government Printing Office, www.gpo.gov]

[DOCID: f:appen_a._]
Economic Report of the President - - - - - - - - - - - - H. Doc. 105-002
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Appendix A--REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE COUNCIL OF ECONOMIC ADVISERS DURING 1996


LETTER OF TRANSMITTAL

Council of Economic Advisers
Washington, D.C., December 31, 1996
Mr. President:
The Council of Economic Advisers submits this report on its
activities during the calendar year 1996 in accordance with the
requirements of the Congress, as set forth in section 10(d) of the
Employment Act of 1946 as amended by the Full Employment and Balanced
Growth Act of 1978.
Sincerely,
Joseph E. Stiglitz, Chairman
Alicia H. Munnell, Member
Jeffrey A. Frankel, Member-Nominee

Council Members and their Dates of Service
----------------------------------------------------------------------------------------------------------------
Name                          Position           Oath of office date        Separation date
----------------------------------------------------------------------------------------------------------------
Edwin G. Nourse.....................  Chairman...............  August 9, 1946........  November 1, 1949.
Leon H. Keyserling..................  Vice Chairman..........  August 9, 1946........  .........................
Acting Chairman........  November 2, 1949......  .........................
Chairman...............  May 10, 1950..........  January 20, 1953.
John D. Clark.......................  Member.................  August 9, 1946........  .........................
Vice Chairman..........  May 10, 1950..........  February 11, 1953.
Roy Blough..........................  Member.................  June 29, 1950.........  August 20, 1952.
Robert C. Turner....................  Member.................  September 8, 1952.....  January 20, 1953.
Arthur F. Burns.....................  Chairman...............  March 19, 1953........  December 1, 1956.
Neil H. Jacoby......................  Member.................  September 15, 1953....  February 9, 1955.
Walter W. Stewart...................  Member.................  December 2, 1953......  April 29, 1955.
Raymond J. Saulnier.................  Member.................  April 4, 1955.........  .........................
Chairman...............  December 3, 1956......  January 20, 1961.
Joseph S. Davis.....................  Member.................  May 2, 1955...........  October 31, 1958.
Paul W. McCracken...................  Member.................  December 3, 1956......  January 31, 1959.
Karl Brandt.........................  Member.................  November 1, 1958......  January 20, 1961.
Henry C. Wallich....................  Member.................  May 7, 1959...........  January 20, 1961.
Walter W. Heller....................  Chairman...............  January 29, 1961......  November 15, 1964.
James Tobin.........................  Member.................  January 29, 1961......  July 31, 1962.
Kermit Gordon.......................  Member.................  January 29, 1961......  December 27, 1962.
Gardner Ackley......................  Member.................  August 3, 1962........  .........................
Chairman...............  November 16, 1964.....  February 15, 1968.
John P. Lewis.......................  Member.................  May 17, 1963..........  August 31, 1964.
Otto Eckstein.......................  Member.................  September 2, 1964.....  February 1, 1966.
Arthur M. Okun......................  Member.................  November 16, 1964.....  .........................
Chairman...............  February 15, 1968.....  January 20, 1969.
James S. Duesenberry................  Member.................  February 2, 1966......  June 30, 1968.
Merton J. Peck......................  Member.................  February 15, 1968.....  January 20, 1969.
Warren L. Smith.....................  Member.................  July 1, 1968..........  January 20, 1969.
Paul W. McCracken...................  Chairman...............  February 4, 1969......  December 31, 1971.
Hendrik S. Houthakker...............  Member.................  February 4, 1969......  July 15, 1971.
Herbert Stein.......................  Member.................  February 4, 1969......  .........................
Chairman...............  January 1, 1972.......  August 31, 1974.
Ezra Solomon........................  Member.................  September 9, 1971.....  March 26, 1973.
Marina v.N. Whitman.................  Member.................  March 13, 1972........  August 15, 1973.
Gary L. Seevers.....................  Member.................  July 23, 1973.........  April 15, 1975.
William J. Fellner..................  Member.................  October 31, 1973......  February 25, 1975.
Alan Greenspan......................  Chairman...............  September 4, 1974.....  January 20, 1977.
Paul W. MacAvoy.....................  Member.................  June 13, 1975.........  November 15, 1976.
Burton G. Malkiel...................  Member.................  July 22, 1975.........  January 20, 1977.
Charles L. Schultze.................  Chairman...............  January 22, 1977......  January 20, 1981.
William D. Nordhaus.................  Member.................  March 18, 1977........  February 4, 1979.
Lyle E. Gramley.....................  Member.................  March 18, 1977........  May 27, 1980.
George C. Eads......................  Member.................  June 6, 1979..........  January 20, 1981.
Stephen M. Goldfeld.................  Member.................  August 20, 1980.......  January 20, 1981.
Murray L. Weidenbaum................  Chairman...............  February 27, 1981.....  August 25, 1982.
William A. Niskanen.................  Member.................  June 12, 1981.........  March 30, 1985.
Jerry L. Jordan.....................  Member.................  July 14, 1981.........  July 31, 1982.
Martin Feldstein....................  Chairman...............  October 14, 1982......  July 10, 1984.
William Poole.......................  Member.................  December 10, 1982.....  January 20, 1985.
Beryl W. Sprinkel...................  Chairman...............  April 18, 1985........  January 20, 1989.
Thomas Gale Moore...................  Member.................  July 1, 1985..........  May 1, 1989.
Michael L. Mussa....................  Member.................  August 18, 1986.......  September 19, 1988.
Michael J. Boskin...................  Chairman...............  February 2, 1989......  January 12, 1993.
John B. Taylor......................  Member.................  June 9, 1989..........  August 2, 1991.
Richard L. Schmalensee..............  Member.................  October 3, 1989.......  June 21, 1991.
David F. Bradford...................  Member.................  November 13, 1991.....  January 20, 1993.
Paul Wonnacott......................  Member.................  November 13, 1991.....  January 20, 1993.
Alan S. Blinder.....................  Member.................  July 27, 1993.........  June 26, 1994.
Laura D'Andrea Tyson................  Chair..................  February 5, 1993......  April 22, 1995.
Joseph E. Stiglitz..................  Member.................  July 27, 1993.........  .........................
Chairman...............  June 28, 1995.........  .........................
Martin N. Baily.....................  Member.................  June 30, 1995.........  August 30, 1996.
Alicia H. Munnell...................  Member.................  January 29, 1996......  .........................
----------------------------------------------------------------------------------------------------------------

