[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.