[Economic Report of the President (2006)]
[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 2005





LETTER OF TRANSMITTAL

Council of Economic Advisers,
Washington, D.C., December 30, 2005.

Mr. President:
The Council of Economic Advisers submits this report on its
activities during the calendar year 2005 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,

Ben S. Bernanke, Chairman
Katherine Baicker, Member
Matthew J. Slaughter, 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. 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        February 18, 2005.
Kristin J. Forbes   Member           November 21, 2003   June 3, 2005.
Harvey S. Rosen     Member           November 21, 2003
Chairman         February 23, 2005   June 10, 2005.
Ben S. Bernanke     Chairman         June 21, 2005
Katherine Baicker   Member           November 18, 2005
Matthew J. Slaughter Member          November 18, 2005


Report to the President on the
Activities of the Council of Economic
Advisers During 2005

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

Ben S. Bernanke was appointed by the President on June 21, 2005 as
Chairman of the President's Council of Economic Advisers. Dr. Bernanke
succeeded Harvey S. Rosen, who returned to Princeton University,
where he is the John L. Weinberg Professor of Economics and Business
Policy. Dr. Rosen succeeded N. Gregory Mankiw, who returned to Harvard
University, where he is the Robert M. Beren Professor of Economics.
Prior to his appointment to the Council, Dr. Bernanke served as a
Member of the Board of Governors of the Federal Reserve System.
Before becoming a Member of the Board, Dr. Bernanke was the Howard
Harrison and Gabrielle Snyder Beck Professor of Economics and Public
Affairs and Chair of the Economics Department at Princeton University
(1996-2002). Dr. Bernanke had served as a Professor of Economics and
Public Affairs at Princeton since 1985.
Dr. Bernanke was nominated by the President on October 24, 2005 to be
Chairman of the Federal Reserve System for a term to begin on
February 1, 2006. Dr. Bernanke subsequently recused himself from the
development of the Administration's economic forecast for the fiscal
year 2007 budget.
The Chairman of the Council 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. The Chairman 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
Katherine Baicker was appointed by the President as a Member of the
Council of Economic Advisers on November 8, 2005. She succeeds Dr. Rosen,
who had served as a Member prior to being appointed Chairman. Dr. Baicker
is on leave from the University of California in Los Angeles, where she is
an Associate Professor in the Department of Public Policy. At the Council
Dr. Baicker's responsibilities include work on public finance, labor, and
health issues.
Matthew J. Slaughter was appointed by the President as a Member of the
Council of Economic Advisers on November 8, 2005. He succeeds Kristin J. Forbes,
who returned to 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. Dr. Slaughter is on leave from the Tuck School
of Business at Dartmouth College where he is an Associate Professor of
Business Administration. At the Council Dr. Slaughter's responsibilities include
work on international finance and trade, and industrial organization issues.

Macroeconomic Policies
As is its tradition, the Council devoted much time during 2005 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 regular
memoranda that report key economic data and analyze current economic events.
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 2005, the Council took part in discussions on a range of macroeconomic
issues. An important concern in the second half of the year was providing analysis
related to hurricanes Katrina and Rita. 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. It also works 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.

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.
This involvement included extensive analysis of alternative liberalization
scenarios, participation in deliberations concerning trade policy in a number of
industries, and analysis related to U.S. economic interaction with China.   In
international finance, 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 discussions concerning international financial
relations with both advanced and emerging market economies. 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 recent months, meetings have been held with
the ministers of finance from countries including Great Britain, Japan, and India
as well as officials from the European Commission and international financial
institutions such as the International Monetary Fund.
Council staff were part of the U.S delegation that participated in Joint Economic
Committee discussions in Beijing, focused on banking reform and capital market
development in China. In addition, the Council participated in discussions with
Chinese officials in the U.S.-China Joint Commission on Commerce and Trade. The
Council participated in the development of U.S. proposals for providing additional
debt relief to the world's poorest countries (Highly Indebted Poor Countries, or
HIPCs) that were agreed to at the G-8 Summit held at Gleneagles, Scotland, and
prepared analyses for the summits involving the countries of the Asia Pacific Economic
Cooperation (APEC).  The Council is also a leading participant in the Organization
for Economic Cooperation and Development (OECD), the principal forum for economic
cooperation among the high-in
come 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. Rosen, Dr. Forbes, and Dr. Slaughter participated
in meetings of the Economic Policy Committee, as well as meetings of the OECD's
Working Party 3 on macroeconomic policy and coordination. Council staff participated
in additional OECD meetings.

