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Published online by Cambridge University Press: 01 August 2014
When the Council of Economic Advisers opened its doors in late 1946, many regarded the fledgling agency as a contingent of depression doctors armed with a “watered down” version of the Full Employment Bill. Instead, during the Truman era, the Council became, in the words of its second chairman, “an overall general economic advisory staff” generally concerned with major problems affecting the growth and stability of the American economy, including its adaptability to the special demands of international stress. Actually the “transition” of the agency to this broader role was more apparent than real, since the Employment Act itself clearly contained a charter for a general economic staff function if the new staff and its principal chose development in that direction. In the wartime deliberations which led up to the Act, the Congress was concerned not only to prevent a postwar depression but also to improve the integration of the whole economic policy formation process. And, in the final version of the Act, after making a very general policy declaration, the Congress decided, instead of drafting specific substantive solutions which would prejudge the source and nature of future economic problems, to establish procedural machinery to facilitate the intelligent diagnosis and solution of such problems when they did subsequently arise.
1 Testimony of Leon H. Keyserling in the Senate Appropriations Subcommittee Hearings on the Independent Offices Appropriation Bill for 1952, 82nd Cong., 1st sess., p. 90.
2 The immediate legislative ancestors of the Employment Act included a number of statutes (the most important of which was the one setting up the Office of War Mobilization and Reconversion) dealing with the problem of coordinating the diverse economic activities of the federal government. This concern persisted during the consideration of the Employment Act and helps to account for the use of the term “coordinate” in the Act's declaration of policy. In earlier versions of the Bill, moreover, specific mention was made of the objective of preventing inflation as well as depressions. While in the final version specific mention of the anti-inflation objective was eliminated, the language of the statute still assigns to the Council the responsibility of recommending policies “to avoid economic fluctuations or to diminish the effects thereof ….”
3 Public Law 304, 79th Cong., Sec. 2: “The Congress hereby declares that it is the continuing policy and responsibility of the Federal Government to use all practicable means consistent with its needs and obligations and other essential considerations of national policy, with the assistance and cooperation of industry, agriculture, labor, and State and local governments, to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining, in a manner calculated to foster and promote free competitive enterprise and the general welfare, conditions under which there will be afforded useful employment opportunities, including self-employment for those able, willing, and seeking to work, and to promote maximum employment, production, and purchasing power.”
4 For emphasis on the policy-coordinating purpose of the Employment Act machinery and on the primarily procedural character of the Act's prescriptions, see President Truman's final Economic Report (Jan., 1953).
5 Secs. 3 (a) and 4(c) of the Act.
6 This work had been started, at the President's direction, in April, 1950 shortly before the start of the Korean action.
7 In its extensive work with the defense agencies, both at Council and staff levels, the Council followed the directive of Sec. 803 of Executive Order 10161 (Sept. 9, 1950) implementing the Defense Production Act of 1950: “The Council of Economic Advisers shall adapt its continuing studies of employment, production and purchasing power needs and objectives so as to furnish guides to the agencies under this Executive Order in promoting balance between defense and civilian needs and in avoiding inflation in a stable and growing economy. In the performance of this function, the Council shall obtain necessary information from the agencies concerned and engage in regular consultation with them.”
In the Senate Appropriation hearings for the fiscal year 1952, Mr. Keyserling illustrated the Council's relations with the defense agencies this way:
“First, take Mr. Wilson's organization. Very shortly after he came down I had a talk with him. It was manifest that, with the wide range of responsibilities that he has got, he would need economic servicing. I said to him, ‘What is the need of you having an economic staff when you work for the President and the Council is a general economic staff servicing the President? Can't we help you?’
“And he said ‘Yes.’ Two things followed from that. I was put on his executive committee where he meets with his top executive mobilization officials, and time and again he has turned to us for the performance of general economic functions in connection with his work.” Hearings (cited in note 1), pp. 90–91. The reference is to Mr. C. E. Wilson, Defense Mobilizer from December, 1950 to April, 1951.
