Foreign Relations of the United States, 1977–1980, Volume XXVIII, Organization and Management of Foreign Policy

112. Memorandum From Secretary of the Treasury Blumenthal and the Chairman of the Council of Economic Advisers (Schultze) to President Carter¹

Washington, February 12, 1977

SUBJECT

• Proposed Organization of an Economic Policy Group

The following proposal outlines our final recommendations on proposed membership, basic structure, and the process for formulating recommendations to you within an Economic Policy Group (EPG).

I. Recommendations for membership

—That a single cabinet-level committee called the Economic Policy Group be created to help formulate and co-ordinate both domestic and foreign economic policy.

—That the Executive Committee of the group consist of the Secretaries of State, Treasury, Commerce, Labor, HUD, Council of Economic Advisers, the Director of the Office of Management and Budget, and the National Security Adviser.

—That the Vice President be an ex-officio member of the Executive Committee.

—That the Assistant to the President for Domestic Affairs and Policy be an ex-officio member of the Executive Committee.

—That the Secretary to the Cabinet attend all meetings as an ex-officio member, and insure that other members of the Cabinet, as well as the Assistant to the President for Energy, the Ambassador to the United Nations, and the Special Trade Representative, are invited to attend those EPG meetings that deal with issues in which they have a significant interest.

—That the Treasury Secretary and the CEA Chairman would be co-chairmen of the EPG and its Executive Committee.

II. Recommended Structure

—The operation of the EPG should be less rigid than that of the Ford Administration’s Economic Policy Board.

Specifically:

1. The EPG should meet weekly, on Monday, rather than four times weekly as the EPB did.

2. A small staff of three professionals and four clerical employees will be assigned from the staffs of the Treasury Department and CEA to assist the co-chairmen in co-ordinating EPG activities. This staff will advise the co-chairmen on the EPG agenda, manage the flow of reports and other paper, enforce deadlines, schedule meetings, and otherwise accept the burden of keeping this operation functioning smoothly.

3. Actual policy analysis will be carried out by groups of staff members and senior deputies from the several agencies involved in the EPG. Most of these groups will be created ad hoc to deal with specific problems as they arise. Final recommendations will be formulated by the EPG itself.

NOTE: The staff supporting the EPG would remain on the payrolls of the Treasury Department and the CEA. The General Counsel at the Office of Management and Budget advises that direct funding of the EPG staff would require a new statute. Any request for such a statute would, in our view, open the door for Congress to stipulate in the law the manner in which the EPG should operate. It is possible, but not likely that the appropriations subcommittee which handles Treasury and CEA may not approve the method we have suggested above for providing an EPG staff. (If that happens, the only alternative that averts the need for a new statute and a direct appropriation is to put the EPG staff on the payroll of the White House, probably in the Cabinet Secretary’s office.) We are sanguine, however, that the appropriations committees will not object to our proposals.

III. Recommended Jurisdiction of an EPG

—All major economic policy issues should be coordinated through the EPG. In particular, we want to bring together in one place staffing and planning for both domestic and international issues.

A major aim of this proposal is to avoid duplication and competition in international economic policy making between EPG and NSC. Since the National Security Adviser or his economics deputy will serve on the Executive Committee of the EPG, NSC participation in the economic deliberations of that group would be constant. Membership of the EPG co-chairmen and the Director of OMB on the NSC also assures adequate economic input into NSC decisions.

Under this proposal, NSC would continue to be the primary forum for discussion of the political aspects of international economic issues, through the operations of its Policy Review Committee or its Special Co-Ordinating Committee. NSC routinely will ask EPG to take on the staffing and analysis of international economic issues, however, retaining the option to review EPG recommendations for their political impact before those recommendations are forwarded to you.

An example of how the NSC–EPG arrangements would work in one situation is attached.

Attachment²

Washington, undated

Illustration of NSC and EPG Coordination of
International Economic Issues

1) The question of whether or not to hold an Economic Summit Meeting would be addressed in the Policy Review Committee of the NSC since that decision involves substantial political, as well as economic considerations.

2) If PRC decided that an Economic Summit Meeting should be held, staffing of the underlying economic issues for the meeting would be handled through EPG. Staffing on such questions as sterling balance, Italy’s economic situation, international commodity policy, debt overhang, etc. would be divided among members of the EPG for appropriate analysis and summary.

3) Once the EPG completed its recommendations, the subject would be returned to the Policy Review Committee before going to the President. If there were some disagreement in the PRC concerning the policy recommendations of EPG, the matter would not go to the President without further discussion in the NSC.

1. Source: Carter Library, White House Central Files, Box FG–95, FG 6–18, 1/20/77–1/20/81. No classification marking. “The President has seen” is typed at the top of the memorandum. Carter wrote, “Mike & Charlie—OK—My only suggestion is that you two alternate chairmanship (monthly or annually) & that staff be assigned to existing entity. Alternative: Let Mike be chairman, & staff work within CEA—Let me have your comments—J.”
2. No classification marking.