ECONOMIC REPORT OF THE PRESIDENT

goals of the government in their area of responsibility, and an ability to operate
in a political environment” (1986).
Moreover, although CEA’s strength is providing unvarnished economic
advice, it is impossible to divorce this advice from the broader
context of the Administration’s goals and objectives. While economists can
help policymakers to weigh tradeoffs among different policy options or to
design policies so that they are more likely to achieve their stated objective,
how those tradeoffs are weighed and goals are set often depends on values.
In addition, policy recommendations themselves are more relevant if they
can be implemented, which in turn depends on a range of political factors
like legislative feasibility and how the policy is described and contextualized.
Finally, CEA chairs are selected and agree to serve because they at least
broadly share the goals and values of the President and the administration.
Beyond the chair, however, there is no guarantee that CEA members, or
especially staff economists and researchers, share a political or philosophical
agreement with the President.
As dictated in the Employment Act of 1946, CEA’s advice must ultimately
be guided by its own analysis of which economic policies will foster
and promote free competitive enterprise, avoid economic fluctuations, and
maintain employment, production, and purchasing power. Former CEA
chairs, members, and staff offer several specific pieces of advice as to how
to successfully strike this balance: they advise that CEA should not publicly
advocate for policies that are not supported by economic analysis, and that
CEA should stick to giving economic advice, not political advice. CEA’s
comparative advantage is economics, and as illustrated by Keyserling’s
tenure and its aftermath, straying outside this function risks damaging the
institution’s credibility.
Others advise that the Council should not get too involved in policy
coordination. CEA’s limited staff and resources, combined with the academic
background of most of its staff, render it poorly equipped to serve as
a policy coordinating body. One episode that illustrates this lesson occurred
during the Johnson Administration, when CEA was responsible for the
day-to-day administration of wage-price guideposts to combat inflation.
Reflecting on the experience, Walter Heller remarked that there was no
other appropriate agency to handle the wage-price guideposts, but that it
was “diversionary” and that “the Council has to stay away from that kind of
operational responsibility” (Hargrove and Morley 1984).
Excessive involvement in policy coordination can also have the effect
of undermining CEA’s institutional credibility, due to the types of compromises
that are necessary. Hugh Norton writes that CEA’s efforts to administer
the wage-price guidelines “had the effect of weakening the general moral
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