The recent announcement that Larry Summers will be departing as head of President Obama’s National Economic Council (NEC) has prompted rampant speculation about what this will mean for future White House economic policy and process direction.
In my time since leaving the White House as deputy director of the NEC for President George W. Bush, I have found that the NEC-led economic policy process is dimly illuminated for the press and broader public. I attribute this primarily to the fact that the NEC facilitates the president’s internal policy coordination, and is not the public face of the administration’s policies as seen during hearings on Capitol Hill and in many other settings. Nor is the NEC the hands-on administrative implementer of administration policies; that role is played by individual departments (e.g., Treasury or Labor). The NEC, however, is the vital entity directing the development of policy for all of the above, and more.
Within the White House complex, the president has three leading senior economic advisors: The director of the NEC, the chair of the Council of Economic Advisers (CEA), and the director of the Office of Management and Budget (OMB). Each has a distinct role.
Very broadly speaking, the NEC’s job is to coordinate economic policy. The CEA’s job is to provide the raw economic analysis in support of that policy development. OMB’s job is to develop the president’s budget (in addition to other important management duties, such as coordinating the regulatory processes of the various departments).
A real-world example is often useful in explaining the distinctions. If the president wanted a report on the state of the employment market, CEA would typically provide that analysis. If the president wanted to develop a policy to boost employment, NEC would direct that process and would involve CEA, OMB and several other departments. In President Bush’s White House, top CEA economists would sometimes refer to their relationship with the NEC as a “client relationship.” We at NEC were the customers, using the CEA’s economic analysis to inform policy development.
NEC as policy coordinator plays a vital “honest broker” role. It is NEC’s job to ensure that the expertise of all of the president’s senior advisors is brought to bear upon a policy decision. It’s also NEC’s job to ensure that materials that go to the president fairly reflect the combined views of his various advisors. Further, NEC must ensure that dissenting views are fairly aired, whether presented orally to the president or in writing. We at NEC especially felt that we had done our jobs well when those on the losing end of a presidential decision would compliment us afterwards for running a fair process.
White House advisors, of course, sometimes wear multiple hats. The NEC has its honest broker role, but the NEC director will have policy views as well. NEC’s coordinating role does not oblige the NEC director to refrain from advocating his or her own policy views, which are sought like those of every other policy principal. At the same time, the NEC director’s own policy views must never become a barrier to running a fair and inclusive policy process.
Similarly, while CEA is charged with providing objective economic information, the head of CEA is routinely a participant in policy deliberations, as well as a public spokesperson for administration policies. Our CEA chair, Dr. Edward Lazear, for example, excelled in all of these roles — providing objective economic analysis, deliberating over policy options, and publicly explaining policy decisions.