- There’s an exodus of economists is sweeping the Trump administration.
- Departures at the end of a presidential term is common, but to do so during a pandemic and economic crisis is a worrisome sign.
- We can’t have a decreasing influence of economists over Trump.
- Simon W. Bowmaker is Clinical Professor of Economics at the Stern School of Business, New York University.
- Lawrence J. White is Professor of Economics at the Stern School of Business, New York University.
- This is an opinion column. The thoughts expressed are those of the authors.
- Visit Business Insider’s homepage for more stories.
An exodus of senior officials from a presidential administration toward the end of a term is not an uncommon phenomenon. The officials have put in their time. They have tried to contribute to better policy (at least, in their view). So it is time for them to move on.
But to see several senior economists leave the Trump administration during the past few weeks is extremely unsettling— especially in these fraught times. Tomas Philipson, who had been the Acting Chair of the Council of Economic Advisers (CEA), left at the end of June — allegedly because of too many clashes with the politicos — to return to the University of Chicago. Because the CEA was already down to only two of the mandated three members there is now a single CEA member: Tyler Goodspeed, who now has the position of Acting Chair.
Kevin Hassett — who had been Philipson’s predecessor as CEA Chair — returned to the Trump administration as an unpaid senior advisor earlier this year, but he has departed. Andrew Olmem, deputy director of the National Economic Council (which is separate from the CEA), left in mid-June; although he has been replaced, this is not a good time to be seeing turnover. Bimal Patel, a senior Treasury Official responsible for financial institutions, departed in early July.
This slew of departures—even with some replacements—leaves the Trump administration bereft of trained economics expertise and continuity in the job.
Economists are vital for presidential administrations
The history of economists and presidential administrations extends back at least to the 1930s, when Rex Tugwell, Adolf Berle, and Gardiner Means were advisors to Franklin Roosevelt’s New Deal policies. The economics-advising role was formalized by the Employment Act of 1946, which created the CEA as a formal Executive Branch agency.
As documented in the recent book When the President Calls: Conversations with Economic Policymakers, the relationships between presidents and their economic advisors have—not surprisingly—waxed and waned. During the 1980s, President Reagan became so exasperated with CEA Chair Martin Feldstein’s criticism of the administration’s budget deficit that he wanted to disband the council. After Feldstein returned to his faculty position at Harvard, the vacancy remained open for nine months until the appointment of Beryl Sprinkel, who Reagan rarely turned to for advice. By contrast, Bill Clinton had cordial working relationships with his CEA Chairs, who included Janet Yellen and future Nobel Prize winner Joseph Stiglitz.
The president’s economics advisors and political advisors have also clashed. Michael Boskin, Chair of the CEA during the George H.W. Bush administration, was often at loggerheads with the president’s political advisors. There was a brief period early in the presidency when the elder Bush was getting hammered on the economy. His political advisors held the view that he should be optimistic about the state of the economy, but Boskin wanted the president to acknowledge the problems—such as the oil price shock resulting from Saddam Hussein’s invasion of Kuwait—that were buffeting the economy. Boskin had to go to the White House briefing room to explain that the president was worried about every unemployed person in the country. That upset some of Bush’s political advisors, and they tried (unsuccessfully) to squeeze Boskin out.
But, despite these waxings and wanings, since 1946 the economists have always had “a seat at the table.”
A troubling exodus
As professional economists, we have had — and continue to have — substantial differences between our views of appropriate economic policy and those of the Trump administration. We acknowledge that even when a White House conference room is packed with first-rate economists, there will be disagreement, and so it is not easy to figure out how to implement a particular policy. But what is distressing to us is the hollowing-out of economics expertise at senior levels, which cannot be good for current policy and could well set bad precedents for the diminishing role of economics and economists in policy going forward.
All of this would be a bad direction in normal times. While economics does not have a monopoly on knowledge—there is much that we do not understand about the economy—good, impartial economists bring to the policy world a way of thinking that is distinctive and advantageous: a propensity to be rigorously analytic when dealing with uncertainty; an awareness of trade-offs; and an expertise in understanding the effects of incentives on our behavior.
As an undergraduate at Yale, Austan Goolsbee — a Chair of the CEA during the Obama administration—took the last class that Nobel laureate James Tobin ever taught and became his research assistant. Tobin told him that serving at the CEA under President Kennedy was the highest honor and that the raison d’être of economics was to be able to deal with crises.
Thirty years later—with a spike in coronavirus cases that threaten American lives and a persistently high level of new unemployment claims that threaten American wellbeing—the ever-decreasing influence of economists in the Trump administration is not only alarming, it is truly tragic.
Simon W. Bowmaker is Clinical Professor of Economics at the Stern School of Business, New York University and author of When the President Calls: Conversations with Economic Policymakers (MIT Press, 2019).
Lawrence J. White is Professor of Economics at the Stern School of Business, New York University and was a Senior Staff Economist on the CEA during the Carter administration.