[Economic Report of the President (2000)]
[Administration of William J. Clinton]
[Online through the Government Printing Office, www.gpo.gov]


[[Page 285]]
 
Appendix A
REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1999


[[Page 287]]

LETTER OF TRANSMITTAL

Council of Economic Advisers,
Washington, D.C., December 31, 1999.

Mr. President:
The Council of Economic Advisers submits this report on its activities
during the calendar year 1999 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,


Martin N. Baily, Chairman
Robert Z. Lawrence, Member
Kathryn L. Shaw, Member-Nominee


[[Page 288]]

Council Members and Their Dates of Service

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.
Laura D'Andrea Tyson  .................	Chair  .............................................	February 5, 1993  ......................	April 22, 1995.
Alan S. Blinder  .............................	Member  ........................................	July 27, 1993  ............................	June 26, 1994.
Joseph E. Stiglitz  .........................	Member  ........................................	July 27, 1993  ............................
Chairman  ......................................	June 28, 1995  ...........................	February 10, 1997.
Martin N. Baily  ............................	Member  ........................................	June 30, 1995  ...........................	August 30, 1996.
Alicia H. Munnell  .........................	Member  ........................................	January 29, 1996  .....................	August 1, 1997.
Janet L. Yellen  .............................	Chair  .............................................	February 18, 1997  ....................	August 3, 1999.
Jeffrey A. Frankel  ........................	Member  ........................................	April 23, 1997  ..........................	March 2, 1999.
Rebecca M. Blank  ........................	Member  ........................................	October 22, 1998  .....................	July 9, 1999.
Martin N. Baily  .............................	Chairman  ......................................	August 12, 1999  .......................
Robert Z. Lawrence  ......................	Member  ........................................	August 12, 1999  .......................


[[Page 289]]

Report to the President on the
Activities of the Council of Economic
Advisers During 1999


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

Martin N. Baily, who was a Member of the Council of Economic Advisers
from 1995 to 1996, was appointed Chairman on August 12, 1999. Dr. Baily
replaced Janet L. Yellen, who left the Council to return to the Haas
School of Business at the University of California, Berkeley, where she
is the Eugene E. and Catherine M. Trefethen Professor of Business
Administration and a Professor of Economics. Before joining the Council
in August, Dr. Baily was a Principal at McKinsey & Company, Inc., at the
McKinsey Global Institute in Washington. He was also a Senior Fellow at
the Brookings Institution and Co-Editor of the Brookings Papers on
Economic Activity, Microeconomics.

Dr. Baily is responsible for communicating the Council's views on
economic matters directly to the President through personal discussions
and written reports. He 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. Baily 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

Robert Z. Lawrence is a Member of the Council of Economic Advisers. Dr.
Lawrence is on leave from the John F. Kennedy School of Government at
Harvard University, where he is the Albert L. Williams Professor of
International Trade and Investment at the Center for Business and
Government. He

[[Page 290]]

previously served as the New Century Senior Fellow at the Brookings
Institution, as Editor of the Brookings Trade Forum, and as a Research
Associate at the National Bureau of Economic Research.

Jeffrey A. Frankel was a Member of the Council of Economic Advisers
until March 1999. Dr. Frankel currently holds the Harpel Chair for
Capital Formation and Growth at the John F. Kennedy School of Government
at Harvard University. He is also Director of the Program for
International Finance and Macroeconomics at the National Bureau of
Economic Research.

The President has nominated Kathryn L. Shaw to succeed Rebecca M. Blank
as a Member of the Council. While awaiting confirmation, Dr. Shaw has
been serving as Senior Economic Advisor. She is on leave from Carnegie
Mellon University, where she is a Professor of Economics at the Graduate
School of Industrial Administration. Dr. Blank was a Member of the
Council of Economic Advisers until July 1999. She is currently the Henry
Carter Adams Professor of Policy and Dean of the School of Public Policy
at the University of Michigan.

