Thursday, November 27, 2008

How many economic advisers?

During the recent presidential campaign, John McCain was unable to tell a journalist how many houses he owns. Pretty soon, Barack Obama will have the same problem, if he's asked how many economic advisers he has.

After I wrote here, questioning the need for both a Council of Economic Advisers and a National Economic Council in the White House, Obama went ahead and appointed yet another advisory group. The distinctive aspect of this Economic Recovery Advisory Board appears to be that it's an outsider group whose members are not full-time White House staffers. Former Federal Reserve Chairman Paul Volcker will chair the new board.

This follows the old presidential tradition of the "kitchen cabinet". That term, for a group of unofficial presidential advisers, goes back to the presidency of Andrew Jackson. Among the other presidents in relation to whom that phrase was commonly used, was Warren Harding.

This new advisory board is more formally organized than those kitchen cabinets, but the idea of bringing in perspectives other than those of the staffers with whom a president regularly interacts, applies to both of those types of groups.

I suppose there is a trade-off. The regular staffers have more access to inside information, which should improve the quality of their advice to the president. But the flip side of that coin is that the outsiders can give him a fresh perspective, based on their experiences outside of the White House bubble.

All presidents seek out some combination of inside and outside advice. Obama appears to be willing to involve the gray eminences of the financial world in his economic decision-making, including Volcker and former Treasury Secretary Robert Rubin.

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