[Economic Report of the President (2007)] [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 2006 LETTER OF TRANSMITTAL COUNCIL OF ECONOMIC ADVISERS Washington, D.C., December 29, 2006 MR. PRESIDENT: The Council of Economic Advisers submits this report on its activities during calendar year 2006 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, Edward P. Lazear, 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. Council Members and Their Dates of Service Name Position Oath of office date Separation date 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 January 31, 2006 Katherine Baicker Member November 18, 2005 Matthew J. Slaughter Member November 18, 2005 Edward P. Lazear Chairman February 27, 2006 Report to the President on the Activities of the Council of Economic Advisers During 2006 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 Edward P. Lazear was appointed by the President on February 24, 2006 as Chairman of the President's Council of Economic Advisers. Dr. Lazear succeeded Ben S. Bernanke, who was appointed by the President as Chairman of the Federal Reserve Board on February 1, 2006. Dr. Lazear is on a leave of absence from the Stanford Graduate School of Business where he is the Jack Steele Parker Professor of Human Resources Management and Economics. He also serves as the Morris Arnold Cox Senior Fellow at the Hoover Institution. Dr. Lazear 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 daily White House senior staff meetings, a variety of inter-agency meetings, Cabinet meetings, 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. Lazear 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 and Matthew J. Slaughter are Members of the Council of Economic Advisers. 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. She also served as a Faculty Research Fellow for the National Bureau of Economic Research. At the Council, Dr. Baicker's responsibilities include work on public finance, labor, and health issues. Dr. Slaughter is on leave from the Tuck School of Business at Dartmouth College where he is an Associate Professor of Business Administration. He also serves as a visiting Fellow at the Institute for International Economics and has served as a Research Associate at the National Bureau of Economic Research. Dr. Slaughter's responsibilities at the Council include work on international finance and trade, and industrial organization issues. Macroeconomic Policies As is its tradition, the Council devoted much time during 2006 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. Council staff also regularly provides assistance with economic data to other offices of the Executive Office of the President. 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 2006, the Council took part in discussions on a range of macroeconomic issues. The Council contributed significantly to discussions of the macroeconomic impact of unexpected oil supply shocks, the effects of a potential pandemic flu, and proposed mitigation plans. The Council works closely with the Department of 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 and finance issues, and was an active participant in discussions at the global, regional, and bilateral levels. On the international trade front, the Council provided empirical analysis of forthcoming free trade agreements and the recently released top-to-bottom review of U.S.-China bilateral economic relations spearheaded by the United States Trade Representative. Staff also conducted a landmark study exploring the prevalence and effects of non-tariff barriers in conjunction with the Department of Commerce. Further involvement included extensive analysis and participation in deliberations related to the U.S. economic interaction with China. The Council participated in the inaugural U.S. Treasury-led Strategic Economic Dialogue in Beijing where a host of bilateral economic issues with China were discussed, ranging from financial liberalization, to energy and the environment, to bilateral trade relations. The Council participated in the development of U.S. proposals for securing global energy security and combating the spread of pandemic disease at this year's G8 Summit held in St. Petersburg, Russia. The Council also prepared in-depth analyses for the President's international itinerary, including the annual Asia-Pacific Economic Cooperation (APEC) summit, and travel to Europe, India, and Mexico. The Council participated in discussions concerning the need for greater international financial and trade liberalization 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 finance ministers, other government officials, and members of the private sector. 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 economies. Chairman Lazear and Dr. Slaughter participated in meetings of the OECD's Economic Policy Committee (EPC), as well as meetings of the OECD's Working Party 3 on macroeconomic policy and coordination. Microeconomic Policies A wide variety of microeconomic issues received Council attention during 2006. The Council actively participated in the Cabinet-level National Economic Council and Domestic Policy Council, dealing with issues including health care, labor issues, energy policy, legal reform, the environment, homeland security, education, pensions, transportation, and technology among others. The Council was involved in a plethora of discussions related to health care. These included examination and policy proposals relating to the tax treatment of health insurance, analysis and development of Administration efforts to enhance Health Savings Accounts, analysis of potential Medicare and Medicaid reforms, and promotion of transparency in health price and quality. The Council investigated the causes and consequences of rising health care costs