The Chairman and the Members work as a team on most economic policy
issues. Dr. Lawrence is primarily responsible for the Administration's
economic forecast, macroeconomic analysis, international economic issues,
and certain microeconomic issues, including those relating to natural
resources, the environment, and industrial organization. Dr. Shaw has
taken over responsibility for policy analysis relating to the budget and
taxation, labor, retirement security, health care, welfare reform, and
child and family issues. The Chairman and the Members participate in the
deliberations of the NEC, and Dr. Baily is a member of the NEC Principals
Committee.


Weekly Economic Briefings

Dr. Baily and the Members continued to prepare the Weekly Economic
Briefing of the President of the United States 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 briefing, 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.


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 economic events.

[[Page 291]]

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 Chairman and the Members, initiates the forecasting process twice
each year. In preparing these forecasts, the Council consults with a
variety of outside sources, including leading private sector forecasters.

In 1999 the Council continued to take part in discussions about a range
of budget issues including Medicare reform, discretionary spending
priorities, and the Administration's tax proposals. The Council also
participated in the development of the President's proposal to strengthen
Social Security for the 21st century.

The Council also participates in the Working Group on Financial
Markets, an interagency group that monitors developments related to
financial markets and the banking sector. The group includes
representatives from the Treasury, the Federal Reserve, the NEC, and
various regulatory agencies. The Council also participated in a working
group studying bankruptcy reform, and in another on the macroeconomic
implications of the year-2000, or Y2K, computer problem.

The Council continued its efforts to improve the public's understanding
of economic issues and of the Administration's economic agenda through
regular briefings with the economic and financial press, frequent
discussions with outside economists, and presentations to outside
organizations. The Chairman and the Members also regularly exchanged
views on the macroeconomy with the Chairman and Members of the Board of
Governors of the Federal Reserve System.


International Economic Policies

The Council continued as an active participant in 1999 in international
economic policymaking through the NEC and the National Security Council,
providing both technical and analytical support and policy guidance. The
Council took an active role in developing policies to respond to
financial turmoil in Latin America and elsewhere, continuing the role it
has taken following the series of emerging market financial crises that
began in 1997. The Council also monitored closely the effects of the
Asian crisis on U.S. trade and actively participated in developing
proposals to reform the international financial architecture.

The Council has played an important role in evaluating and explaining
the case for trade liberalization and U.S. participation in the
multilateral trading system. Its involvement included writing a white
paper on America's Interest in the World Trade Organization. The Council
was also involved in a range of other international economic issues,
including U.S. trade remedy laws

[[Page 292]]

(antidumping, countervailing duties, safeguards, and Section 301 actions)
and sanctions policy. Dr. Lawrence testified before the Trade Deficit
Review Commission of the Senate on the causes and consequences of the
U.S. trade deficit.

Council members regularly met with representatives of the Council's
counterpart agencies in foreign countries, as well as with foreign trade
ministers, other government officials, and members of the private sector.
The Council often represents the United States at international meetings
and forums, such as meetings of the Economic Committee of the
Asia-Pacific Economic Cooperation forum.

The Council is a leading participant in the Organization for Economic
Cooperation and Development (OECD), the principal forum for economic
cooperation among the high-income industrial countries. The Council heads
the U.S. delegation to the semiannual meetings of the OECD's Economic
Policy Committee. Dr. Baily serves as chairman of that committee. In 1999
Dr. Lawrence participated in the OECD's Working Party 3 on macroeconomic
policy and coordination. Charles F. Stone, Chief Economist at the
Council, participated in the OECD's Working Party 1 meeting on structural
issues and attended the OECD's workshop ``Making Work Pay.'' Dr. Lawrence
also participated in a meeting of subcabinet officials from the United
States and Japan and was a member of the Joint Economic Development Group
meeting with the Israeli government.


Microeconomic Policies

During 1999 the Council was an active participant in a range of
microeconomic policy discussions, including discussions on welfare
policy, regulation by the Occupational Health and Safety Agency, and
statistical policy. The Council also participated in Administration
working groups on Social Security and Medicare reform and on issues
related to parental leave, pension regulations, long-term care, and
private investment in high-poverty areas.

