November 21, 2016

The Importance of the National Economic Council

Charles Blahous

J. Fish and Lillian F. Smith Chair
Summary

Though the NEC is not currently receiving the same level of public and press attention as other administration appointments, it is tremendously important. The quality of the president’s economic policy decision-making will depend on his team getting this right. 

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Over the past several days there have been multiple announcements of president-elect Trump’s intended appointments. The purpose of this piece is to draw public attention to another yet-unfilled administration job that receives less press attention than it should: directing the National Economic Council (NEC).

The NEC Director is vital because that individual essentially has the job of facilitating all of the president’s economic policy decisions. This critical NEC role is generally less visible in the press than certain others, in part because the job is not subject to Senate confirmation and in part because the NEC interfaces with the president rather than with the public as economic policies are implemented. Cabinet-level positions such as the Secretary of the Treasury and the Director of the Office of Management and Budget (OMB) are every bit as important as commonly portrayed, both as economic policy developers and later implementers. But it is the NEC that actually runs the president’s economic decision process, with those other advisors acting as participants. Typically, the NEC consists of a Director, a Deputy Director and roughly a half-dozen Special Assistants, each advising the president on a different portion of the economic policy portfolio.

It is important to distinguish the NEC Director’s role from that of the chair of the Council of Economic Advisors (CEA). CEA basically acts as the White House’s internal consultancy for economic analysis; NEC by contrast is the vehicle for policy development.  I often explain the difference with a hypothetical example. If the president sought an analysis of why young adult males are dropping out of the labor force, that analysis would likely be authored by CEA, submitted through a process led by NEC. If on the other hand the president wished to develop a policy to increase labor force participation, NEC would lead that process with the CEA chair as one of the participants.

These distinct roles highlight the importance of finding people with the right qualifications to head up NEC and CEA respectively. The process works best when CEA is headed by an esteemed academic economist, while NEC is headed by someone with expertise in directing economic policy process. Previous administrations have had troubles whenever there was confusion about the respective roles – for example, if NEC is routinely disputing CEA’s analyses, or CEA is attempting to control policy development.

The NEC manages the flow of information to the president to serve his economic policy decision-making. This consists of both written material as well as information transmitted orally in meetings. Each is important; the relative importance is determined by whether the president most readily absorbs information in writing or in oral conversation. The written part often consists of memoranda or visual presentations that NEC compiles and condenses from information generated by the different departments and agencies. NEC typically conducts repeat checks with all participants, to ensure the material submitted is sufficiently complete and balanced. For in-person meetings, NEC coordinates the presentation of the principals’ advice and information to the president. On both tracks, NEC must work within the president’s extremely tight time constraints, which means reading material must be succinct and oral presentations efficiently brief.

The physical structure of presidential meetings is important. Subject to the approval of the White House Chief of Staff, the NEC serves as arbiter of which principal advisors attend alone, and which are permitted a “+1” or additional staff. Advisors who are regarded as central to a discussion are assigned seats closer to the center, with others seated near the ends or perhaps even in separate chairs away from the table against the wall. In my time as NEC Deputy Director I felt that discussions in the White House’s Roosevelt Room tended to be better structured for decision-making than those in the Oval Office. This was because the long rectangular table in the Roosevelt, with the president seated at the center, was more conducive to orderly discussion than the Oval, where the President and Vice President sat on separate chairs on one side of the room, the staff being distributed between two sofas and separate chairs scattered behind them.

Before any meeting, NEC must know which departments and agencies have important information or advice to put before the president. In the Bush 43 White House, a typical meeting might begin with the NEC Director sitting across from the president and saying, “Mr. President, the purpose of this meeting is to facilitate a decision on Issue X.  With your permission, the Deputy Director will summarize some critical background information about this issue for roughly five minutes. Then we would like Secretary Y to present the argument for Course A, and then Budget Director Z will present the countervailing argument for Course B. In your background memorandum, we have listed a fuller range of options for your consideration, and we have also listed which of your advisors favor each one.  Now, with your permission, the Deputy Director will begin your background briefing.”

Key at all times is deferring to the president’s sense of what he needs to make a decision. When I was the NEC Deputy, Director Keith Hennessey and I spent a lot of time structuring and rehearsing our presentations to ensure maximum clarity and efficiency. Still, all bets were off once the briefing began. More than once, President Bush cut me off less than a minute into the presentation to basically say, “Wrong place.  Start again.  Tell me this, this and that. Then go back to where you were.” His method of reorganizing the discussion often better met his needs than what we had planned. 

Other surprises can happen as well. One time I was briefly into my background presentation when the president cut me off and said, “Got it. So, what do you think we should do?” As the background briefer, I had not expected to offer my opinion. I hesitated briefly and in that split second the president’s eyes darted to his other advisors, who immediately filled the gap with their advice. I resolved never to make that mistake again, and I didn’t. From then on I was prepared to answer any question the president posed, whether informational or advisory.

We at NEC always felt that regardless of the president’s decision, the meeting had gone well if the discussion had stayed on track and he had heard the information and advice he needed to decide. We were proudest of all when someone on the losing side of a decision nevertheless came up to us afterward and said, “Good meeting.”

Though the NEC is not currently receiving the same level of public and press attention as other administration appointments, it is tremendously important. The quality of the president’s economic policy decision-making will depend on his team getting this right.