and examined potenial remedies including greater consumer involvement in health care, opening access to insurance across state lines, Association Health Plans, and encouraging high quality health care when the government is the payer. The Council was also especially active in energy and environmental policy discussions, where it analyzed energy markets, fuel economy issues, and alternatives to oil. This included issues such as the President's Advanced Energy Initiative, bio-energy, the Outer-Continental Shelf, the Renewable Fuels Standard, CAFE, the Strategic Petroleum Reserve, regulatory reforms, global climate change, and the international trade of energy. The Council examined transportation policies relating to airports, hybrid vehicles, and congestion pricing. The Council also played a role in the analysis of policy for telecommunications, broadband, and spectrum allocation. Council staff also provided analyses related to agricultural issues. The Council participated in discussions related to catastrophic risk insurance relating to natural disasters and attacks. The Council also participated in ongoing policy discussions relating to the government's role in terrorism risk insurance. On labor policy, the Council was involved in the development of the President's comprehensive immigration policy and other proposed immigration reforms. The Council also assisted in Administration evaluation of higher education policies, as well as in the examination of the No Child Left Behind program. The Council was active in tax policy discussions relating to comprehensive tax reforms, business tax credits, and corporate taxation, as well as tax issues related to entitlement programs such as Social Security. Many additional tax policy discussions were involved in other microeconomic discussions including labor, insurance, pensions, and health care. 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, eight senior economists and one economist, and seven junior staff of analysts and research assistants. The professional staff and their areas of concentration at the end of 2006 were: Chief of Staff Gary D. Blank Chief Economist Keith Hall Director of Macroeconomic Forecasting and Statistics Steven N. Braun Senior Economists William J. Collins . Labor, Immigration, Education, Welfare Erik A. Heitfield .. Finance, Telecommunications Bradley J. Herring.. Health Kristin McCue ...... Labor, Small Business, Economic Development Robert F. Martin ... Macroeconomics, International Finance and Development Christine A. McDaniel..International Trade David P. Richardson... Public Finance Wolverton, Maryann.... Agriculture, Environment, Natural Resources Economist Benjamin T. Ho ................ Energy, Transportation, Legal Reform Analysts Dagmara K. Tchalakov...... International Finance and Trade Diana C. Wielocha......... Public Finance, Finance, Legal Reform Jonathan A. Wolfson ...... Health Research Assistants Eric B. Cragun........ Labor, Macroeconomics Nikola D. Kojucharov.. Macroeconomics Gregory E. Stein...... Energy, Transportation, Environment, Agriculture Lucas D. Threinen .... International Finance and Trade, Technology 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 Linda Reilly retired from Federal service on December 29, 2006. She had worked at the Council for 36 years and had been with the Statistical Office since 1981. Linda's dedication to the Council has been extraordinary, and her knowledge of statistics and their applications are greatly appreciated by CEA staff past and present. 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 Archana A. Snyder .......... Financial Manager Doris T. Searles ........... Information Management Specialist 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 and Assistant to the Chief Economist Jane Tufts and Anna Paganelli provided editorial assistance in the preparation of the 2007 Economic Report of the President. Student Interns during the year were: Daniel M. Cohen, Shana N. Dougherty, Stacy L. Droms, George Kim, Bryan C. Hoppe, Grace C. Hou, Lindsay A. Philbrick, Joni Perdue, Jennifer Scallion, Timothy Simmons, Michael S. Verne, and Sajid S. Zaidi. Fellows during the year were: Michael Chow and Therese C. Scharlemann. Departures The Council's senior economists, in most cases, are on leave of absence from academic institutions, government agencies, or private research institutions. Their tenure with the Council is usually limited to one or two years. The senior economists who resigned during the year and returned to their previous affiliations were: John Anderson (University of Nebraska), William Block (Department of the Treasury), Daniel Covitz (Federal Reserve Board), Joseph Cooper (Department of Agriculture), William H. Dow (University of California, Berkeley), Wayne Dunham (Department of Justice), Dino Falaschetti (Montana State University), and Richard Newell (Resources for the Future). Rebecca Kalmus, an economist, resigned to pursue studies at the University of Texas. The economists are supported by a team of junior staff made up of staff economists, analysts, and research assistants who generally work with the Council for one or two years before returning to school. Those who served as staff economists at the Council and resigned during 2006 were: Soren Anderson, Faisal Z. Ahmed, and Andrew Hanson. Those who served as research assistants at the Council and resigned during 2006 were: Jeffrey P. Clemens and Sarena F. Goodman. 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 for distribution as a bound volume and on the Internet, where it is accessible at www.gpoaccess.gov/eop. The Council also publishes the monthly Economic Indicators, which is available on-line at www.gpoaccess.gov/indicators. The Council's home page is located at www.whitehouse.gov/cea.