Over the past year the Council has released several research papers on
microeconomic policy issues. In May 1999 the Council released a report
titled Families and the Labor Market, 1969-1999: Analyzing the ``Time
Crunch.'' Its purpose was to further the national discussion on balancing
work and family and to encourage a discussion of policies that could help
strengthen American families. In a report titled The Effects of Welfare
Policy and the Economic Expansion on Welfare Caseloads: An Update, the
Council examined the unprecedented fall in the number of people receiving
welfare. Released in August 1999, the report concluded that the welfare
reforms of 1996 accounted for about one-third of the reduction in
caseloads from 1996 to 1998. Finally, in December 1999 the Council and
the Office of the Chief Economist at the Department of Labor released a
report titled 20 Million

[[Page 293]]

Jobs: January 1993-November 1999. This study documented the strong job
growth of the past 7 years and found evidence that a high proportion of
the new jobs were in industry and occupation categories that pay wages
above the median.

The Council has taken an active role in reviewing and analyzing
progress in the telecommunications industry and other growing sectors of
the digital economy. In February the Council released a white paper
titled Progress Report: Growth and Competition in U.S.
Telecommunications, 1993-1998. The Council has also been active in
ongoing interagency discussions involving the digital economy and has
recently assumed a leading role in facilitating work on the topic. Work
in progress includes reviewing and improving data collection activities
to better assess the growth of electronic commerce; participation in the
new OECD Growth Project initiated at the May 1999 meeting of the OECD
Council at the Ministerial level; and economic analysis of policy-related
costs and barriers to electronic commerce.

The Council has also participated actively in interagency discussions
on regulation and competition policy. On the domestic front, the Council
has been involved in discussions about merger policy, rail policy
regarding interconnections, and the performance of agricultural markets.
Discussions regarding regulatory reform in the broadcast industry and in
the air traffic control system have also been ongoing, as has the
monitoring of issues related to the privatization of the U.S. Enrichment
Corporation. The Council has been actively involved in several issues
relating to international regulation and competition, including the
effects of gray market imports, and has under-taken interagency
discussions regarding the role of competition policy in the World Trade
Organization.

The Council was active during 1999 in a range of policy discussions on
natural resources and the environment, including implementation of the
Clean Air Act as it applies to automobiles, petroleum refineries, power
plants, and other pollution sources. Council Members and staff
participated in several Administration efforts to assess oil supply
issues, including the effects of oil imports on the U.S. economy and
planning for potential Y2K oil supply disruptions. The Council has also
contributed to Administration initiatives on national forest management.

Continuing the Council's involvement in the analysis of the
Administration's global climate change policy, Dr. Yellen testified on
two occasions before Senate and House committees on the economic
implications of the Kyoto Protocol. At a high-level OECD meeting on
climate change, Dr. Lawrence participated in a discussion on developing
country participation in the Kyoto Protocol. The Council has been active
in developing and promoting plans for the international trading of
emissions permits and other market mechanisms to achieve the protocol's
targets as efficiently as possible. It has also worked

[[Page 294]]

with a number of developing countries to identify opportunities for them
to further contribute to the global effort to address climate change. To
advance these plans, Members and staff consulted with officials from a
number of countries and organizations, including Argentina, Australia,
Bolivia, Canada, China, Colombia, the European Union, Japan, Kazakhstan,
Mexico, the OECD, and the Russian Federation. In addition, the Council
has evaluated trends in U.S. carbon dioxide emissions and participated in
Administration efforts to promote energy efficiency in the Federal
Government.


The Staff of the Council of Economic Advisers

The professional staff of the Council consists of the Chief of Staff,
the Senior Statistician, nine senior economists, six staff economists,
and three research assistants. The professional staff and their areas of
concentration at the end of 1999 were:


Chief of Staff
Audrey Choi

Senior Economists

Joseph E. Aldy...............  Environment and Natural Resources
Steven N. Braun..............  Director, Macroeconomic Forecasting
Michael J. Brien.............  Labor, Social Policy, and Education
John G. Fernald..............  International Economics
William H. Gillespie.........  Industrial Organization
Victoria A. Greenfield.......  International Trade and Agriculture
Robin L. Lumsdaine...........  Labor
Charles F. Stone.............  Chief Economist and Editor,
Weekly Economic Briefing of the President
John C. Williams.............  Macroeconomics, Financial Markets, and
Editor, Weekly Economic Briefing of the
President

