[Economic Report of the President (2002)]
[Administration of George W. Bush]
[Online through the Government Printing Office, www.gpo.gov]


 
Appendix A
REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 2001






LETTER OF TRANSMITTAL

Council of Economic Advisers,
Washington, D.C., December 31, 2001.

Mr. President:
The Council of Economic Advisers submits this report on its activities
during the calendar year 2001 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,


Robert Glenn Hubbard, Chairman
Randall S. Kroszner, Member
Mark B. McClellan, Member


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, 1953February 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	January 19, 2001
Robert Z. Lawrence    Member          August 12, 1999   January 19, 2001
Kathryn L. Shaw	      Member	      May 31, 2000	January 19, 2001
R. Glenn Hubbard      Chairman	      May 11, 2001
Mark B. McClellan     Member	      July 25, 2001
Randall S. Kroszner   Member	      November 30, 2001
__________________________________________________________________________

REPORT TO THE PRESIDENT ON THE
ACTIVITIES OF THE COUNCIL OF ECONOMIC
ADVISERS DURING 2001

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

The membership of the Council of Economic Advisers changed in 2001,
following the inauguration of the new President. The President
nominated R. Glenn Hubbard to be Chairman of the Council on April 23,
2001. He was confirmed by the Senate on May 10, 2001, and was appointed
by the President on May 11, 2001, as Chairman. He succeeds Martin N.
Baily, who joined the Institute for International Economics as a Senior
Fellow.

Dr. Hubbard is on a leave of absence from Columbia University, where
he is the Russell L. Carson Professor of Economics and Finance and
Co-Director of the Entrepreneurship Program in the Graduate School
of Business and Professor of Economics in the Faculty of Arts and
Sciences. He also served as Senior Vice Dean of the Graduate School of
Business. Before joining the Columbia faculty in 1988, Dr. Hubbard
taught at Northwestern University. He also served as a visiting
professor at the John F. Kennedy School of Government at Harvard
University, the Graduate School of Business of the University of
Chicago, and the Harvard Business School, and as a John M. Olin Fellow
at the National Bureau of Economic Research, where he was a research
associate. From 1991 to 1993 he was Deputy Assistant Secretary (Tax
Analysis) of the Department of the Treasury.

In addition to his responsibilities at Columbia and the National
Bureau of Economic Research, Dr. Hubbard served as the Director of
the Program on Tax Policy at the American Enterprise Institute. He has
been a consultant to the Department of the Treasury, the Federal
Reserve Bank of New York, the Board of Governors of the Federal Reserve
System, and the National Science Foundation, among others.

Dr. Hubbard is responsible for communicating the Council's views on
economic matters directly to the President through personal discussions
and written reports. He represents the Council at Cabinet meetings,
meetings of the National Economic Council, daily White House senior
staff meetings, budget team meetings with the President, and other
formal and informal meetings with the President. He also travels
within the United States and overseas to present the Administration's
views on the economy. Dr. Hubbard is the Councilï¿½s 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

Mark B. McClellan was nominated by the President on June 5, 2001,
confirmed by the Senate on July 19, 2001, and appointed by the
President as a Member of the Council of Economic Advisers on July 25,
2001. He succeeds Robert Z. Lawrence, who returned to 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.

From 1999 to 2000, Dr. McClellan was Associate Professor of Economics
at Stanford University, Associate Professor of Medicine at Stanford
Medical School, a practicing internist, a Director of the Program on
Health Outcomes Research at Stanford University, and a Visiting
Scholar at the American Enterprise Institute.

Dr. McClellan was also a Research Associate of the National Bureau
of Economic Research. He was a Member of the National Cancer Policy
Board of the National Academy of Sciences, Associate Editor of the
Journal of Health Economics, and Co-Principal Investigator of the
Health and Retirement Study, a longitudinal study of the health and
economic well-being of older Americans. From 1998 to 1999 he was
Deputy Assistant Secretary of the Treasury for Economic Policy, where
he supervised economic analysis and policy development on a wide range
of domestic policy issues.

Randall S. Kroszner was nominated by the President on November 5, 2001,
confirmed by the Senate on November 28, 2001, and appointed by the
President on November 30, 2001, as a Member of the Council of Economic
Advisers. He succeeds Kathryn L. Shaw, who returned to Carnegie Mellon
University, where she is Professor of Economics in the Graduate School
of Industrial Administration.