Report to the President on the Activities of the Council of Economic
Advisers During 1996

The Council of Economic Advisers 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.

The Chairman of the Council

Joseph E. Stiglitz, previously a Member of the Council, was
appointed Chairman on June 28, 1995. Dr. Stiglitz is on leave from
Stanford University where he is the Joan Kenney Professor of Economics.
Dr. Stiglitz is responsible for communicating the Council's views on
economic matters directly to the President through personal discussions
and written reports. Dr. Stiglitz also represents the Council at Cabinet
meetings, meetings of the National Economic Council (NEC), daily White
House senior staff meetings, budget team meetings with the President,
and other formal and informal meetings with the President, senior White
House staff, and other senior government officials. Dr. Stiglitz is the
Council's chief public spokesperson. He directs the work of the Council
and exercises ultimate responsibility for the work of the professional
staff.

The Members of the Council

Alicia H. Munnell is a Member of the Council. Dr. Munnell had
previously served in this Administration as Assistant Secretary for
Economic Policy at the Department of the Treasury. She also had served
as Senior Vice President and Director of Research at the Federal Reserve
Bank of Boston.
Martin N. Baily was a Member of the Council until August 1996. He
left the Council to join the Global Institute at McKinsey and Company,
Inc. The President has nominated Jeffrey A. Frankel to succeed Dr. Baily
as a Member of the Council. While awaiting confirmation, Dr. Frankel has
been serving as Chief Economist. He is on leave from the University of
California, Berkeley, where he is a Professor of Economics. He
previously directed the program on International Finance and
Macroeconomics at the National Bureau of Economic Research and is a
former Senior Fellow at the Institute for International Economics.
The Chair and Members work as a team on most economic policy issues.
Dr. Munnell and Dr. Baily shared responsibility for domestic
macroeconomic analysis, the Administration's economic forecast, and
budget and tax issues. Dr. Munnell is primarily responsible for health
care, welfare reform, environmental, and labor issues. Dr. Baily was
primarily responsible for international economic issues and certain
microeconomic issues, including agriculture and the environment. Dr.
Frankel has taken over this portfolio. The Chair and the Council Members
participate in the deliberations of the NEC. Dr. Stiglitz is a member of
the NEC Principals Committee.
WEEKLY ECONOMIC BRIEFINGS
Dr. Stiglitz and the Members continued to conduct a weekly economic
briefing for the President, the Vice President, and the President's
other senior economic and policy advisers. The Council, in cooperation
with the Office of the Vice President, prepares a written Weekly
Economic Briefing of the President, which provides analysis of current
economic developments, more extended discussions of a wide range of
economic issues and problems, and summaries of economic developments in
different regions and sectors of the economy. This document serves as a
basis for the President's oral briefing.
MACROECONOMIC POLICIES
A primary function of the Council is to advise the President on all
major macroeconomic issues and developments. The Council prepares for
the President, the Vice President, and the White House senior staff
almost daily memoranda that report key economic data and analyze current
macroeconomic events.
The Council, the Department of the Treasury, and the Office of
Management and Budget--the Administration's economic ``troika''--are
responsible for producing the economic forecasts that underlie the
Administration's budget proposals. The Council, under the leadership of
the Members, initiates the forecasting process twice each year. In
preparing these forecasts, the Council consults with a wide variety of
outside sources, including leading private sector forecasters.
In 1996 the Council continued to take part in discussions about the
President's balanced budget plan. The Council also participated in
meetings on a range of budget issues including Medicare and Medicaid,
discretionary spending priorities, and the Administration's tax
proposals.
The Council, together with the Department of Labor, prepared a
report titled ``Job Creation and Employment Opportunities: The United
States Labor Market, 1993-1996,'' which analyzed the American economy's
robust employment growth, the nature of the jobs being created, and the
incidence of job displacement. This report concluded that over two-
thirds (68 percent) of the net job growth in full-time employment
between February 1994 and February 1996 occurred in industry/occupation
categories that paid above-median wages. The Council also prepared a
background report titled ``Promoting Economic Growth,'' which discussed
the challenge of increasing the underlying productivity growth rate of
the U.S. economy.
The Council continued its efforts to improve the public's
understanding of economic issues and the Administration's economic
agenda through regular briefings with the economic and financial press,
frequent discussions with outside economists, and presentations to
outside organizations.
INTERNATIONAL ECONOMIC POLICIES
The Council has been an active participant in the international
