ERP1978 Appendixes 1

Appendix A

REPORT TO THE PRESIDENT ON THE ACTIVITIES

OF THE

COUNCIL OF ECONOMIC ADVISERS DURING 1977

239

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis


LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERS,

Washington, D.C., December 30,1977.MR. PRESIDENT:

The Council of Economic Advisers submits this report on its activitiesduring the calendar year 1977 in accordance with the requirements of theCongress, as set forth in section 4(d) of the Employment Act of 1946.

Cordially,CHARLES L. SCHULTZE, Chairman.LYLE E. GRAMLEY.

WILLIAM D. NORDHAUS.

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Report to the President on the Activities of theCouncil of Economic Advisers during 1977

The membership of the Council of Economic Advisers changed entirelyin January 1977 when the Garter Administration took office. Charles L.Schultze became Chairman of the Council on January 22, 1977, replacingAlan Greenspan, who returned to Townsend-Greenspan, New York. Mr.Schultze had been a senior fellow at the Brookings Institution in Washington,D.C.

Lyle E. Gramley and William D. Nordhaus became Members onMarch 18, 1977, succeeding Burton G. Malkiel, who returned to PrincetonUniversity. Mr. Gramley came to the Council from the Board of Governorsof the Federal Reserve System. Mr. Nordhaus is on leave of absence fromYale University, where he is Professor of Economics and a member of theCowles Foundation for Research in Economics.

Past Council Members and their dates of service are listed below

Name

Edwin G. NourseLeon H. Keyserling

John D. Clark.

Roy Blough..Robert C. TurnerArthur F. BurnsNeil H. JacobyWalter W. Stewart...Raymond J. Saulnier

Joseph S. Davis.Paul W. McCracken...Karl BrandtHenry C. WallichWalter W. HellerJames Tobin _Kermit Gordon..Gardner Ackley

John P. LewisOtto EcksteinArthur M. Okun.

James S. DuesenberryMerton J. PeckWarren L. SmithPaul W. McCracken-...Hendrik S. HouthakkerHerbert Stein.

Ezra SolomonMarina v.N. WhitmanGary L. SeeversWilliam J. FellnerAlan Greenspan..Paul W. MacAvoyBurton G. Malkiel

Position

ChairmanVice ChairmanActing ChairmanChairmanMemberVice ChairmanMemberMemberChairmanMember..MemberMember _ChairmanMemberMember..MemberMemberChairman..MemberMember.MemberChairmanMember.Member.MemberChairman...MemberMemberMember..ChairmanMemberMember.Chairman..MemberMember.MemberMemberChairmanMember..Member

Oath of office date

Augusts 1946.Augusts 1946November 2,1949May 10,1950Augusts 1946May 10,1950June 29,1950September 8,1952March 19,1953...September 15,1953December 2,1953April 4,1955December 3,1956May 2,1955December 3,1956November 1,1958.May 7,1959January 29,1961January 29,1961January 29,1961August 3,1962November 16,1964May 17,1963September 2,1964November 16,1964February 15,1968February 2,1966February 15,1968July 1,1968.February 4,1969February 4,1969February 4,1969January 1,1972September 9,1971March 13,1972...July 23,1973October 31,1973September 4,1974..June 13,1975.July 22,1975. . . .

Separation date

November 1,1949.

January 20,1953.

February 11,1953.August 20, 1952.January 20,1953.December 1,1956.February 9, 1955.April 29, 1955.

January 20,1961.October 31,1958.January 31,1959.January 20,1961.January 20, 1961.November 15,1964.July 31,1962.December 27, 1962.

February 15,1968.August 31,1964.February 1,1966.

January 20,1969.June 30, 1968.January 20,1969.January 20,1969.December 31,1971.July 15,1971.

August 31,1974.March 26,1973.August 15, 1973.April 15,1975.February 25,1975.January 20,1977.November 15,1976.January 20,1977.

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RESPONSIBILITIES OF THE COUNCIL

The principal directive of the Employment Act is that the FederalGovernment "use all practicable means consistent with its needs and obli-gations . . . for the purpose of creating and maintaining . . . condi-tions . . . to promote maximum employment, production, and purchasingpower."

To this end, the Council of Economic Advisers analyzes economic prob-lems and interprets trends and changes in the economy in order to helpthe President develop and evaluate national economic policies. The Councilprepares regular reports on current economic conditions in the UnitedStates and abroad and prepares forecasts of future economic developments.The Council also performs an advisory role within the Executive Officeof the President and participates in interagency groups that analyze eco-nomic problems and develop programs to address them.

During 1977 the Council and its staff contributed to the study of a widevariety of economic issues. An important part of the Council's work duringthe year was to analyze current developments in business activity and eval-uate alternative macroeconomic policies in keeping with the President'sefforts continually to assess his decisions on taxation and expenditures withinthe context of long-run budgetary and economic requirements. The Councilparticipated in the development of such Administration initiatives as wel-fare reform, tax reform, social security financing proposals, the NationalEnergy Plan, agricultural legislation, minimum wage legislation, and urbanpolicy proposals, and played a major role in the development of the Admin-istration's international economic policies.