Dr. Kroszner is on leave from the University of Chicagoï¿½s Graduate
School of Business, where he is Professor of Economics. He is also on
leave from his positions as Editor of the Journal of Law & Economics
and Associate Director of the George J. Stigler Center for the Study
of the Economy and the State.

During 1999-2000 Dr. Kroszner was the John M. Olin Fellow in Law and
Economics at the University of Chicago Law School. He is a Faculty
Research Fellow of the National Bureau of Economic Research. He is
on leave from his position as an Associate Editor of the journal
Economics of Governance, the Journal of Economics and Business, and
the Journal of Financial Services Research.

The Chairman and the Members work as a team on most economic policy
issues. Dr. Hubbard was primarily responsible for the Administration's
economic forecast, macroeconomic analysis, budget and taxation policy,
retirement security, and international financial issues. Dr. Kroszner's
portfolio included international economic issues and certain
microeconomic issues, including those relating to the environment and
costs of regulation. Dr. McClellan was primarily responsible for policy
analysis relating to labor, health care, welfare reform, and child and
family issues.

Macroeconomic Policies

As is its tradition, the Council devoted much time during 2001 to
assisting the President in formulating economic policy objectives and
designing programs to implement them. In this regard the Chairman kept
the President informed, on a continuing basis, of important
macroeconomic developments and other major policy issues through
regular macroeconomic briefings. 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. In addition, they prepare weekly discussion and data memos for
the Vice President and senior White House staff.

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 2001 the Council took part in discussions on a range of
macroeconomic issues, with particular focus on tax and budget policy.
The Council engaged in discussions with other agencies concerning
taxation and its effects on the U.S. economy. The Council works closely
with the Office of Management and Budget, the Treasury, the Federal
Reserve, and the National Economic Council, as well as other
government agencies, in providing analyses to the Administration on
these topics of concern.

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 also regularly exchanged views on
the macroeconomy with the Chairman of the Board of Governors of the
Federal Reserve System.

International Economic Policies

The Council was involved in a range of international trade issues,
including discussions about a new work program for the World Trade
Organization, steel trade issues, trade adjustment assistance, and
negotiations for new free-trade areas. In addition, the Council
participated in international finance discussions involving Argentina,
Brazil, Japan, and Turkey.

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 Chairman
heads the U.S. delegation to the semiannual meetings of the OECD's
Economic Policy Committee (EPC) and serves as the EPC Chairman as well
as Chairman of the Ad Hoc Group on Sustainable Development. Dr.
McClellan led the U.S. delegation to the OECDï¿½s Working Party 1, which
focused on a variety of microeconomic issues, such as lifetime learning.
In 2001 Dr. Kroszner participated in the OECDï¿½s Working Party 3
meetings on macroeconomic policy and coordination. He also participated
in the annual review of U.S. economic policy. The Council was an active
participant in these  committees, working on a variety of issues
including economic policy, tax policy, sustainable development,
international financial markets, and labor issues, such as the
interaction between product and labor markets. The Council provided
both analytical support and policy guidance.

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. In 2001 Dr. Kroszner participated in the U.S.-Japan Economic
Sub-Cabinet dialogue, part of the U.S.-Japan Economic Partnership for
Growth. During the year the Council represented the United States at
other international forums as well, including meetings of the
Asia-Pacific Economic Cooperation forum.

Microeconomic Policies

A wide variety of microeconomic issues received Council attention
during 2001. The Council actively participated in the Cabinet-level
National Economic Council, dealing with such issues as problems in
the agricultural sector, climate change, unemployment insurance,
health policy, energy policy, and financial markets and institutions.
Dr. McClellan was extensively involved in formulating policy concerning
Medicare reform, the Patients' Bill of Rights, tax credits for health
insurance, and exploring ways to reduce the cost of pharmaceuticals.
Dr. Kroszner participated in a series of discussions on environmental
policies and industry-specific issues. In the aftermath of the
terrorist attacks on September 11, Council members and staff analyzed
the effects on the airline and insurance industries, including the
challenges of the provision of terrorism reinsurance, as well as
costeffective measures to combat bioterrorism.