8 The legislative committees which framed the Act specifically rejected proposals for a joint legislative-executive commission and for something on the model of the independent regulatory commission, reasoning that the new Act should make the constitutional division of powers work more smoothly, not blur it. It should be noted, however, that, as discussed below, there are important questions concerning the relations of the Council as a staff arm of the President with Congress.
9 Contrary to the impressions of some, the statute itself does not require that members of the Council be professional economists in the strict sense of the term. The qualifications are that “as a result of … training, experience, and attainments,” they be “exceptionally qualified to analyze and interpret economic developments, to appraise programs and activities of the government … and to formulate and recommend national economic policy ….”
10 The Employment Act provides a $345,000 annual appropriations ceiling for Council personnel, including the three Council members. Appropriations, moreover, never have reached this ceiling and on several occasions have fallen substantially short of it.
11 Under this heading, for example, would fall the technical work for the National Security Council noted above.
12 For instance, at the request of the State Department or ECA, it frequently assisted in the preparation of U.S. presentations to the UN, NATO, and OEEC and, during the post-Korean period, it undertook various assignments for ODM and ESA. Cf. note 8, above.
13 The concern of the Council with optimum economic growth as well as with stability appeared first in the discussion of “long-range program” in the President's first Annual Economic Report (pp. 34 ff.) and in the Council's December, 1947 Annual Report, which focused on the Employment Act's “maximum production” objective. The need for rapid and sustained growth became a dominant theme in the December and January reports bracketing the beginning of 1949, and was consistently emphasized thereafter.
14 The decision to shorten the President's report and to support it with an extensive analysis and interpretation presented under the Council's own label was made at midyear, 1948.
15 Midyear Reports similar in form and content to the Annual Reports required by law were issued on the President's initiative from 1947 through 1952.
16 Published by the Joint Committee on the Economic Report.
17 Sec. 4(d)(2).
18 See Sec. 4(d)(l) of the Employment Act, dealing with advisory committees.
19 Now the Office of Statistical Standards.
20 The Council was partly instrumental in the development of data showing total physical production and the publication of a “deflated gross national product” series by the Department of Commerce; early release of quarterly national income estimates; development of the “cash balance” form of federal budget presentation; presentation of more meaningful data on changes in income distribution than was previously easily available; use of “input-output” analysis for testing the feasibility and implications of various programs; and the continuing improvement of the “Nation's Economic Budget.” The last provides a consolidated national account summarizing receipts and expenditures of “Consumers,” “Business,” “Government,” and of U. S. nationals in international transactions. For a full discussion of this approach see Colm, Gerhard, “Experiences in the Use of Social Accounting in the United States,” Income and Wealth, Series I, Appendix by Smelker, Mary (Cambridge, 1951), pp. 75–111 Google Scholar. Moreover, the appendixes of the semi-annual Reviews have presented a relatively concise, yet detailed, overall statistical picture.
21 In addition to these calls in connection with the Annual Reports, first suggested by the Council, in 1951 and 1952 more restricted calls were issued in connection with the Midyear Economic Reports.
22 For an analysis of the consequences of the latter's aloofness, see Millett, John D., The Process and Organization of Government Planning (New York, 1947)Google Scholar.
23 It might be remarked that the kind of group-thinking process just sketched—which process, of course, has been the essence of the Council's operation, internally as well as externally, and out of “report seasons” as well as during them—is displeasing to some scholars who have a nose for the unadulterated atmosphere of “pure” independent research. They find it unhappily cumbersome in its methods, insufficiently thorough in its analysis, and murky in its results. For remarks in this vein directly related to the Council, see Bronfenbrenner, M., “Postwar Political Economy; the President's Reports,” Journal of Political Economy, Vol. 56, pp. 373–91 (Oct., 1948)CrossRefGoogle Scholar. Certainly the institutional mind is costly in time and effort and usually, as it turns out, involves some lost motion. And certainly it should strive for maximum clarity in its utterances. But its functioning does not bear close analogy to academic research; rather, in the context discussed here, it is one of the essential processes for organizing authoritative agreement in a polity where no one is generally credited with omniscience.
24 Published through the cooperation of the Joint Committee on the Economic Report as Economy of the South (Washington, D. C.: Government Printing Office, 1949)Google Scholar.
