[Economic Report of the President (2005)]
[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 2004



LETTER OF TRANSMITTAL

Council of Economic Advisers,
Washington, D.C., December 30, 2004.

Mr. President:
The Council of Economic Advisers submits this report on its
activities during the calendar year 2004 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 date      Separation date

Edwin G. Nourse	   Chairman	   August 9, 1946     November 1, 1949.
Leon H. Keyserling Vice Chairman   August 9, 1946
Acting Chairman November 2, 1949
Chairman	   May 10, 1950	      January 20, 1953.
John D. Clark      Member	   August 9, 1946
Vice Chairman   May 10, 1950	     February 11, 1953.
Roy Blough	   Member	   June 29, 1950     August 20, 1952.
Robert C. Turner   Member	   September 8, 1952 January 20, 1953.
Arthur F. Burns	   Chairman	   March 19, 1953    December 1, 1956.
Neil H. Jacoby     Member	  September 15, 1953 February 9, 1955.
Walter W. Stewart  Member	   December 2, 1953  April 29, 1955.
Raymond J. SaulnierMember	   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 2004


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 continued to chair the Council during 2004.
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 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, and
other formal and informal meetings. 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 and Harvey S. Rosen are Members 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. Dr. Rosen is
on leave from Princeton University, where he is the John L. Weinberg
Professor of Economics and Business Policy.  Dr. Randall Kroszner
was previously a Member of the Council and has returned to the
University of Chicago's Graduate School of Business where he is a
Professor of Economics, Associate Director of the Stigler Center for
the Study of the Economy and the State, and Research Consultant to
the Federal Reserve Bank of Chicago.

The Chairman and the Members work as a team on most economic policy
issues. Dr. Mankiw is responsible for the Council's macroeconomic
analysis including the Administration's economic forecast. Dr.
Forbes's 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 fiscal policy and microeconomic issues including labor
and financial markets, health care, and regulation.

Macroeconomic Policies
As is its tradition, the Council devoted much time during 2004 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 2004, the Council took part in discussions on a range of
macroeconomic issues. An important part of the Council's ongoing
work involved monitoring economic data, including assessing the
response of the economy, and the labor market in particular, to
fiscal and monetary policies. Council staff analyzed economic
conditions at the state level, with a particular focus on labor
market developments. The Council also provided analysis relating
to the macroeconomic impact of natural disasters such as hurricanes.
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. The Council continued
to work closely in 2004 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 participated in the
development and analysis of policies relating to domestic and
international tax reform and reform of Social Security.
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
continued to give public addresses on economic developments, with a
focus on the role of policies and the implications of increased
international economic integration. The Chairman also regularly
exchanged views on the economy with the Chairman and Governors
of the Federal Reserve System. Council staff provided regular
assistance with economic data to other offices of the Executive
Office of the President, including the Office of Communications
and the Offices of Speechwriting for the President and Vice
President.

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 participated in
deliberations concerning trade policy in a number of industries,
and provided analysis related to U.S. economic interaction with
China and the impact of trade on the domestic economy. Dr. Forbes
and Council staff participated in dialogues with the Chinese
government, including the National Development and Reform Committee
and the Joint Economic Committee. Council staff participated in the
Beijing working group talks of the Joint Commission on Commerce and
Trade in July.
The Council participated in discussions concerning international
financial policy involving relations with both advanced and emerging
market economies. The Council provided extensive analysis of the
implications of changes in the U.S. external position and developments
in foreign exchange markets. The Council participated in the
development of U.S. proposals for the G-8 Summit held at Sea Island,
Georgia, which Dr. Forbes attended. Dr. Forbes and Council staff
also participated in sub Cabinet-level discussions with Japan.
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. Forbes also participated in meetings of the Economic Policy
Committee, as well as meetings of the OECD's Working Party 3 on
macroeconomic policy and coordination. Dr. Rosen participated in
the OECD's Working Party 1 on microeconomic policy and in the annual
OECD review of U.S. economic policy, as did CEA chief economists
Andrew Samwick and Donald Marron.
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.
Microeconomic Policies