The Staff of the Council of Economic Advisers

The professional staff of the Council consists of the Chief of Staff,
the Senior Statistician, the Chief Economist, the Director of
Macroeconomic Forecasting, eight senior economists, five staff
economists, and four research assistants. The professional staff and
their areas of concentration at the end of 2001 were:


Chief of Staff
Diana E. Furchtgott-Roth



Senior Statistician
Catherine H. Furlong


Chief 	                                    Director of
Economist                               Macroeconic Forecasting
Douglas J. Holtz-Eakin	                    Steven N. Braun


Senior Economists

Katherine Baicker		Labor, Health, Welfare, and Education
Jeffrey R. Brown		Social Security
Carolyn L. Evans		International Trade
Peter M. Feather		Agriculture, Regulation, and Environment
Andrew J. Filardo		Macroeconomics
William R. Melick		International Finance
Wallace P. Mullin		Energy, Electricity, Telecommunications,
and Transportation
William A. Pizer		Climate Change and Environment

Staff Economists

Irena I. Asmundson		International Trade
Katherine R. Baylis		Agriculture
Catherine L. Downard		Macroeconomics, Financial Markets,
and Tax Policy
Judson L. Jaffe		        Microeconomics and Environment
Brian H. Jenn		        Labor and Social Security

Research Assistants
Heather C. McNaught		Environment and Regulation
M. Marit Rehavi		        Labor, Health, Education, and Unemployment
Adam R. Saunders		International Economics
Jason M. Zhao		        Macroeconomics

Statistical Office

Mrs. Furlong directs the Statistical Office. The Statistical Office
maintains and updates the Councilï¿½s 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
Dagmara A. Mocala		Research Assistant

Administrative Office

Catherine Fibich		Administrative Officer
Rosemary M. Rogers		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. Kroszner
Stephen M. Lineberry		Executive Assistant to Dr. McClellan

Staff Support

Mary E. Jones		Executive Assistant for International
Economics, Labor, Health, Environment, and
Regulation
Mary A. Thomas-Parker   Program Assistant for Macroeconomics,
Industrial Organization, and Agriculture

Michael Treadway provided editorial assistance in the preparation of
the 2002 Economic Report of the President.

During 2001, Francine P. Obermiller served as Executive Assistant to
Dr. McClellan until she was called to active duty by the Department of
the Navy in support of Operations Noble Eagle and Enduring Freedom.
Rex W. Cowdry, Douglas A. Irwin, Helen G. Levy, and Jonathan S. Skinner
provided consulting services to the Council during 2001.

Student interns during the year were Jennifer L. Abrahamson, Ashley A.
Ensign, Namita K. Kalyan, Jonathan M. Klick, Elizabeth A. Leet, Mark F.
Magazu, Charles J. McCleary, Stephen R. Mulholland, Jared B. Prushansky,
Douglas A. Smith, James W. Soldano, Julia A. Stahl, and Kevin P.
Sweeney. Ivan A. DeJesus, Nayla Z. Idriss, and Matthew L. Nestorick
joined the staff of the Council in January as student interns.

Departures

Audrey Choi, who served as Chief of Staff, resigned in January 2001.
She accepted a position as Research Director for former Vice President
Al Gore. Charles F. Stone, Chief Economist, also resigned in January
2001. He accepted a position with the Senate Budget Committee.

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 William B. Boning (The CNA Corporation), Menzie
D. Chinn (University of California, Santa Cruz), Andrew G. Keeler
(University of Georgia), Peter G. Klein (University of Georgia),
Michael R. LeBlanc (Department of Agriculture), Kathleen M. McGarry
(University of California, Los Angeles), and Phillip L. Swagel
(International Monetary Fund). Diane Lim Rogers accepted a position
at the Joint Economic Committee of the Congress.

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 2001 are Daniel W. Elfenbein
(Harvard University), Jason S. Seligman (University of California,
Berkeley), and Vivian Y. Wu (Harvard University). Matthew C. Wilson
accepted a position at the University of Denver. Alexander M. Brill
accepted a position at the House Ways and Means Committee, and Kevin
F. Erickson accepted a position at the Joint Economic Committee. Terry
L. Lumish accepted a position with former Vice President Al Gore. After
serving as research assistants at the Council, some pursue graduate
studies. Those who began graduate studies in 2001 are Olivier Coibion
(University of Michigan), Nathaniel F. Stankard (Harvard Law School),
and Elizabeth A. Weber (University of California, Berkeley). Heather L.
Jambrosic accepted a position with the American Meat Institute, and
James A. Mathews accepted a position at the Advisory Board Company.
Rosalind V. Rasin, Executive Assistant, accepted a position with the
U.S. Customs Service.

Public Information

The Council's annual Economic Report of the President is an important
vehicle for presenting the Administrationï¿½s domestic and international
economic policies. It is now available for distribution as a bound
volume and on the Internet, where it is accessible at
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 www.access.gpo.gov/congress/cong002.html.
The Council's home page is located at www.whitehouse.gov/cea/index.html.