Senior Statistician

Catherine H. Furlong

Staff Economists

Douglas V. Almond............  Labor and Health Economics
Jason A. Bernstein...........  Agriculture and International Economics
Yu-chin Chen.................  International Economics

[[Page 295]]

Andrew R. Feldman............  Labor and Social Economics
Leigh L. Linden..............  Environment, Natural Resources, and
Industrial Organization
Noah Y. Weisberger...........  Macroeconomics

Research Assistants

John L. Goldie...............  Weekly Economic Briefing of the President
and International Economics
Stephen F. Lin...............  Macroeconomics
Sarah L. Rosen...............  Weekly Economic Briefing of the President
and Labor

Statistical Office

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

Susan P. Clements............  Statistician
Linda A. Reilly..............  Statistician
Brian A. Amorosi.............  Statistical Assistant

Administrative Office

Catherine Fibich.............  Administrative Officer

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. Lawrence
Francine P. Obermiller.......  Executive Assistant to Dr. Shaw

Staff Support

Mary E. Jones................  Executive Assistant for International
Economics, Labor, and Health Care
Rosalind V. Rasin............  Executive Assistant for Environment,
Industrial Organization, and Agriculture
Mary A. Thomas...............  Program Assistant for the Weekly Economic
Briefing of the President and
Macroeconomics

[[Page 296]]

Michael Treadway provided editorial assistance in the preparation of
the text of the 2000 Economic Report of the President.

Lowell J. Taylor and Christopher W. Snow joined the Council in January
2000 as senior economist and staff economist, respectively, and assisted
with the preparation of the Economic Report of the President.

Student interns during the year were Sarah M. Anderson, Robert P.
Bamsey, Carol L. Capece, David S. Felman, Paul K. Hoffmeister, Heather L.
Jambrosic, Burth G. Lopez, Matthew S. Milner, Jason K. Nuzzo, Jacob M.
Studley, and Aaron D. Tracy. The following student interns joined the
Council in January to assist with the preparation of the Economic Report
of the President: Karin A. Braack, Warren A. Herold, and Julie M. Meyers.


Departures

Michele Jolin, who served as Chief of Staff, resigned in April 1999 to
accept a position as Vice President and Senior Project Manager of
Innovative Learning Initiatives at Ashoka: Innovators for the Public.

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. Some of the senior economists who
resigned during the year returned to their previous affiliations. They
are Elise H. Golan (U.S. Department of Agriculture), Cordelia W. Reimers
(Hunter College of the City University of New York), and Robert F.
Schoeni (RAND Corporation). Senior economists who resigned during the
year and accepted new positions are Douglas W. Elmendorf (Department of
the Treasury), Stephen Polasky (University of Minnesota), Nouriel Roubini
(Department of the Treasury), Howard A. Shelanski (Federal Communications
Commission), and Robin L. Lumsdaine (Deutsche Bank).

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 1999 are Ryan D. Edwards
(University of California, Berkeley), Nora E. Gordon (Harvard
University), and Matthew R. McBrady (Harvard University). Bert I. Huang
began graduate studies at Harvard Law School and at the Massachusetts
Institute of Technology. Quindi C. Franco accepted a position at the
Federal Communications Commission. After serving as research assistants
at the Council, Raymond P. Guiteras accepted a position at Bain and
Company, and Summer L. Scott accepted a position at Charles River
Associates.

[[Page 297]]

Public Information

The Council's annual Economic Report of the President is an important
vehicle for presenting the Administration's domestic and international
economic policies. It is now available for distribution as a bound volume
and on the Internet, where it is accessible at
http://www.access.gpo.gov/eop. The Council also has primary
responsibility for compiling the monthly Economic Indicators, which is
issued by the Joint Economic Committee of the Congress. The Internet
address for the Economic Indicators is
http://www.access.gpo.gov/congress/cong002.html. The Council's home page
is located at http://www.whitehouse.gov/WH/EOP/CEA/html/index.html.