economic policymaking process through the National Economic Council and
the National Security Council, providing both technical and analytic
support and policy guidance. The Council engaged in interagency
discussions dealing with such topics as U.S. trade remedy laws
(antidumping, countervailing duties, safeguards, and Section 301
actions); the U.S. balance of payments; cross-border investment;
international aspects of telecommunications and information technology;
integrating Russia, China, and other newly market-oriented economies
into the world economic order; and the agendas of multilateral and
regional fora such as the World Trade Organization, the Asia-Pacific
Economic Cooperation forum, and the North American Free Trade Agreement.
In 1996, Dr. Stiglitz led a U.S. delegation to the Information
Society and Development (ISAD) Conference in South Africa. The ISAD
Conference, which followed the 1995 G-7 Ministerial Conference on the
Information Society held in Brussels, was designed to extend acceptance
of the Global Information Infrastructure principles, first articulated
by the Vice President in 1994, to the developing world. Dr. Stiglitz
also led a U.S. delegation to China, where he met with top Chinese
officials to initiate a dialogue on economic issues between the Council
and China's State Planning Commission. In addition, the Council drafted
the 1996 APEC Economic Outlook for the Asia-Pacific Economic
Cooperation, and Dr. Stiglitz presented this report to the APEC
Ministers during their meetings in Manila.
The Council plays a leading role in U.S. participation in the
Organization for Economic Cooperation and Development (OECD), the
principal forum for economic cooperation among the high-income
industrialized countries. The Council heads the U.S. delegation to the
semiannual Economic Policy Committee (EPC) meetings, and Dr. Stiglitz is
the Committee's Chairman. In that role, Dr. Stiglitz has led an effort
to make the EPC's meetings more relevant to member-country policy
discussions. Dr. Munnell led the U.S. delegation to the OECD's Working
Party 1 on microeconomic and structural issues and participated in
Working Party 3. Dr. John D. Montgomery also participated in the OECD's
Working Party 3 on macroeconomic policy coordination, and Dr. Steven N.
Braun led the U.S. delegation to the OECD's Short-term Economic
Forecasters Meeting.
MICROECONOMIC POLICIES
The Council was an active participant in discussions of
microeconomic policy issues in 1996. Dr. Stiglitz is a member of the
Administration's Regulatory Working Group and addressed numerous groups
on the principles, content, and importance of the Administration's
regulatory reform program. At Dr. Stiglitz's initiative, the OECD has
undertaken a series of studies to promote regulatory reform around the
globe. The Council also participated in a range of Administration
efforts to reform regulation.
The Council was an active participant in the Administration's
reinventing government effort, which has made Federal Government
agencies more efficient and more performance oriented and has revised
and eliminated thousands of pages of regulations. To help promote its
objectives, the Council advocated procurement reforms that would extend
the use of competitive auctions by Federal agencies in their purchase of
products and services.
The Council was involved in efforts to implement the 1996
telecommunications reform bill. The Council worked with the Vice
President, the National Economic Council, and the Departments of Justice
and Commerce to develop Administration policies regarding
interconnection of telephone competitors. Dr. Timothy J. Brennan
participated in an economists' forum at the Federal Communications
Commission to examine various aspects of allowing local telephone
companies to provide long-distance service. The Council also promoted
participation in spectrum auctions held by the Federal Communications
Commission and played an important role in ongoing efforts to
restructure INTELSAT and Inmarsat (the international satellite
consortia).
The Council was active in a range of policy discussions on natural
resources and the environment. The Council has been a leading proponent
of reforming public lands policy, especially by reducing subsidies for
extractive use of Federal public lands. The Council played a key role in
the Headwaters acquisition negotiations and has worked extensively on
other land exchanges.
The Council participates actively in the ongoing assessment of
global climate change policies. The Council was also active in
discussions on the Superfund program and other issues relating to the
management of hazardous wastes. The Council helped assess the
reauthorization of the Clean Water Act and the Safe Drinking Water Act
and evaluated the drafts of the Environmental Protection Agency's
Mercury and Utility reports required by the Clean Air Act Amendments of
1994. In addition, the Council was involved in the evaluation of
alternative National Ambient Air Quality Standards for particulate
matter and ozone, which are regulated under the Clean Air Act.
The Council played an important role in agricultural policy reform,
most notably the Administration's continuing efforts to implement the
1996 Farm Act. The Council also advised on the operation of agricultural
trade programs, including the sugar program and various farm export
subsidy programs.

