Setting Economic Policy

When Congress passed the Employment Act of 1946, it declared that the promotion of maximum employment, production and purchasing power was to be the policy of the federal government. It authorized the president to appoint a three-member Council of Economic Advisers (CEA) to study economic conditions and advise the president of needed action.

This act focused on full employment, but it did not specify how the goal was to be achieved. The law recognized freedom and competition as important goals in themselves. The nation, the law stated, should rely on free enterprise -- not on government direction of business -- for running the vast economy.

The CEA advises the president on economic problems and helps set the tone of government policy as it decides what kind of action is required. The CEA has no direct authority, but keeps constant watch over changes in income, production and employment. It recommends economic policy to the president and helps in the preparation of reports to Congress.

The federal government's chief economic policy official is the secretary of the treasury. Created by Congress in 1789, the Treasury has responsibility for formulating and recommending fiscal (spending) and tax policy for the economy; managing the public debt; carrying out law enforcement related to federal taxes: serving as financial agent for the government; collecting the revenue from import duties and enforcing customs laws; and manufacturing coins and currency.