ABSTRACT
The newly appointed chairman of the CEA, Charles Schultze, was the principal author of the package, which had the support of Jimmy Carter’s other economic advisers and the Democratic congressional leadership. Joining Schultze on the Council were William Norhaus, a Yale professor and expert on productivity, corporate profits and long-term energy supplies, and Lyle E. Gramley, Director of the Federal Reserve Board’s division of research and statistics and an expert on economic forecasting. Managing a return to full employment without reigniting inflationary pressure was the central economic problem for the Carter administration. Carter was personally skeptical of the need for such decisive action to rejuvenate the economy because he was a fiscal conservative and was already concerned that inflation would be his major problem. Carter and his advisers had been trying to adjust to the second oil shock without a real recession. They probably underestimated the buoyancy in the economy and the severity of inflationary pressures.