25 See The New England Economy (Washington, D. C.: Government Printing Office, 1951)Google Scholar.
26 The Southwest Economy (Washington, D. C.: Government Printing Office, 1952)Google Scholar.
27 The first airing of this issue appeared in an article by Nourse, Edwin G. and Gross, Bertram M., “The Role of the Council of Economic Advisers,” this Review, Vol. 42, pp. 283–95 (April, 1948)Google Scholar. The case against Council participation in congressional hearings was developed at greater length by Nourse, Edwin G. in “Why Dr. Nourse Broke with the President,” Collier's, February 18, 1950, and The 1950's Come First (New York, 1951)Google Scholar. The case for Council participation in congressional hearings has been stated by members of Congress who contributed to the enactment of the legislation under which the Council was established and by others serving on the Joint Committee on the Economic Report. For example, see the views of Flanders, Ralph Senator, “Administering the Employment Act,” Public Administration Review, Vol. 7, pp. 223–24 (Autumn, 1947)CrossRefGoogle Scholar, and of Murray, James E. Senator, Washington Post, November 5, 1949 Google Scholar. The Joint Committee, in the majority report of June, 1950, dealing with the President's January, 1950 Economic Report, also expressed itself on the subject: “Full and free discussion of economic problems with those who have the statutory responsibility to advise the President on economic policy is essential to a complete understanding of the President's Economic Report by the committee and, therefore, to the committee's fulfillment of its responsibilities under the Employment Act.” (81st Cong., 2d sess., Report No. 1843, p. 21.) For a more general discussion see Gross, Bertram M., The Legislative Struggle (New York, 1953), pp. 295–96Google Scholar.
28 If the committees' investigative purposes and methods are constructive. The Council's salutary experience in this respect was due in large measure to the excellent manner in which the Joint Committee on the Economic Report conducted its hearings.
29 A partial exception to this policy was made for the first time in the January, 1952 Annual Economic Review with the inclusion of a short separate statement by Mr. John D. Clark on monetary and credit policy. In their final Review (January, 1953) the Truman Council members soloed rather more freely, with separate statements by both Messrs. Clark and Keyserling, Clark's being in outright disagreement with a considerable portion of the Review, Keyserling's only amplifying or paralleling one aspect of it. In no case, it should be noted, did the policy of public unanimity conflict with the freedom of members to vary the emphasis of their own speeches, articles, or other individual public statements.
30 This last point gains cogency from the fact that Council members (and staff members as well) did spend a considerable part of their time mixing as individuals in the rough and tumble of daily presidential business. By means of this quasi-explicit distinction between their individual and collective roles, the members of the Council sought a detour around Millett's 1947 judgment that two members of the Council would have to subordinate themselves to the third if the new board were not to become excessively remote from the President and his other advisers. See Millet's, The Process and Organization of Government Planning (cited in note 22), pp. 167–68Google Scholar.
31 Cf. Tugwell's, R. G. highly stimulating discussion of central planning, “The Utility of the Future in the Present,” Public Administration Review, Vol. 8, pp. 57–59 (Winter, 1948)CrossRefGoogle Scholar. On the ground that “any planning tied exclusively to the Chief Executive will never become central planning in any defensible definition of the term,” he concludes that the Council does not “possess very great survival value,” that it is “vulnerable to its natural enemies and possesses no strength of its own,” and that “when this experiment is finally liquidated, we … are not likely to be much further advanced in the development of central planning.” Committed to the thoroughly monistic policy-forming and -executing process he finds in Britain, his argument is not with the Council as such but with the whole separation of powers concept. Despite its brilliance, we do not find in his exposition any adequate refutation of the Employment Act's underlying thesis—namely, that by fortifying what he happily calls “agencies of conjuncture” in both the executive and the legislature, and by strengthening the connecting rods between them, it is possible to develop workable programming machinery within our present constitutional framework. Nor in all Tugwell's castigation of things as they are here and idealization of things as he sees them in Britain do we find any hints of a practicable program of constitutional reform for this country.
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