Microeconomic Policies
A wide variety of microeconomic issues received Council attention during 2005.
The Council actively participated in the Cabinet-level National Economic Council,
dealing with such diverse issues as health care policy, energy policy, environment,
Social Security, tax policy, immigration, education reform, asbestos litigation,
and financial markets and institutions. The Council was particularly active in
the area of health care policy, conducting analyses of the sources and impact of
rising health care costs, the use of health savings accounts, and a number of
issues related to the Medicare and Medicaid programs. The Council also participated
in discussions related to market-based health care reforms and the tax treatment
of health care spending.   Energy policy was also an important focus of the Council,
with analysis on the impact of hurricanes Katrina and Rita on energy markets,
increasing world demand for oil, and the impact of various policy proposals regarding
both energy efficiency and energy supply.


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 and Statistics, nine senior economists,
four staff economists, and five research assistants. The professional staff and their
areas of concentration at the end of 2005 were:


Chief of Staff
Gary D. Blank


Chief Economist
H. Keith Hall


Director
of
Macroeconomic Forecasting and Statistics
Steven N. Braun





Senior Economists

John E. Anderson ............................ Public Finance
William D. Block ............................ International Finance and Development
Joseph C. Cooper ............................ Agriculture and Natural Resources
Daniel M. Covitz ............................ Macroeconomics and Finance
William H. Dow .............................. Health
Wayne R. Dunham ............................. Regulation, Technology, and Transportation
Dino D. Falaschetti ......................... Regulation and Finance
Christine A. McDaniel ....................... International Trade
Richard G. Newell ........................... Energy and Environment

Economist
Rebecca J. Kalmus ........................... Labor

Staff Economists
Faisal Z. Ahmed ............................. International Finance and Trade,
and Macroeconomics
Soren T. Anderson ........................... Regulation
Andrew R. Hanson ............................ Public Finance

Research Assistants

Jeffrey P. Clemens .......................... Public Finance and Regulation
Sarena F. Goodman ........................... Macroeconomics and Labor
Dagmara K. Tchalakov ........................ International Trade and Finance
Diana C. Wielocha ........................... Macroeconomics, Finance,
and Regulation
Jonathan A. Wolfson ......................... Health and Regulation


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 .............................. Program Analyst (Statistical)
Brian A. Amorosi ............................. Program Analyst (Statistical)
Dagmara A. Mocala ............................ Research Assistant

Catherine Furlong retired from Federal service on September 2, 2005. She had
worked in the CEA Statistical Office for 54 years, and had been its Senior
Statistician since 1977. A retirement ceremony was held on September 30, where
she was honored in comments by present and former Council Chairmen, Ben Bernanke,
Alan Greenspan, and Charles Schultz. Chairman Raymond Saulinier was also in
attendance. Her untiring dedication to accuracy, detail and the reputation
of the Council will indeed be missed. All future Councils will benefit from that wisdom.


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


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. Slaughter
Mary E. Jones ................................ Executive Assistant to Dr. Baicker


Staff Support

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

Jane Tufts and Barbara Pendergast provided editorial assistance in the preparation
of the 2006 Economic Report of the President.
Student Interns during the year were: Matthew B. Adler, Taylor W. Buley, Sean D. Clifford,
Andrew M. Dietrich, Alan Y. Gu, Brett W. Hollenbeck, Rebecca L. Homkes, Thomas R. Johnson,
Aaron W. Kletzing, Edwin H. Lee, Stephanie Mak, Andrew Park, Sean X. Qin,
Elizabeth M. Schultz, Brian C. Tucci, and Joseph S. Vavra.
Fellows during the year were: Courtney Biesecker, Kenneth Gillingham, and Neal Rappaport.

Departures
Phillip P. Swagel left the Council as Chief of Staff in February of 2005 to join the
American Enterprise Institute as a resident scholar.
Donald B. Marron left the Council as Chief Economist in October of 2005 to join the
Congressional Budget Office where he is currently the Acting Director.
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 one
or two years. Some of the senior economists who resigned during the year returned
to their previous affiliations. They are: Raymond R. Geddes (Cornell University),
Pia M. Orrenius (Federal Reserve Bank of Dallas), John C. Driscoll (Federal Reserve Board),
Joshua S. Graff Zivin (Columbia University), Gerald Auten (Department of the
Treasury), Alexander Raskovich (Department of Justice), Philip Levy (State Department)
Staff economists are generally graduate students who spend one year with the Council
and then return to complete their dissertations. Those who departed the Council in 2005
are: Maria Damon, Peter R. Kingston, Anne Berry, and Carol Cohen.
Those who served as research assistants at the Council and resigned during 2005 were:
Namita K. Kalyan, Therese C. Scharlemann, Derek A. Haas, James Soldano, and Daniel Ramsey.
Brenda Compton, Finance Manager, accepted a position with the Census Bureau.
Satiah Pee, Information Management Assistant accepted a position with the Discovery Channel.

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 available on the Internet at www.gpoaccess.gov/eop. The Council also has
responsibility for compiling the monthly Economic Indicators. The Internet address
for the Economic Indicators is www.gpoaccess.gov/indicators. The Council's home
page is located at www.whitehouse.gov/cea.