5. to make and furnish such studies, reports thereon, and recommendations with respect to matters of Federal economic policy and legislation as the President may request.

[6]In 1949 Chairman Edwin Nourse and member Leon Keyserling argued about whether the advice should be private or public and about the role of government in economic stabilization.

[7] Nourse believed a choice had to be made between "guns or butter" but Keyserling argued for deficit spending, asserting that an expanding economy could afford large defense expenditures without sacrificing an increased standard of living.

Keyserling succeeded to the chairmanship and influenced Truman's Fair Deal proposals and the economic sections of NSC 68 that, in April 1950, asserted that the larger armed forces America needed would not affect living standards or risk the "transformation of the free character of our economy".

[9] Until 1963, during its first seven years the CEA made five technical advances in policy making, including the replacement of a "cyclical model" of the economy by a "growth model", the setting of quantitative targets for the economy, use of the theories of fiscal drag and full-employment budget, recognition of the need for greater flexibility in taxation, and replacement of the notion of unemployment as a structural problem by a realization of a low aggregate demand.

[7] In the wake of the Great Recession of 2008–09, the Council of Economic Advisers played a significant role in supporting the American Recovery and Reinvestment Act.