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What is the Council of Economic Advisers?

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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 25 September 2016
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In 1946, the United States passed the Employment Act, which among other things, set up a special presidential advisory committee called the Council of Economic Advisors (CEA). This Council would consist of three members, one of whom who would chair the Council, and each advisor would be decided on by presidential appointment, which then had to be confirmed by the US Senate. In overview, the main goals of the Council of Economic Advisors were to evaluate the economy, and government programs and how they affected the economy. From this analysis, they reported to the president, and advised on and helped to develop economic policy based on their findings.

In addition to the main leaders of the Council of Economic Advisors, the CEA has a large staff. Trained and well-respected economists, often those who have postgraduate degrees in economics from well-known universities, fill staff positions. There are usually 20 highly educated economists on staff, and their work consists of gathering as much information as possible to help the council give the president a full overview and advice on the economy. The CEA also employs four statisticians to evaluate “the numbers” regarding the findings of these economists.

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One thing a US president must do is furnish Economic Reports on a yearly basis, and it is through the Council of Economic Advisors that such reports are created. These reports take into account current trends in the economy, which are gathered by the council. Additionally, the Council of Economic Advisors must evaluate how current economic trends are positively or adversely affected, or relatively unaffected by current government policies on the economy, which can prompt changes in law or the President’s urging the passage of temporary laws, rebates, and the like to help stimulate the economy.

Due to the fact that members of the Council of Economic Advisors are created by Presidential appointment, there are some inherent flaws in the Council’s existence and its work. Evaluating the economy can lead to several interpretations, and these interpretations tend to fall along political party lines. In addition, recommendations to take steps to amend the economy or pass new legislation to change economic policy can be based on the economic philosophy of the president’s political party, resulting in proposed solutions or changes that may not be supported by the political party that does not hold the presidency.

It gets slightly more complicated than that because even an analysis of current economic status and trends may be interpreted in diverse ways. How the economy is depicted and interpreted can influence what recommendations are made. A president attempting to make the economic outlook of the country less bleak might prepare with the Council of Economic Advisors an economic report that focuses on small areas where the economy seems to flourish, and any reports delivered can be in part a way to obfuscate the facts or present the facts in a light that does not please the other political party. Proposed executive bills arising from the CEA’s recommendations are not always passed if there is strong disagreement about the direction the government must take in amending or improving the economy, and especially if the president’s political party is the opposite of the majority party in the US House of Representatives and the Senate.

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