William A. Niskanen - Reagan Administration

Reagan Administration

However, Niskanen would not be out of work for long. Incoming president Ronald Reagan appointed Niskanen to his Council of Economic Advisers, which was responsible for conducting and analyzing economic research to inform executive branch policies. The appointment was surprising given Niskanen's hawkishness on deficits and concern about military spending—views that conflicted with Reagan policies.

Niskanen's blunt-spokenness both inside and outside the CEA sometimes caused problems. In a speech before a women's group in 1984, he commented that women's leaving the workforce to raise children contributed to a disparity in pay between the genders. Though broadly accepted and empirically supported today, Niskanen's comment was condemned in 1984, including criticism from Democratic presidential nominee Walter Mondale, who claimed it exemplified a lack of respect toward women by the Reagan administration.

The following year, another of Niskanen's blunt comments would ultimately lead to his departure from the Reagan administration. During the negotiations over legislation that would ultimately become the Tax Reform Act of 1986, Niskanen internally criticized the administration proposal that was drawn up by the Treasury Department under Secretary Donald Regan, telling President Reagan in front of Regan that the proposal was "something Walter Mondale would love." Regan took offense at the comment and, after becoming Reagan's chief of staff, blocked Niskanen's ascendancy to chair the CEA after Martin Feldstein left to return to Harvard. Niskanen served as acting chair for a brief period, but then resigned from the CEA. Niskanen later chastised Regan as "a tower of jelly" in his book Reaganomics.