[Economic Report of the President (2004)]
[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 2003




LETTER OF TRANSMITTAL

Council of Economic Advisers,
Washington, D.C., December 31, 2003.

Mr. President:
The Council of Economic Advisers submits this report on its activities
during the calendar year 2003 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,

N. Gregory Mankiw, Chairman
Kristin J. Forbes, Member
Harvey S. Rosen, Member




Council Members and Their Dates of Service


Name               Position         Oath of office       Separation
date               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.
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       February 28, 2003.
Mark B. McClellan   Member         July 25, 2001      November 13, 2002.
Randall S. Kroszner Member         November 30, 2001  July 1, 2003.
N. Gregory Mankiw   Chairman       May 29, 2003
Kristin J. Forbes   Member         November 21, 2003
Harvey S. Rosen     Member         November 21, 2003




Report to the President on the
Activities of the Council of Economic
Advisers During 2003

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

N. Gregory Mankiw was appointed by the President as Chairman on
May 29, 2003. Dr. Mankiw replaced R. Glenn Hubbard, who returned to
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. Dr. Mankiw is on leave from Harvard
University, where he is the Allie S. Freed Professor of Economics.
Dr. Mankiw 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. Mankiw
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

Kristin J. Forbes is a Member of the Council of Economic Advisers.
Dr. Forbes is on leave from the Massachusetts Institute of Technology
Sloan School of Management where she is the Mitsubishi Career
Development Chair of International Management and Associate
Professor of International Management in the Applied Economics
Group. She previously served as Deputy Assistant Secretary for
Quantitative Policy Analysis and Latin American and Caribbean Nations
at the U.S. Department of the Treasury.
Harvey S. Rosen is also a Member of the Council of Economic Advisers.
Dr. Rosen is on leave from Princeton University, where he is the
John L. Weinberg Professor of Economics and Business Policy.
Dr. Rosen previously served as Deputy Assistant Secretary for Tax
Analysis at the U.S. Department of the Treasury.
The Chairman and the Members work as a team on most economic policy
issues. Dr. Mankiw is primarily responsible for the Council's
macroeconomic analysis including the Administration's economic
forecast. Dr. Forbes' responsibilities include international
finance and trade issues, with a particular focus on emerging
markets and developing economies. Dr. Rosen's responsibilities
include policy analysis relating to taxation and microeconomic
issues including labor markets, health care, and regulation.


Macroeconomic Policies

As is its tradition, the Council devoted much time during 2003 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 President, Vice President and senior White
House staff.
The Council, the Department of the Treasury, and the Office of
Management and Budget (OMB)--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 Chief Economist, 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 2003, the Council took part in discussions on a range of
macroeconomic issues. An important concern in the first half of
the year was in providing analysis related to the President's Jobs
and Growth proposal, which took effect in midyear. An important
subsequent interest was then in assessing the response of the
economy, and the labor market in particular, to fiscal and
monetary policies. The Council works closely with the Treasury,
the Federal Reserve, and other government agencies in providing
analyses to the Administration on these topics of concern. In
2003, the Council worked closely with the National Economic
Council, the Office of Management and Budget, and other offices
within the Executive Office of the President in assessing the
economy and economic policy proposals.
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 economy with the Chairman and
Governors of the Federal Reserve System.


International Economic Policies

The Council was involved in a range of international trade issues,
including discussions on trade liberalization at the global,
regional, and bilateral levels.  The Council contributed to the
development of U.S. positions in talks on free trade agreements
with Australia, Central America, Morocco, the Southern African
Customs Union, and to the development of positions for the
ongoing negotiations on the Doha Development Agenda at the World
Trade Organization and for the Free Trade Agreement of the Americas.
The Council participated in deliberations concerning trade policy
in a number of industries, including steel and softwood lumber. The
Council also provided analysis related to U.S. economic interaction
with China and the impact of trade on the manufacturing sector.
The Council participated in discussions concerning international
financial policy involving many countries, including Argentina,
Bolivia, Brazil, China, the Dominican Republic, Iraq, Japan, the
Philippines, and Turkey. The Council participated in the
development of U.S. proposals for a number of heads of state
summits, including the leaders of the G8 nations and the Special
Summit of the Americas in early 2004. The Council also provided
analysis in support of efforts to promote economic stability and
growth in Iraq.
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.
Dr. Kroszner and Dr. Forbes participated in meetings of the OECD's
Working Party 3 on macroeconomic policy and coordination. Council
staff participated in the OECD's Working Party 1 on microeconomic
policy, in the annual OECD review of U.S. economic policy, and in
the OECD Ad Hoc Group on Sustainable Development.
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. During the year the Council represented the
United States at other international forums as well, including
meetings of the Asian-Pacific Economic Cooperation forum (APEC).


