Economic policy

What does it take to develop federal economic policy? UChicago scholars reflect on time spent in the White House

Three professors from the University of Chicago who have been members of the White House Council of Economic Advisers (CEA) in three administrations spanning political parties lifted the curtain on the agency — and the high-flying act of working for a president — during a lively and lively panel discussion.

Sponsored by the Harris School of Public Policy and the Becker Friedman Institute for Economics, the April 21 event delved into politics and politics and offered insider insights such as navigating crises fueled by a dinner of ICT Tacs. The 75-minute live-streamed forum was part of the Harris Policy Forum series of events, which aims to foster discussion among scholars and practitioners on the topic of evidence-based policy. The panel featured:

  • Catherine BaickerDean of Harris and Professor Emmett Dedmon, who was a member of the CEA during the administration of George W. Bush.
  • Austan D. GoolsbeeRobert P. Gwinn professor of economics and member and president of the CEA during the administration of Barack Obama.
  • Tomas J. Philipsonholder of the Daniel Levin Chair in Public Policy Studies and a member of the CEA and interim president during the administration of Donald Trump.

The moderation of the event was Michael GreenstoneProfessor Milton Friedman Distinguished Service in Economics, College and Harris who served as Chief Economist for President Obama’s CEA and currently directs the Becker Friedman Institute and Energy Policy Institute at UChicago.

Greenstone reflected on his time in the White House and strategies for overcoming the age-old challenge faced by economists whose commitment to data puts them at risk of being the “skunk at the picnic.” “.

In pre-recorded remarks, Cecilia Elena Rouse, current president of the CEA, kicked off the discussion by noting that the agency “was created in the 1940s to advise the president on economic policy based on data, research and evidence. “.

“But what really defines CEA,” Rouse said, “is our love of all things ‘econ geek.’ At all times, we have in-depth conversations about questions such as “What is the right definition of unemployment?”

CEA senior economists, she added, “come on leave from academic institutions and other federal agencies. They usually stay for a year, work more hours than they thought possible, and return to their home institutions with a sense of how the economy actually affects the sausage-making process called legislation.

Sausage making came to the fore when panelists described their time at CEA, where they had to defend facts without losing a seat at the table.

“A key objective of the CEA is to bring rigorous data and evidence to the president, to be the voice of the facts in meetings that are often dominated by more political voices and considerations,” said Greenstone who asked the panelists to share their “secrets to successfully getting the facts on the table” so they don’t get “thrown to the back of the room.”

Baicker emphasized “the importance of marrying your best evidence with the realism of what is possible.”

“Academics aren’t known for being willing to make nuances or drop all the footnotes, caveats, and wrinkles,” she said. “It is also often difficult to get us out of our first best solution. But if the choices on the table are A, B, and C, pound the table and say, “That should be Q; why isn’t there Q on the table? Let me talk about Q and why it’s so good, ‘it’s a good way to not get invited again to the next meeting.

Philipson’s time in the Trump White House, he said, illustrated how “you can have the facts on your side, but translating into the language of the listener is very important.”

For example, in discussions with President Trump about Operation Warp Speed ​​- the effort to develop and distribute COVID-19 vaccines – “I got nowhere until I pointed out that the FDA drug development delays are similar to real estate delays with permits and then boom, it clicked.

“I don’t know if it was unique to this president,” he added of Trump, but the decision-making “was very president-centric.”

“It wasn’t like we were recommending things and he was just nodding his head. It was very often kind of a debate in the Oval and then he liked to have very different points of view aired,” Philipson said.

“Academics,” he added, “is a much higher level of debate, but here it’s [about] get your message across in the easiest way possible. And I think that’s very important to be effective in these kinds of situations.

Since the CEA works for the president, Goolsbee said, “it makes a huge difference in your life at the CEA if the president wants to hear from the CEA. If the president doesn’t listen and insist that the CEA be involved in the process, then it’s the loneliest job in Washington. If the president insists that the CEA be involved in the process, then it’s the most fun job ever.

“Most jobs in Washington are very specialized,” he added. “The CEA is one of the few where we think about all sorts of things. Things are coming over the back board: there’s COVID, there’s an oil spill in the Gulf. And then someone in high places says, ‘Well, how much is this going to cost? And what will be the impact? Then you need to learn all you can about it. It’s very exciting.

With that excitement, panelists said, comes stress. Each has been involved in at least one major policy decision at the CEA. For Baicker, it was health insurance coverage. For Philipson, it was COVID-19. And, for Goolsbee, it was the Great Recession: “It was really, really stressful. I remember we ate Tic Tacs for dinner and slept under the table.

“At a time like this,” he added with a laugh, “the good news is that everyone wants to hear about CEA.”

Still, Goolsbee said, it’s critical to remember that the CEA is not the decision maker. “You’re just a person from a university working there for two years to give the best possible advice.”

What advice, then, Greenstone asked, would the panelists give Chair Rouse? What three things, he asked, should the administration focus on economically?

“Obviously,” Baicker said, “recovering from COVID is first, second, and third. It is a question of health, of course, but it is also a question of economic consequences, which are felt in an extremely disparate way with the consequences on health. [We need to be] thinking about how to be smart in the recovery so that we can maintain health in a way that is compatible with as much economic activity as possible – it’s hard to imagine focusing on anything other than that for any length of time.

Philipson added that in today’s economic discussions, the CEA should position itself as the adult in the room.

And, Goolsbee said the research formed his view “that the number one rule of virus economics is that if you want the economy to recover, you have to control the spread of the virus.”

“I still think that’s true, but I think we’re looking at the background of it all. And so I thought it was a bit inspired by Joe Biden to pick This [Cecilia] Wake up, because coming out of this crisis, I think all of these labor issues, which This is a world expert on, are going to come to the fore.

During the pandemic, he said, school enrollment plummeted, job losses were uneven and parents had to stop working to care for children who were no longer in school or at home. nursery. “I think those three things are going to become important over the next 12 to 24 months, so hopefully they think about that.”

Regardless of the administration, and regardless of the structure of the president’s cabinet and executive office, which has varied over the years, every former member agreed that the ACE has a vital role to play in providing unvarnished guidance. and evidence-based on the most important issues facing the country and, at times, the world – an appropriate topic for an audience of Harris, with his motto “social impact, down to a science”.

—This story was first published by the Harris School of Public Policy.