[Economic Report of the President (2003)]
[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 2002




LETTER OF TRANSMITTAL

Council of Economic Advisers,
Washington, D.C., December 31, 2002.

Mr. President:

The Council of Economic Advisers submits this report on its
activities during the calendar year 2002 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


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     January 19, 2001
Robert Z. Lawrence   Member         August 12, 1999     January 12, 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       November 13, 2002
Randall S. Kroszner  Member         November 30, 2001

Report to the President on the
Activities of the Council of Economic
Advisers During 2002

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

R. Glenn Hubbard continued to chair the Council during 2002. 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
is a Research Associate at the National Bureau of Economic Research.
He also served as Senior Vice Dean of the Graduate School of Business
at Columbia University.
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
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

Randall S. Kroszner is the other current Member of the Council of
Economic Advisers. Dr. Kroszner is on leave from the University of
Chicago's 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 at
the University of Chicago. Dr. Kroszner is also a Faculty Research
Fellow at the National Bureau of Economic Research. He represents
the Administration at a variety of international and domestic
meetings. The Council's third Member, Mark B. McClellan, left the
Council in November 2002 upon his appointment by the President to
be Commissioner of the Food and Drug Administration.

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, and retirement security. Dr. Kroszner's responsibilities
included international finance and trade issues for both emerging
markets and developed economies, macroeconomic forecasting, and a
number of microeconomic issues, including those relating to corporate
governance, financial markets, energy, environment, transportation,
and the costs of regulation.


Macroeconomic Policies

As is its tradition, the Council devoted much time during 2002 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 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 memoranda 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 2002 the Council took part in discussions on a range of
macroeconomic issues, with a particular focus on issues relating
to tax policy. The Council provided analytical support for major
fiscal initiatives such as the Job Creation and Worker Assistance
Act of 2002 and the President's January 2003 proposal to strengthen
the economy. The Council worked 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 rest of the Administration.

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
Members also regularly exchanged views on the economy 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 economic
issues. Discussions on trade policy matters involved a number of
industries as well as broader trade liberalization initiatives
in various multilateral, regional, and bilateral forums. The
Council participated in the development of U.S. positions during
the concluding stages of free trade agreements with Chile and
Singapore as well as in ongoing negotiations under the auspices
of the World Trade Organization and with regard to the proposed
Free Trade Agreement of the Americas. The Council participated in
international finance discussions involving a number of emerging
market economies. A particular focus of the Council was in
developing an analytical framework for a pro-growth agenda for
emerging markets. The Council participated in the development of
the President's Millennium Challenge Account, which will increase
aid to low- and middle-income countries that have a demonstrated
commitment to pro-growth policies and institutions.

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. In 2002 Dr. Kroszner participated in the OECD's
Working Party 3 meeting on macroeconomic policy and coordination,
and Council staff participated in the OECD's Working Party 1 meeting
on microeconomic policies. Dr. Kroszner also participated in the
annual OECD review of U.S. economic policy.

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 represented the United States at
other international forums as well, including meetings of the
Asia-Pacific Economic Cooperation (APEC) forum. The Council played
a key role in organizing an APEC-led initiative focused on corporate
restructuring, initial results of which were presented at a
conference in Singapore.

Microeconomic Policies

A wide variety of microeconomic issues received the Council's
attention during 2002. The Council actively participated in the
Cabinet-level National Economic Council, dealing with issues
related to energy, the environment, homeland security and
cybersecurity, technology, telecommunications, and transportation,
among others. Dr. McClellan was extensively involved in
formulating policy concerning health care and various aspects
of welfare policy. Dr. Kroszner participated in a series of
discussions on energy and environmental policies, financial
market issues, corporate governance reform, regulation, and
numerous issues relating to specific industries including lumber,
steel, and transportation.

The Council participated in discussion on a range of environmental
issues in 2002. A particular focus was on climate change
initiatives, including partnerships with other countries and
negotiations associated with the Kyoto Protocol.  The Council also
played an integral role in regulatory discussions, including the
revision of the OMB Guidelines for the Conduct of Regulatory
Analysis and the Format of Accounting Statements; Dr. Kroszner
co-chaired this process with the Director of the Office of
Information and Regulatory Affairs. This document establishes
guidelines for Federal government agencies on how to undertake
economic analysis of proposed regulations.

Corporate governance reform was an important focus of the Council's
efforts in 2002. Members and staff analyzed various underlying
problems in corporate governance and engaged in discussions within
the Administration and with outside organizations in the United
States and other countries about policies to enhance accountability,
disclosure, and enforcement. The Council was also involved in
discussions relating to the Postal Service, Amtrak, the airlines,
government-sponsored enterprises, bankruptcy reform, and a host
of technology-related issues such as cybersecurity, fusion energy
initiatives, computer reservation systems, and issues related to
broadband.

