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

Three University of Chicago professors who served as members of the  White House Council of Economic Advisers  (CEA) in three administrations spanning political parties pulled back the curtain on the agency-and on the high-wire act of working for a president-in a sweeping and lively panel discussion.

Sponsored by the Harris School of Public Policy and the Becker Friedman Institute for Economics, the April 21 event dug into policy and politics and offered such insider views as getting through crises fueled by a dinner of Tic Tacs. The 75-minute livestreamed forum was part of the Harris Policy Forum event series, which seeks to foster discussion among scholars and practitioners on the topic of evidence-based policy. The panel featured:

  • Katherine Baicker , Harris dean and Emmett Dedmon Professor, who served as a member of the CEA during George W. Bush’s administration.
  • Austan D. Goolsbee , the Robert P. Gwinn Professor of Economics and CEA member and chair during Barack Obama’s administration.
  • Tomas J. Philipson , the Daniel Levin Professor of Public Policy Studies and CEA member and acting chair during Donald Trump’s administration.


Moderating the event was  Michael Greenstone , the Milton Friedman Distinguished Service Professor in Economics, the 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 own time serving in the White House and strategies for overcoming the age-old challenge facing economists whose commitment to data puts them at risk of being the "skunk at the picnic."

In prerecorded remarks, Cecilia Elena Rouse, current chair of the CEA, launched 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 the CEA," Rouse said, "is our love of all things ’econ geek.’ At any given moment we’re having 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 from other federal agencies. They typically stay a year, work more hours than they thought possible, and return to their home institutions with a flavor for how economics really affects the sausage-making process called lawmaking."

Sausage-making came into sharp focus as panelists described their time at the CEA, where they had to stand up for facts without losing a seat at the table.

"A key purpose of the CEA is to bring rigorous data and evidence to the president, to be the voice of facts in meetings that are often dominated by more political voices and considerations," said Greenstone who asked the panelists to share their "secrets for successfully bringing facts to the table" so that they weren’t "shunted to the back of the room."

Baicker highlighted "the importance of marrying your best evidence with realism about what’s possible." 

"Academics are not known for being willing to shed nuance or to let go of all of the footnotes and caveats and wrinkles," she said. "It’s also often hard to get us off of our first-best solution. But if the choices on the table are A, B and C, pounding the table and saying, ’It should be Q; why isn’t Q on the table? Let me talk about Q and why it’s so good,’ that’s a good way to not get invited back 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 it’s very important to translate into the language of the listener."

For example, during discussions with President Trump about Operation Warp Speed-the effort to get COVID-19 vaccines developed and distributed--"I didn’t get anywhere until I made a point that 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 about Trump, but the decision-making "was very president-driven."

"It wasn’t like we were recommending things and he was just nodding. It was very often sort of a debate in the Oval and then he liked to have very different views aired," Philipson said.

"Academics," he added, "is a much higher level of debate, but here, it’s [about] getting your point a across in the simplest possible way you can. And, I think that’s very important for being effective in these kind of situations."

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

"Most jobs in Washington are very specialized," he added. "The CEA is one of the only ones where you’re thinking about all kinds of things. Things are coming in over the transom: there’s COVID, there’s an oil spill in the Gulf. And then somebody high up is like, ‘Well, how much is that going to cost’ And what’s going to be the impact of that?’ Then you have to go learn everything that you can about it. That’s very exciting."

That excitement, panelists said, comes with stress. Each was involved in at least one major policy decision while at 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 us eating Tic Tacs for dinner and sleeping under the table."

"In a moment like that," he added, laughing, "the good news is everybody wants to hear from the CEA."

Yet, Goolsbee said, it’s key to remember that the CEA is not the decision-maker. "You’re just a person from a university who is there working for two years giving the best advice you can."

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

"Clearly," Baicker said, "recovering from COVID is first, second, and third. That’s about health, of course, but it’s also about the economic consequences, which are wildly disparately felt along with the health consequences.  [We need to be] thinking about how to be smart in recovery so that we can preserve health in a way that’s compatible with as much economic activity as possible-it’s hard to imagine focusing on something other than that for a while."

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

And, Goolsbee said research formed his view "that the number one rule of virus economics is if you want the economy to recover, you’ve got to get control of the spread of the virus."

"I still think that’s true, but I kind of think we are looking at the back end of this. And so I thought that it was a little inspired of Joe Biden to pick Ceci [Cecilia] Rouse, because coming out of this crisis I think all of these issues of the workforce, which Ceci is a world expert on, are going to become front-and-center."

During the pandemic, he said, school enrollment fell, job losses were unequal, and parents had to stop working to care for kids no longer in school or daycare. "All three of those, I think, are going to become first-order important over the next 12 to 24 months, so I hope they are thinking about that."

No matter the administration, and no matter the structure of the cabinet and the Executive Office of the President, which has varied over the years, each former member agreed that the CEA has a vital role in giving unvarnished, evidence-based advice on the most important issues facing the country and, sometimes, the world-a fitting topic for an audience from Harris, with its motto of "social impact, down to a science."

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

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