The Staff of the Council of Economic Advisers

The professional staff of the Council consists of the Chief of
Staff, the Senior Statistician, 11 senior economists, 6 staff
economists, and 3 research assistants. The professional staff and their
areas of concentration at the end of 1996 were:

Chief of Staff and General Counsel

Michele M. Jolin
Senior Economists

S. Lael Brainard....    International Economics and Senior Director at
the National Economic Council
Steven N. Braun.....    Director, Macroeconomic Forecasting
Timothy J. Brennan..    Regulation, Industrial Organization, and
Antitrust
William B. English..    Macroeconomics and Finance
Phillip B. Levine...    Labor, Welfare, and Education
Mark J. Mazur.......    Public Finance and Senior Director at the
National Economic Council
John D. Montgomery..    International Economics
Raymond Prince......    Environment and Natural Resources
Christopher J. Ruhm.    Health Care, Aging, and Labor
Charles F. Stone....    Macroeconomics and Editor, Weekly Economic
Briefing of the President
David L. Sunding....    Agriculture and Natural Resources
Senior Statistician

Catherine H. Furlong
Staff Economists

Carrie S. Cihak.....    International Economics
Jason L. Furman.....    Macroeconomics
Cynthia K. Gustafson    Labor, Welfare, and Education
Andrea Richter......    International Economics
Cristian J.
Santesteban.........    Industrial Organization, Science and Technology,
and Regulation
Caroline M. Thompson    International Economics
Research Assistants

Jennifer C. Daskal
Sarah J. Reber
Diane M. Whitmore
Statistical Office

Mrs. Furlong directs the Statistical Office. The Statistical Office
maintains and updates the Council's statistical information, oversees
the publication of the Economic Indicators and the statistical appendix
to the Economic Report, and verifies statistics in Presidential and
Council memoranda, testimony, and speeches.