Microeconomic Policies

A wide variety of microeconomic issues received Council attention
during 2003. The Council actively participated in the
Cabinet-level National Economic Council, dealing with issues
including energy policy, the environment, international tax policy,
reform of Medicare, pensions, transportation, homeland security,
technology, and financial markets. Dr. Rosen was involved in
formulating policy concerning the supervisory regime for
government-sponsored enterprises in the home mortgage system.
The Council worked on a variety of environmental issues in 2003. The
Council played a role in the development of proposed mercury
standards, as well as in the proposed Inter-State Air Quality
Rule, which seeks to regulate sulfur dioxide and nitrogen oxides
emissions from power plants. The Council participated in discussions
on the final rule to clarify the routine maintenance, repair and
replacement exclusion under EPA's New Source Review program.  The
Council also helped in the revision of the OMB Guidelines for the
Conduct of Regulatory Analysis and the Format of Accounting
Statements. The Council analyzed proposed revisions to the voluntary
registry for greenhouse gases, and aided in the review and updating
of models concerning the Administration's Clear Skies legislative
proposal.
Energy policy was an important focus of the Council's efforts in
2003, with analysis on topics including the impact of high natural
gas prices and problems with the electricity transmission grid. The
Council also played a role in the deregulation of computer
reservation systems, as well as a number of other technology issues
including the exploration of space, telecommunications and
broadband, spectrum allocation, and spam. The Council also
participated in discussions concerning reforms to corporate
governance, government-sponsored enterprises, financial privacy
rules, pensions, the Postal Service, and tort reform.
During 2003, the Council participated in discussions on a number of
issues related to labor markets and social policies. These issues
included Medicare reform and the provision of prescription drug
benefits within Medicare, health information technology, medical
malpractice liability, unemployment insurance, workers' compensation,
immigration, college financial aid, and the President's proposal for re-employment accounts. The Council was also involved in discussions on
agriculture, transportation, and homeland security.


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 five research assistants. The professional staff
and their areas of concentration at the end of 2003 were:

Chief of Staff

Phillip L. Swagel


Chief Economist

Andrew A. Samwick


Director
of
Senior Statistician                  Macroeconomic Forecasting

Catherine H. Furlong                       Steven N. Braun


Senior Economists

Karen E. Dynan ................. Macroeconomics
Ted Gayer ...................... Environment and Regulation
Eric A. Helland ................ Finance, Regulation, and Technology
Philip I. Levy ................. International Trade
David W. Meyer ................. Energy, Regulation, and Transportation
Mark H. Showalter .............. Labor, Health Care, and Education
Alan D. Viard .................. Public Finance and Macroeconomics
Beth Anne Wilson ............... International Finance

Staff Economists

Anne L. Berry .................. Finance, Regulation, and Technology
Carol L. Cohen ................. International Trade
William J. Congdon ............. Education and Labor
Brent I. Neiman ................ International Finance
Matthew C. Weinzierl ........... Macroeconomics

Research Assistants

Christine L. Dobridge .......... Environment and Regulation
Namita K. Kalyan ............... Macroeconomics and Public Finance
Amanda E. Kowalski ............. Health Care and Labor
Therese C. Scharlemann ......... Macroeconomics and Public Finance
Julia A. Stahl ................. Public Finance

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 ............... Program Analyst (Statistical)
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.

Rosemary M. Rogers ............. Acting Administrative Assistant
Brandon L. Schwartz ............ 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
and Chief Economist
Lisa D. Branch ................. Executive Assistant to Dr. Forbes
Mary E. Jones .................. Executive Assistant to Dr. Rosen

Staff Support

Sharon K. Thomas ............... Administrative Support Assistant

Jane Tufts and Barbara Pendergast provided editorial assistance
in the preparation of the 2004 Economic Report of the President.
John P. Cogbill, Jamie Hall, Joseph J. Prusacki, and John L. Staub
served at the Council in 2003 on detail from other government agencies.
John A. List, Michael Moore, and Peter H. Woodward provided
consulting services to the Council during 2003.
Student Interns during the year were Jose G. Asturias, Jeffrey P.
Clemens, James B. Hargrave, Angela B. Howard, James R. Larson,
Yoon-Ho Lee, Evan M. Newman, Christina A. Norair, Michael K. Price,
Nirupama S. Rao, Mark T. Silvestri, Richard R. Townsend,
Diane T. Tran and Clint W. Wood. Elaine L. Hill joined the staff
of the Council in January as a student intern.


Departures

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 Robert N. Collender, (U.S. Department
of Agriculture), John L. List (University of Maryland),
Michael O. Moore (George Washington University), Robert J. Carroll
returned to the Department of the Treasury as Deputy Assistant
Secretary for Tax Analysis after joining the Congressional Budget
Office as a Visiting Scholar.
Others went on to new positions.  Cindy R. Alexander accepted a
position at the Securities and Exchange Commission, S. Brock Blomberg
accepted a position at Claremont McKenna College, Thomas C. DeLeire
went on to a position at Harvard University, and Christopher L. Foote
accepted a position with the Federal Reserve Bank of Boston.
Several staff economists went on to new positions. D. Clay Ackerly
accepted a position with the Food and Drug Administration.
Catherine L. Downard accepted a position with the Department of the
Treasury. Brian H. Jenn accepted a position with the Joint Economic
Committee. Those who served as research assistants at the Council
and resigned during 2003 are Adam R. Saunders (MIT Sloan School of
Management), Leandra T. de Silva (University of Pennsylvania),
Shelley D. de Alth (Public Policy Institute of California),
Paul Landefeld (Federal Reserve Board), and Jeff Lee.
John W. Arnold, Information Management Assistant, resigned to pursue
graduate studies. Stephen M. Lineberry, Confidential Assistant to
Dr. McClellan accepted a position with the White House Office of
Public Liaison. Administrative Officer, Mary C. Fibich, retired
after 37 years of Federal service, most of which were with the Council.


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 www.gpoaccess.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.gpoaccess.gov/indicators. The
Council's home page is located at www.whitehouse.gov/cea.