The Council participated extensively in discussions related to
labor market and social policies. Issues included prescription drug
benefits, reform of the Medicare system, medical malpractice
liability, unemployment insurance, and the President's proposal to
offer reemployment accounts to certain unemployed individuals.
The Council was also involved in discussions relating to financial
institutions, agriculture, and the economic effects of ports disputes.



The Staff of the Council of Economic Advisers

The professional staff of the Council consists of the Chief of
Staff, the Chief Economist, the Director of Macroeconomic
Forecasting, the Senior Statistician, eight senior economists,
five staff economists, and five research assistants. The
professional staff and their areas of concentration at the end
of 2002 were:


Chief of Staff

Phillip L. Swagel


Chief Economist
Douglas J. Holtz-Eakin


Director of                                      Senior
Macroeconomic Forecasting                           Statistician
Steven N. Braun	                         Catherine H. Furlong


Senior Economists

Cindy R. Alexander              Industrial Organization, Corporate
Finance, and Regulation
S. Brock Blomberg               International Finance
Robert J. Carroll.              Public Finance
Robert N. Collender             Regulation, Energy, Finance, and
Agriculture
Christopher L. Foote.           Macroeconomics
Thomas C. DeLeire               Labor, Health, and Education
John A. List                    Environment and Regulation
Michael O. Moore                International Trade

Staff Economists

D. Clay Ackerly                  Health Care and Labor
Anne L. Berry                    Regulation and Industrial Organization
Catherine L. Downard             International Finance
Brian H. Jenn                    Labor, Regulation, and Public Finance
Peter H. Woodward                International Finance and Financial
Markets

Research Assistants

Shelley D. de Alth              International Trade
Leandra T. DeSilva              Environment and Regulation
Christine L. Dobridge           Macroeconomics
Paul S. Landefeld               Macroeconomics and Public Finance
Adam R. Saunders                Macroeconomics, Public Finance, and
Regulation

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.

Linda A. Reilly                 Statistician
Brian A. Amorosi                Statistical Assistant
Dagmara A. Mocala               Research Assistant


Administrative Office

The Administrative Office provides general support for the Council's activities. This includes financial management, human resource management, and travel, facility, security, information, and telecommunications management support.

Catherine Fibich                Administrative Officer
Rosemary M. Rogers              Administrative Assistant
John W. Arnold                  Information Management 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

Diana E. Furchtgott-Roth served as Chief of Staff for the first
half of 2002 and subsequently as Special Advisor to the Council.
Michael Treadway provided editorial assistance in the preparation
of the 2003 Economic Report of the President.
Katherine Baicker, Rex W. Cowdry, John G. Matsusaka, and William
B. Vogt provided consulting services to the Council during 2002.
Student interns during the year were M. Caroline Beasley, Jason
P. Brinton, Alexander Chan, Carol L. Cohen, Brian C. Grech, Laura C.
Hanlon, Clarette S. Kim, David Y. Lin, Matthew Nestorick, Samuel
C. Roddenberry, Douglas A. Smith, Kevin P. Sweeney, Thomas B.
Valuk, Peter H. Woodward, and Aimee C. Zullo. Sarah R. Darley,
Evan M. Newman, and Adam R. Sorkin joined the staff of the
Council in January as student interns.


Departures

Diana E. Furchtgott-Roth accepted a position as Chief Economist
at the Department of Labor in early 2003. Douglas J. Holtz-Eakin
left the Council at the end of January 2003 to become the Director
of the Congressional Budget Office.
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 Katherine Baicker (Dartmouth College),
Peter M. Feather (U.S. Department of Agriculture, Economic Research
Service), William R. Melick (Kenyon College), and William A. Pizer
(Resources for the Future). Others went on to new positions. They
are Jeffrey R. Brown (University of Illinois at Urbana-Champaign),
Carolyn L. Evans (Board of Governors of the Federal Reserve System),
Andrew J. Filardo (Bank for International Settlements), and Wallace
P. Mullin (George Washington University).
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 2002 are Irena I.
Asmundson (Stanford University) and Katherine R. Baylis (University
of California, Berkeley). Judson L. Jaffe accepted a position at
Analysis Group/Economics. Those who served as research assistants
at the Council and resigned during 2002 are M. Marit Rehavi (London
School of Economics), Heather C. McNaught (Department of Justice),
and Jason M. Zhao. Mary A. Thomas-Parker, Program Assistant,
retired after nearly 26 years of Federal service, the last 13 years
of which were with the Council.
During 2002 the Council lost a valued colleague. Susan P. Clements,
who served as a Statistician in the Statistical Office, passed away
in August 2002; she had retired in June 2002 for health reasons.


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 both 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.