A wide variety of microeconomic issues received Council attention
during 2004. The Council actively participated in the Cabinet-level
National Economic Council, dealing with issues including energy
policy, the environment, health care, homeland security, pensions,
transportation, technology, tort reform, and financial markets.
The Council participated in Administration efforts to improve the
supervisory regime for government-sponsored enterprises in the home
mortgage system. The Council also participated in ongoing policy
discussions relating to terrorism risk insurance.
The Council was involved in a variety of issues related to health
care. These included analyses of the sources of rising health care
costs, the design and impact of health savings accounts, and a number
of issues related to the Medicare and Medicaid programs. The Council
also participated in discussions related to pharmaceutical products
and helped evaluate the impacts of disease management and information
technology in health care.
On labor and education programs, the Council was involved in the
development of the President's proposal for a temporary worker
program, as well as evaluations of other proposed immigration
reforms. The Council assisted in Administration efforts to review
education policies, as well as to evaluate the effectiveness of the
Head Start program. The Council also participated in discussions
related to reauthorization of the Workforce Investment Act,
evaluation and reform of job training programs, and consideration
of education and other benefits for Veterans.
The Council worked on a variety of environmental issues in 2004.
The Council played a role in the development of a suite of proposed
air quality rules, including the Clean Air Mercury Rule and the Clean
Air Interstate Rule, which seek to regulate mercury, sulfur dioxide,
and nitrogen oxide emissions from power plants. The Council was
involved in the development of regulations concerning fine particles
and emissions coming from diesel engines. The Council was a member
of the Interagency Ocean Policy Group and helped to formulate the
Administration's response to the U.S. Commission on Ocean Policy's
recommendations for national ocean policy.
Energy policy continued to be an important focus of the Council's
efforts in 2004, with analysis on the impact of oil prices on the
economy and the impact of various policy proposals regarding energy
supplies. The Council also played a role in the analysis of policy
for telecommunications, broadband, and spectrum allocation. The
Council participated in discussions concerning Federal prison
industries, the Postal Service, tort reform, and transportation
issues, including the state of the airline industry. Council staff
also provided analyses related to agricultural issues, including
the economic impacts of ``mad cow'' disease.

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, one economist,
four staff economists, and five research assistants. The professional
staff and their areas of concentration at the end of 2004 were:


Chief of Staff
Phillip L. Swagel

Chief Economist
Donald B. Marron


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


Senior Economists

Gerald E. Auten ............. Public Finance
William D. Block ............ International Finance and Development
John C. Driscoll ............ Macroeconomics and Public Finance
R. Richard Geddes ........... Regulation and Finance
Joshua Graff Zivin .......... Environment, Health Care, and
Regulation
Philip I. Levy .............. International Trade
Pia M. Orrenius ............. Labor, Health Care, and Education
Alexander Raskovich ......... Regulation, Energy, and Technology

Economist
Anne L. Berry ............... Finance, Regulation, and Technology

Staff Economists

Carol L. Cohen .............. International Trade and Finance
Maria Damon ................. Environment and Regulation
Rebecca J. Kalmus ........... Health Care and Labor
Peter R. Kingston ........... Macroeconomics and Finance

Research Assistants

Derek A. Haas ............... Finance, Regulation, and Technology
Namita K. Kalyan ............ Macroeconomics
Daniel L. Ramsey ............ Public Finance
Therese C. Scharlemann ...... Macroeconomics
James W. Soldano ............ International 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 .......... Administrative Officer
Brenda Compton .............. Financial Manager

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 2005 Economic Report of the President.
Scott E. Carrell served as a senior economist for labor and public
finance during the summer of 2004 and then returned to his position
on the faculty of the Air Force Academy. Gerald F. Zukowski and
Roger E. Stanley also served at the Council in 2004 on detail from
other government agencies.
John List and Ted Gayer provided consulting services to the Council
during 2004.
Student Interns during the year were Sarah E. Anders, Mary B.
Anderson, Christian M. Bonilla, Eric C. Breitenstein, Matthew J.
Burton, Deepa Dhume, Michael M. Furchtgott, Sabah M. Khan, Susan J.
Li, Joshua S. Meltzer, Barbara J. Merry, Amol S. Navathe, Kirsten D.
Powers, Brian K. Smedley, Dagmara K. Tchalakov, and Sean M. Zimmerman.
Alexander P. Ryan joined the staff of the Council in January as a
student intern.

Departures
The Council's senior staff, in most cases, are on leave of absence
from faculty positions at academic institutions or from other
government agencies or research institutions. Chief Economist
Andrew Samwick returned to Dartmouth College, where he is a Professor
of Economics and Director of the Rockefeller Center for Public
Policy. The senior economists who resigned during the year returned
to their previous affiliations. They are Karen Dynan (Federal
Reserve Board), Ted Gayer (Georgetown University), Eric Helland
(Claremont McKenna College), David Meyer (Federal Trade Commission),
Mark Showalter (Brigham Young University), Beth Anne Wilson (Federal
Reserve Board), and Alan Viard (Federal Reserve Bank of Dallas).
Staff economists are generally graduate students who spend one year
with the Council and then return to complete their dissertations.
Those who returned to graduate studies in economics in 2004 are:
William Congdon (Princeton University), Brent Neiman (Harvard
University), and Matthew Weinzierl (Harvard University).
Research assistants who resigned during 2004 and went on to further
employment or graduate studies were Christine Dobridge (Deutsche
Bank), Amanda Kowalski (MIT economics), and Julia Stahl (New York
University Law School).
Brandon Schwartz, Information Management Assistant, resigned to
pursue graduate studies.

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. The Report is available on the
Internet, where it is accessible at www.gpoaccess.gov/eop, and for
purchase as a bound volume from the Government Printing Office. 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.