The Council, in cooperation with other Government agencies, becameactively involved in many different regulatory reform issues. The Regula-tory Analysis Program authorized by the President in 1977 called upon theCouncil to establish and chair an interagency group to review analysesprepared by regulatory agencies of the economic consequences of majorregulatory proposals. This review is intended to assure that the costs ofregulatory proposals have been considered, including the costs of all alter-native methods of regulation, so that the least-cost approach to regulationmay be found and applied.

Early each year the President submits the Economic Report of the Presi-dent to the Congress as required by the Employment Act. The Councilassumes major responsibility for the preparation of the Report, which to-gether with the Annual Report of the Council of Economic Advisers reviewsthe progress of the economy during the preceding year and outlines theAdministration's policies and programs.

The Chairman of the Council of Economic Advisers is a member of theEconomic Policy Group (EPG) and of its Executive Committee and Steer-ing Committee. The EPG was formed in January 1977 to direct the formula-tion and coordination of economic policy. The Steering Committee meetsweekly to address current issues of economic policy.

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The Chairman of the Council also heads the U.S. delegation to the Eco-nomic Policy Committee of the Organization for Economic Cooperation andDevelopment (OECD). Council Members and staff economists meet withvarious working parties of the committee and attend other meetings of theOECD during the year.

The review and analysis of the overall performance of the economy isconducted and coordinated through interagency working groups comprisingrepresentatives from the Council, the Treasury, the Office of Managementand Budget, and the Departments of Commerce and Labor. At regularintervals representatives of these agencies, chaired by the Council, meet toevaluate recent economic performance and formulate economic forecasts.The analysis and projections developed at these sessions are finally reviewedand cleared through the Chairman of the Council for presentation to andconsideration by the Economic Policy Group and the President.

The Joint Economic Committee of the Congress (JEC), like the Council,was created by the Employment Act of 1946 to make a continuing study ofmatters relating to the economy and to submit its own report and recom-mendations to the Congress. During 1977 the Chairman and Members of theCouncil appeared twice before the JEC and once before its Subcommitteeon International Economics. The Chairman and Council Members alsopresented testimony before the House Budget Committee; the House Appro-priations Committee; the House Ways and Means Committee and its Sub-committee on Trade; the House Committee on Banking, Finance, andUrban Affairs and its Subcommittee on Economic Stabilization; the HouseAd Hoc Committee on Energy; the House Committee on Public Works andTransportation and its Subcommittee on Investigations and Review; theHouse Appropriations Committee's Subcommittee on Treasury, Postal Serv-ices, and General Governmental Affairs; the House Committee on Inter-state and Foreign Commerce and its Subcommittee on Energy and Power;the Senate Budget Committee; the Senate Finance Committee; the SenateAppropriations Committee; the Senate Commerce Committee and its Sub-committee on Aviation; and the Senate Committee on Banking, Housing,and Urban Affairs.

PUBLIC INFORMATION

The annual Economic Report of the President and the Annual Report ofthe Council are the principal publications through which the public is in-formed of the Council's work and views. These publications are also an im-portant vehicle for presenting and explaining the Administration's overalleconomic policy, both domestic and international. Distribution of Reports inrecent years has averaged about 50,000 copies. The Council also assumesprimary responsibility for preparing Economic Indicators, a monthly publi-cation prepared by the Council's Statistical Office and issued by the JointEconomic Committee. Economic Indicators has a monthly distribution ofapproximately 10,000 copies.

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Information is also provided to members of the public through speechesand other public appearances by the Chairman, the Members, and thesenior staff economists. Each year the Council answers numerous requestsfrom the press and provides information in response to inquiries from indi-vidual citizens. In addition, the Council and staff receive frequent visitsfrom business, academic, and other groups and individuals.

ORGANIZATION AND STAFF OF THE COUNCIL

OFFICE OF THE CHAIRMAN

The Chairman is responsible for communicating the Council's views tothe President. This duty is performed through direct consultation with thePresident, and through written reports on economic developments and onparticular programs and proposals. The Chairman represents the Council atmeetings of the Cabinet and in many other formal and informal contactswith Government officials.

COUNCIL MEMBERS

The two Council Members are responsible for all subject matter coveredby the Council, including direct supervision of the work of the professionalstaff. Members represent the Council at a wide variety of meetings andassume major responsibility for the Council's involvement in many activities.

In practice, the small size of the Council's staff permits the Chairmanand Council Members to work as a team in most circumstances. There is,however, an informal division of subject matter between them. Mr. Gramleyassumed primary responsibility in 1977 for macroeconomic analysis, includ-ing the preparation of economic forecasts. Mr. Nordhaus is primarilyresponsible for international economic analysis and for microeconomicanalysis, including such policy areas as energy, agriculture, labor markets,social welfare, and regulated industries.

PROFESSIONAL STAFF

At the end of 1977 the professional staff consisted of the Special Assistantto the Chairman, 10 senior staff economists, 2 staff economists, 1 statistician,and 6 junior staff economists. Members of the professional staff wereresponsible for economic analysis and policy recommendations in majorsubject areas involving the Council's interests and responsibilities.

