Bush picks Rosen for CEA chair

President Bush has promoted University professor Harvey Rosen to chairman of the Council of Economic Advisers (CEA), the White House announced Wednesday. Rosen, who is on leave from the economics department, has served on the CEA since 2003.

The news that Rosen will succeed Gregory Mankiw '80 comes as something of a surprise. There was widespread speculation in the media last week that Ben Bernanke, a governor at the Federal Reserve and a fellow member of the University's economic department, would be named to the post.

Because Rosen was already a member of the CEA, his elevation leaves the council's third seat open. An informed White House official told The Daily Princetonian that Bernanke remains "one of the top candidates" for the remaining position.

"Everybody's first thought was surprise — everyone was expecting Ben Bernanke to get the job," said Alan Blinder, a colleague of Rosen's and Bernanke's in the economics department and a former vice chairman of the Federal Reserve. "The second reaction was 'what a wonderful choice.' "

The three-member CEA was created in 1946 to provide the president with objective economic analysis and advice on the development and implementation of domestic and international economic policy issues.

The president's nominees to the council must be confirmed by the Senate. Of the three approved members, the president designates one chairman.

Rosen's promotion to CEA chairman initially created some confusion among faculty in the economics department, who had expected him to return to his teaching post after two years at the White House.

Though Rosen could not be reached for comment, a White House official said Rosen is expected to return to Princeton in the fall. If he does so, Rosen will have served as chairman for only six months.

Despite the speculation that Bernanke would get the job, Rosen's promotion to chairman is logical given the president's anticipated emphasis on tax and social security reform in his second administration, Blinder said.

"If tax reform is actually going to be a big deal as an administration policy initiative, you want to have a lot of strength in the tax field," he said, noting Rosen's previous service as a deputy assistant Treasury secretary for tax policy.

"Secondly, the social security debate which is raging now is partly about taxation," Blinder added.

It also doesn't hurt that Rosen's politics "line up with those of Bush," Blinder said. "You're pretty high up in government not to get meshed in the politics. That's part of it."

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Indeed, though the CEA is usually considered a low-profile agency, comments by the council chairman have recently sparked media interest.

In the run up to last year's election, Mankiw, who was once a student of Rosen's at Princeton, created a political maelstrom when he said that the outsourcing of American jobs to other countries was "probably a plus for the economy in the long run."

In an interview with the 'Prince' last week, Mankiw singled out Rosen for his service. "What I'm really proud of is the team we've assembled here," he said. "One of the people I've got recruited is Harvey Rosen."

Bush's passing over of Bernanke isn't a "blow in any sense" for the veteran of the Federal Reserve System, Blinder said. "Many people would argue that he does a better job where he is than where he was rumored to be going."

Bernanke remains one of the viable candidates to replace Federal Reserve chairman Alan Greenspan when he retires next year, according to Blinder and government officials who speculated in the media.

Rosen, who has been a professor at the University since 1974, received his graduate degree in economics from Harvard University. He was chair of the Princeton economics department from 1993 to 1996.