[Economic Report of the President (2008)] [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 2007 LETTER OF TRANSMITTAL Council of Economic Advisers Washington, D.C., December 31, 2007 Mr. President: The Council of Economic Advisers submits this report on its activities during calendar year 2007 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 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 January 31, 2006 Katherine Baicker Member November 18, 2005 July 11, 2007 Matthew J. Slaughter Member November 18, 2005 March 1, 2007 Edward P. Lazear Chairman February 27, 2006 Report to the President on the Activities of the Council of Economic Advisers During 2007 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 continued to chair the Council during 2007. 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 served 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 The Council's two other Members were Katherine Baicker who left the Council in July 2007 to become Professor of Health Economics in the Department of Health Policy and Management at Harvard School of Public Health, and Matthew J. Slaughter who left the Council in March 2007 to return to the Tuck School of Business at Dartmouth College as Associate Professor of Business Administration. The President nominated Dennis W. Carlton and Donald B. Marron to fill these two vacancies. Macroeconomic Policies As is its tradition, the Council devoted much time during 2007 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 within the Executive Office of the President. 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 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 2007, the Council took part in discussions on a range of macroeconomic issues. The Council contributed significantly to discussions on the macroeconomic impact of this year's housing and credit market disruptions, and provided analysis and support for the Administration's economic growth package. 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 Domestic Policy 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, including the U.S. Trade Policy Review, conducted by the World Trade Organization. On the international trade front, the Council provided empirical analysis of forthcoming free trade agreements and met with policymakers and business leaders in support of the Peru, Colombia, Panama, and South Korea free trade agreements. Further involvement included extensive analysis related to U.S. economic interaction with China. The Council provided analysis for the Department of the 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 also prepared in-depth analyses for the President's international itinerary, including travel to the Middle East and Europe, as well as the annual Asia Pacific Economic Cooperation (APEC) summit in Australia. In the area of investment and security, the Council took part in discussions on the implementation of the Foreign Investment and National Security Act of 2007, which clarified and improved the operations of the Committee on Foreign Investment in the United States (CFIUS). The Council also participated in discussions of individual cases before CFIUS. 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 economists and policy officials of foreign countries, finance ministers, other government officials, and members of the private sector to discuss prevailing issues relating to the global economy. 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, along with other senior Council members, participated in the OECD's Economic Policy Committee (EPC) meeting, as well as the Working Party meetings on macroeconomic policy and coordination. Microeconomic Policies A wide variety of microeconomic issues received Council attention during 2007. The Council actively participated in the Cabinet-level National Economic Council and Domestic Policy Council meetings, dealing with issues including health care, labor, energy policy, legal reform, the environment, education, pensions, transportation, and technology. The Council was active in the examination of health care policy related to the tax treatment of health insurance, health information technology adoption, health insurance for children, veterans health, potential reforms to Medicare, and the promotion of transparency in health price and quality. The Council examined the causes and consequences of rising health care costs and reviewed potential remedies including greater consumer involvement in health care, opening access to insurance across state lines, and improving the connection between health care expenditure and positive health outcomes. The Council was also 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 Renewable Fuels Standard, Corporate Average Fuel Economy (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 examined agricultural issues and patent reform. 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 individual income tax, business tax credits, and corporate taxation, as well as tax issues related to entitlement programs like 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, the Director of the Statistical Office, nine senior economists, and seven junior staff of staff economists, analysts and research assistants. The professional staff and their areas of concentration at the end of 2007 were: Chief of Staff Pierce E. Scranton Chief Economist Keith Hall Consultant Donald B. Marron Director of Director Macroeconomic Forecasting Statistical Office Steven N. Braun Adrienne T. Pilot Senior Economists Scott Baier ................ International Finance Erik Durbin ................ Legal, Transportation, Regulation Charles Griffiths .......... Agriculture, Environment, Natural Resources Daniel E. Polsky ........... Health Korok Ray .................. Public Finance, Technology Dan Rosenbaum .............. Labor, Immigration, Education, Welfare Howard Shatz ............... International Trade Sita Slavov ................ Tax, Budget John Stevens ............... Macroeconomics, Labor, Small Business Staff Economist Elizabeth Akers ............ Labor Analyst Kristopher J. Dawsey Macroeconomics Research Assistants Mark W. Clements ........... International Finance and Trade Joshua K. Goldman .......... Microeconomics and Regulation Elizabeth M. Schultz ....... International Finance and US Finance/Banking Brian T. Waters ............ Public Finance and Macroeconomics Chen Zhao .................. Health and Labor Statistical Office The Statistical Office administers and updates the Council's statistical information. Duties include preparing material for and overseeing publication of the monthly Economic Indicators and the statistical appendix to the Economic Report of the President. Staff verifies statistical content in Presidential memoranda and produces background materials for economic analysis. The Office also serves as the Council's liaison to the statistical community. Brian A. Amorosi .......... Program Analyst Dagmara A. Mocala ......... Program Analyst Administrative Office The Administrative Office provides general support for the Council's activities. This includes financial management, ethics, human resource management, travel, operations of facilities, security, information technology, and telecommunications management support. Rosemary M. Rogers ....... Administrative Officer Archana A. Snyder ........ Financial Officer 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 the Member Mary E. Jones ............ Executive Assistant to the Member Staff Support Sharon K. Thomas ......... Administrative Support Assistant and Assistant to the Chief Economist Gary Blank, who served as Chief of Staff, left the Council in August of 2007 to accept a position with Fidelity Investments as Vice President, Policy Analysis. Jane Tufts, Bruce Kaplan, and Anna Paganelli provided editorial assistance in the preparation of the 2008 Economic Report of the President. Student Interns during the year were: Aaron Epstein, Elisabeth E. Fosslien, Marc Held, Jonathan Jardine, Ashley Jelinek, Kyle Jurado, Jessica Levy, Danyank Lok, Robin Lyu, David Marold, Anthony Ng, Ethan Parker, Jeannine Regalia, William Ross, Kyle Smith, and Zachary Watson. Our Fellow during the year was Deepa Dhume. 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 1 or 2 years. The senior economists who resigned during the year were: William Collins (Vanderbilt University), Erik Heitfield (Federal Reserve Board), Bradley Herring (Emory University), Christine McDaniel (Department of the Treasury), Kristin McCue (Census Bureau), Robert Martin (Federal Reserve), David Richardson (TIAA-CREF), and Maryann Wolverton (EPA). The economist who resigned during the year was Benjamin Ho (Cornell University). The economists are supported by a team of junior staff made up of analysts and research assistants who generally work with the Council for 1 or 2 years before returning to school or other endeavors. The analysts who resigned during 2007 were: Dagmara Tchalakov, Lucas Threinen, Diana Wielocha, and Jonathan Wolfson. Those who served as research assistants at the Council and resigned during 2007 were: Eric Cragun, Nikola Kojucharov, and Gregory Stein. 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 purchase through the Government Printing Office, and is viewable on the Internet 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.