The professional staff and their special fields at the end of the year were:

Peter G. Gould Special Assistant to the Chairman

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Senior Staff Economists

Roger E. Brinner Business Conditions Analysis, Econometrics,and Forecasting

Peter K. Clark Macro- and Microeconomic Analysis, Econo-metrics, Trade, and Aggregate Supply

Nina W. Cornell Regulated Industries, Transportation, Envi-ronmental, and Health and Safety Issues

George E. Johnson Labor Policy, Human Resources, Welfare, andHealth Issues

Susan J. Lepper Monetary Policy, Financial Institutions, Capi-tal Markets, Housing, and State and LocalFinances

David C. Munro Business Conditions Analysis, Econometrics,and Forecasting

J. B. Penn Agriculture and Food PolicyJeffrey R. Shafer International Finance and TradeWilliam L. Springer Fiscal Policy, Public Finance, Income Distri-

bution, Human Resources, Welfare, andHealth Issues

David A. Wyss Macro- and Microeconomic Analysis, Econo-metrics, and Prices and Wages

Statistician

Catherine H. Furlong Senior Statistician

Staff EconomistsArthur E. Blakemore Labor MarketsRobert E. Litan Energy Analysis and Policy, Science and Tech-

nology, and Natural Resources

Junior Staff EconomistsMichael S. Golden Agriculture and Food Policy, Econometrics, and

ForecastingHoward K. Gruenspecht Regulation, Monetary Developments, and In-

dustry AnalysisRichard I. Kolsky Regulation, Energy Policy, and Industry An-

alysisRichard A. Koss Econometrics and ForecastingJulianne M. Malveaux Labor Markets and Monetary DevelopmentsMartha M. Parry International Economics

Catherine H. Furlong, Senior Statistician, is in charge of the Council'sStatistical Office. In 1977 Mrs. Furlong replaced Frances M. James, whoretired after 31 years of service as Senior Statistician for the Council. Mrs.Furlong has primary responsibility for managing the Council's statisticalinformation system. She supervises the publication of Economic Indicatorsand the preparation of the statistical appendix to the Economic Report. Shealso oversees the verification of statistics in memoranda, testimony, andspeeches. Natalie V. Rentfro and Earnestine Reid assist Mrs. Furlong.

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George C. Eads (The Rand Corporation), Murray F. Foss (NationalBureau of Economic Research), and John B. Shoven (Stanford University)served as consultants to the Council.

In preparing the Economic Report the Council relied upon the editorialassistance of Rosannah C. SteinhofT. Also called on for special assistance inconnection with the Report was Dorothy L. Reid, a former member of theCouncil staff.

SUPPORTING STAFF

The Administrative Office provides administrative support for the Coun-cil. Nancy F. Skidmore, Administrative Officer, prepares and analyzes thebudget and provides general administrative services. Duplicating, mail, andmessenger services were the responsibility of James W. Gatling and FrankC. Norman. Elizabeth A. Kaminski serves as Staff Assistant to the Council.

Members of the secretarial staff for the Chairman and Council Membersduring 1977 were Patricia A. Lee, Linda A. Reilly, Florence T. Torrison,and Alice H. Williams. Secretaries for the professional staff were M.Catherine Fibich, Bessie M. Lafakis, Joyce A. Pilkerton, Bettye T. Siegel,Margaret L. Snyder, and Lillie M. Sturniolo.

DEPARTURES

The Council's professional staff members are drawn primarily from uni-versities and research institutions. Senior staff economists who resignedduring the year were Barry P. Bosworth (Council on Wage and PriceStability), Barry R. Chiswick (Hoover Institution, Stanford University),John M. Davis, Jr. (Federal Reserve Bank of Cleveland), Bruce L. Gardner(Texas A&M University), Helen B. Junz (Department of the Treasury),Michael D. McCarthy (Wharton Econometric Forecasting Associates, Inc.),John J. Siegfried (Vanderbilt University), John B. Taylor (Columbia Uni-versity), and Philip K. Verleger, Jr. (Department of the Treasury). DoralS. Cooper, staff economist, resigned to accept a position with the SpecialRepresentative for Trade Negotiations.

Frances M. James, Senior Staff Statistician of the Council, retired in1977 after having served on the staff since 1946. More than any otherperson she was responsible for establishing and maintaining a standard ofrigorous accuracy in the data used by the Council and published in theCouncil's Annual Report and monthly Economic Indicators. A generationof economists who have been members of the Council of Economic Ad-visers have been indebted to her for wise guidance in the exercise of theirduties. All future Councils, although they will not have the privilege ofworking with her, will nevertheless be the beneficiaries of the tradition sheleft behind.

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Junior economists who resigned in 1977 were Richard E. Browning(Georgetown University), Timothy H. Quinn (University of California,Los Angeles), Barbara A. Smith (Mathematica Policy Research, Inc.),Paul G. Westcott (Department of Agriculture), and Benjamin Zycher (Uni-versity of California, Los Angeles). Retired during the year were DorothyBagovich, statistical assistant, and Dorothy L. Green, secretary. Margaret A.Bocek, secretary, resigned from the Council staff.

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Documents

ERP1978 Appendixes 1