Larry Summers is leaving his post as director of the National Economic Council after the November elections. Don’t worry: The president still has plenty of people giving him economic advice, including the treasury secretary, the commerce secretary, the chair of the Federal Reserve, the director of the Office of Management and Budget, and the chair of the Council of Economic Advisors. These jobs all sound pretty similar. What’s the difference?
It depends on the president. In theory, each position has its own role in the nation’s economic planning. As a practical matter, though, when the president has to make a tough decision, job descriptions matter very little. All of his economic advisers are experts in the same field, and the president tends to rely on whichever player he has the most confidence in, regardless of title.
Keeping that in mind, there are some clear differences among these jobs. President Clinton established the National Economic Council—the financial equivalent of the National Security Council—in 1993 precisely because he had too many people giving him discordant economic advice. * All executive department heads with a role in macroeconomic policy are on the council, and the director’s job is to get them on the same page. He convenes and presides over meetings and is supposed to serve as an honest broker when raucous economic disagreements break out.
The Council of Economic Advisers is the president’s personal stable of eggheaded economic analysts. The chair is usually a preeminent academic economist—current head Austan Goolsbee is on leave from the University of Chicago—to whom the president turns for research. For example, when the president is thinking of raising taxes, he turns to the council for analysis on potential job losses and the overall impact on GDP.
The Treasury manages the federal debt by buying and selling government securities. It collects taxes, prints money, and chases down international terrorist-financing networks. As secretary, Geithner is in charge of all of this, in addition to putting in his two cents on the president’s economic policies. He has a massive staff of analysts working for him.
Jeffrey Zients, acting director of the Office of Management and Budget, is the president’s budget point-man. He works closely with the president on the broad outlines of where money should go, then sets his underlings to work on hammering out all the details. The OMB is perhaps best known for publishing the budget book that serves as a starting point for congressional debate, but staffers there have lots of nonbudget responsibilities as well—like coordinating all regulatory activity and supervising communication between Congress and the president’s many employees.
The commerce secretary, once considered the second-most important economic position behind the secretary of the treasury, seems to have lost influence in recent years. Current head Gary Locke doesn’t have as robust a staff of macroeconomic researchers as the other advisers. The department also has a rather odd mishmash of duties. It conducts the census, runs the National Oceanic and Atmospheric Administration, and administers the patent office.
The Federal Reserve Chairman isn’t really the president’s adviser. The Fed is an independent commission. While the president nominates the chair, he can fire him only with cause. (He can sack any of the other advisers for looking at him the wrong way.) The chair’s most important decisions on monetary policy, like adjusting the federal funds rate, don’t require presidential approval. He does not attend senior staff meetings, and (in theory) has no interest in furthering the president’s agenda. Still, presidents traditionally consult with the chair on an informal basis.
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Explainer thanks Karen Dynan of Brookings and Alan Viard of the American Enterprise Institute.
Correction, Sept. 23, 2010: This article originally compared the National Economic Council to the National Security Agency, rather than the National Security Council. (Return to the corrected sentence.)
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