It's EROP time!

Every February the President's Council of Economic Advisors rolls out the annual Economic Report of the President. This year's has just been released and is available here. Over the next week or so I'll be posting commentary on the report.

Since the first edition in 1950, the EROP has been a window to the soul of the administration on economic policy. The Council of Economic Advisors is comprised of leading economists usually plucked out of academia to be appointed by the president to short terms (President Bush has had three CEA chairmen thus far - Glenn Hubbard (Columbia), Greg Mankiw (Harvard), and now Ed Lazear (Stanford)). Because these economists need to show their faces to their colleagues when they go back to academia, they are careful to put together a credible report reflecting sound economic analysis. But because they serve the president, what they write must be consistent with the administration's political priorities. The document that results constitutes the best case that can be made for the administration's economic policies.

I'll delve into the details of this year's report later. First though, let's look at the table of contents to get a sense for what the Bush Administration considers to be the most important economic issues facing our country:

CHAPTER 1. THE YEAR IN REVIEW AND THE YEARS AHEAD
CHAPTER 2: PRODUCTIVITY GROWTH
CHAPTER 3. PRO-GROWTH TAX POLICY
CHAPTER 4. THE FISCAL CHALLENGES FACING MEDICARE
CHAPTER 5. CATASTROPHE RISK INSURANCE
CHAPTER 6. THE TRANSPORTATION SECTOR: ENERGY ANDINFRASTRUCTURE USE
CHAPTER 7. CURRENCY MARKETS AND EXCHANGE RATESCHAPTER 8. INTERNATIONAL TRADE AND INVESTMENTCHAPTER 9. IMMIGRATION

Each of these chapters lays the groundwork for some initiative or another that the administration plans to pursue this year. Chapter 8 on trade, for example, will make the case for Congress' granting the administration "fast track" authority for trade negotiations, while chapter 9 on immigration is intended in part to give a push to the president's immigration reform proposals. None of the topics seem to me inappropriate for inclusion in the report. One is struck, however, by the issues that are not addressed in the report. Here's a selection of chapter titles from the Clinton Administration EROPs, 1995-2001 (the 2001 report having been issued in January, just before Clinton left office):

IMPROVING SKILLS AND INCOMES
INVESTING IN EDUCATION AND TRAINING
INEQUALITY AND ECONOMIC REWARDS
THE ECONOMIC WELL-BEING OF CHILDREN
ECONOMIC INEQUALITY AMONG RACIAL AND ETHNIC GROUPS
IMPROVING ECONOMIC EFFICIENCY: ENVIRONMENTAL AND HEALTH ISSUES
WORK, RETIREMENT, AND THE ECONOMIC WELL-BEING OF THE ELDERLY
WORK AND LEARNING IN THE 21ST CENTURY
THE CHANGING AMERICAN FAMILY
MAKING MARKETS WORK FOR THE ENVIRONMENT

The inclusion of topics related to living conditions of the young and elderly, inequality, and the environment reflects those issues’ importance for the Clinton administration. Their absence from the Bush administration report, and the focus on issues such as tax policy, reflects a different set of priorities. These priorities have been fairly consistent through the years. Though the first Bush EROP in 2002 included chapters on “Health Care Quality and Access” and “Building Institutions for a Better Environment,” neither issue makes it into later reports except for one chapter on the environment in 2004 and periodic concern about the fiscal condition of Medicare and Social Security. Instead, the tone of the report is much more “supply side”: “Tax Policy for a Growing Economy,” “Options for Tax Reform,” “Government Regulation in a Free Market Society,” and so on. As another indication of emphasis in the 2007 report, a search for the word “growth” results in 408 hits while a search for the words “poverty,” “poor,” and “inequality” yields next to zero references – nothing indicating that reducing poverty and inequality are policy objectives of this administration.

We often kid ourselves that differences between politicians or political parties are primarily about means rather than ends. We all want an end to poverty, we all want a clean environment, we all want out of Iraq, but Democrats and Republicans have different proposals for getting there. Documents like the EROP remind us that the fundamental differences concern ultimate objectives.