The primary mission of the Office of the Assistant Secretary for Economic Policy is to support the Secretary of the Treasury as the principal economic official in the government. The Office utilizes economic analysis and evaluates current economic data to assist in the determination of appropriate economic policies.
The Office of Financial Analysis, the precursor to the Office of Economic Policy, was established in late 1961 to advise the Secretary on a broad range of economic problems. Its first director was Paul Volcker (1962-1963). Under his leadership the Office undertook research projects and analyzed current developments in the economy. This Office formed the basis of the new Office of the Assistant Secretary for Economic Policy which was established on April 1, 1969. Dr. Murray Weidenbaum, the first Assistant Secretary, was sworn in on June 23, 1969.
Since the early 1970s, the Assistant Secretary for Economic Policy has served on the Troika, the unofficial name of the interagency group comprised of Treasury, the Council of Economic Advisors, and the Office of Management and Budget, that develops official economic assumptions for the President’s budget. In addition, the Assistant Secretary advises the Secretary on the economic effects of tax and budget policy.
Since the late 1970s, the Office of Economic Policy has provided the principal support to the Secretary of the Treasury in his roles as Chairman and Managing Trustee of the Social Security and Medicare Boards of Trustees. The Secretary, along with the other Trustees, sets the short-range and long-range economic and demographic assumptions used in determining the financial status of the Social Security and Medicare programs as reported annually to Congress.
In both the late 1970s and mid-1990s, the Office of Economic Policy was an important participant in the interagency groups working on health care reforms initiated by the White House. It continues involvement in the analysis of the economic effects of health care financing trends and policies. Between 1990 and 1998, the Assistant Secretary for Economic Policy had major responsibility for the analysis and collection of Treasury’s statistics on international capital movements. He continues to analyze international economic issues as they relate to the domestic economy.
One of the responsibilities of the new Office in the early 1970s was to put together the Revenue Sharing Program whereby a portion of federal tax dollars and decision-making power were shifted back to state and local governments. Since 1987, when Revenue Sharing was disbanded, the Office of Economic Policy has continued to study state and local finance issues and produces the index of Total Taxable Resources used in certain allocations among states of federal funds for Medicaid.
Today, the Office of the Assistant Secretary for Economic Policy carries out its functions under the direction of an Assistant Secretary. The current Assistant Secretary, Karen Dynan, was confirmed as Assistant Secretary for Economic Policy in July 2014. The Office also has three Deputy Assistant Secretaries: one for Macroeconomic Analysis, one for Microeconomic Analysis, and one for Policy Coordination. Staff economists in two offices, the Office of Macroeconomic Analysis and the Office of Microeconomic Analysis, provide the economic analysis and often collaborate with other policy offices in Treasury, including the Office of Tax Policy, the Office of Domestic Finance, and the Office of International Affairs, on a wide variety of policy issues. The Office also works with other cabinet departments and government agencies in the development of policy.
The Office of Macroeconomic Analysis routinely monitors economic data as they are released and provides the Secretary of the Treasury and other officials with daily updates and analysis of important economic statistics. In addition, the Office of Macroeconomic Analysis regularly provides in-depth analyses of major trends and developments in the U.S. economy.
The Office of Microeconomic Analysis conducts research to assist in the formulation of Treasury’s policies on a wide range of issues. Currently, the Office is carrying out Treasury’s mandate to provide Congress with an assessment of the effectiveness of the Terrorism Risk Insurance Program and the likely capacity of the industry to continue it after the government program ends.
Staff from Economic Policy, working with Domestic Finance and other government agencies, are developing a comprehensive pension funding reform proposal. The Administration has proposed replacing the interest rates used today to measure a defined benefit pension plan’s current liability and lump sum distributions with rates based on a spot yield curve drawn from prices of high-grade corporate bonds. Economic Policy staff are developing a methodology to calculate the spot yield curves.
Staff economists often represent the Treasury in interagency groups studying a variety of issues, including Social Security, environmental, energy, and use of the airwaves policies. Economists also monitor certain sectors of the economy; work to improve the presentation of governmental financial statements; and perform research and analysis on policy issues in financial markets.
History of Economic Policy.pdf