The Wiggle Watchers

Few organizations in Washington sit atop a hotter spot these days than the President's Council of Economic Advisers. The Council, whose prestige soared in Chairman Walter Heller's last months as a result of the tax cut's success, has a new chairman--Gardner Ackley--and two relatively new members who have yet to prove themselves in their posts. As the President's first line of economic advice, the Council will bear heavy responsibility in the coming months for deciding what methods to adopt to keep the economy moving upward.

President Johnson has also handed the Council the task of preparing what will surely be one of the year's most controversial studies: a report on steel price increases and their effect on inflation. Aware that the report, no matter what its conclusions, is bound to displease either business or labor, the Chief Executive shrewdly handed it to the CEA rather than have it prepared by his personal staff. He will thus be able to keep himself somewhat apart from its conclusions, using them as he sees fit.

Between Indians & Monuments.

Nonetheless, the assignment illustrates Johnson's growing reliance on Ackley and his colleagues. With a professional staff of only 16, the three-man Council ranks (as Heller liked to say) somewhere between the Indian Claims Commission and the American Battle Monuments Commission, and has a budget of only $645,000; yet it exerts power and influence far beyond its size. Last week the Council's members worked late into each night helping to prepare the budget and the President's annual economic message to Congress. Ranging from high policy to day-to-day chores, the CEA keeps the President informed on the latest wiggles on the economic charts, makes recommendations for major economic moves, and provides a large part of the statistics that the President loves to release. Says Ackley: "The President has learned we can do things no one else can do. He likes the idea of having a group that has no ax to grind."

Following Heller is no easy job, but Ackley, 49, has taken it in stride. A former University of Michigan professor who had served on the Council since 1962 before becoming chairman last November, he is a calm and retiring team man and a skillful administrator. Ackley now talks with the President at least three times daily, sends him a daily stream of communications, meets regularly with Cabinet members. He has been helping to cull the 15 presidential task-force reports for legislative recommendations, also serves with Treasury Secretary Douglas Dillon and Budget Director Kermit Gordon on the troika that advises Johnson on fiscal policy.

New Gadfly. Ackley is backed up by two bright young economists: German-born Otto Eckstein, 37, and Arthur Okun, 34. Eckstein came to the Council last September from Harvard, where he was editor of the prestigious Review of Economics and Statistics. He will be the CEA's gadfly, probing new ways to bring economic policy to bear on such old problems as unemployment and the balance of payments deficit. Okun, a former Yale economist, is a tall, professorial type who before his appointment last November was best known for his pioneering explanation of the gaps between actual and potential gross national product. Called "Okun's law," it will be a major tool for the Administration in deciding how much of an excise tax cut will be needed to give the economy a lift.

The Council is well qualified to report on the steel industry, where recent price increases have spread until they cover 16% of total shipments. In Eckstein it has one of the nation's top analysts of the industry; it was his study for Congress in 1959 that produced the startling estimate that the 110% hike in steel prices between 1947 and 1957 accounted for roughly 40% of the entire rise in U.S. industrial prices in that decade. The Council, which makes a specialty of keeping a close watch on steel, has already guided Johnson in his repeated warnings against steel price hikes, basing its advice on steel's rising earnings, increasing productivity, stable raw-material costs and considerable savings from the Government's depreciation reforms. How the three economic advisers handle their newest steel assignment will in large part shape the Council's standing and future influence in Washington.

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