Susan P. Clements...    Statistician and Information Systems
Linda A. Reilly.....    Statistical Assistant
Brian A. Amorosi....    Research Assistant
Margaret L. Snyder..    Statistical Aide
The Administrative Office

Elizabeth A.
Kaminski............    Administrative Officer
Catherine Fibich....    Administrative Assistant
Office of the Chairman

Alice H. Williams...    Executive Assistant to the Chairman
Sandra F. Daigle....    Executive Assistant to the Chairman and
Assistant to the Chief of Staff
Lisa D. Branch......    Executive Assistant to Dr. Munnell
Francine P.
Obermiller..........    Executive Assistant to Dr. Frankel
Staff Secretaries

Mary E. Jones
Rosalind V. Rasin
Mary A. Thomas
Mrs. Thomas also served as executive assistant for the Weekly
Economic Briefing of the President.
Michael Treadway provided editorial assistance in the preparation of
the 1997 Economic Report. Robert E. Cumby, Georgetown University, David
M. Cutler, Harvard University, and Michael A. Toman, Resources for the
Future, served as consultants during the year.
Student interns during the year were Oren Ahoobim, Anthony R.
Alvarado, Noelle M. Campbell, Albert C. Chen, George L. Colindres,
Mariano-Florentino Cuellar, Ariel S. Glasner, Kara A. Gobi, Minna J.
Hahn, Mary K. Lesh, Robert P. Martin, Rachel A. Novak, Christopher J.
O'Connor, Angela Sherry, Courtney A. Sweeney, Megan R. Sweeney, James R.
Sweet, and Jose A. Villar. The following student interns joined the
Council in January to assist with the preparation of the Economic
Report: James T. Engelhardt, Gregory B. Garvin, and Laura M. Higginson.
DEPARTURES
Peter R. Orszag, who served as Senior Adviser to the Council,
returned to the London School of Economics in November and has now
joined the National Economic Council staff. The Council's senior
economists, in most cases, are on leave of absence from faculty
positions at academic institutions or from other government agencies or
research institutions. Their tenure with the Council is usually limited
to 1 or 2 years. Most of the senior economists who resigned during the
year returned to their previous affiliations. They are George B.
Frisvold (Department of Agriculture), Thomas J. Kane (Kennedy School of
Government, Harvard University), Eileen Mauskopf (Board of Governors of
the Federal Reserve System), Robert G. Murphy (Boston College), Marius
Schwartz (Georgetown University), and Michael A. Toman (Resources for
the Future). Robert S. Dohner accepted a staff position with the
Department of the Treasury. Louise M. Sheiner left the Council to serve
as Deputy Assistant Secretary of the Treasury and has now rejoined the
Board of Governors of the Federal Reserve System.
Staff economists are generally graduate students who spend 1 year
with the Council and then return to complete their dissertations. Those
who returned to their graduate studies in 1996 are Michael A. Ash
(University of California, Berkeley), Jonah B. Gelbach (Massachusetts
Institute of Technology), and Scott J. Wallsten (Stanford University).
Valerie A. Mercer accepted a position with the International Monetary
Fund. Ronald C. Chen began graduate studies at Oxford University.

Public Information

The Council's Annual Report is the principal medium through which
the Council informs the public of its work and its views. It is an
important vehicle for presenting the Administration's domestic and
international economic policies. Annual distribution of the Report in
recent years has averaged about 45,000 copies. The Council also has
primary responsibility for compiling the monthly Economic Indicators,
which is issued by the Joint Economic Committee of the Congress and has
a monthly distribution of approximately 10,000.