Outspoken, Outgunned, Outsourced

By Norman Ornstein
Sunday, February 22, 2004; Page B03

President Bush's top economist said yesterday that the outsourcing of U.S. service jobs to workers overseas is good for the nation's economy. N. Gregory Mankiw, chairman of the Council of Economic Advisers, said in releasing the annual Economic Report of the President that the "offshoring" of service jobs is only "the latest manifestation of the gains from trade that economists have talked about" for centuries. "Outsourcing is just a new way of doing international trade," Mankiw said. "More things are tradable than were tradable in the past and that's a good thing."

-- news reports, Feb. 11, 2004

WASHINGTON, Feb. 30 -- The White House announced today that it is outsourcing the work of the president's Council of Economic Advisers to India. Ramindar Prabhakesh, an economist who teaches Introductory Economics and Macroeconomics at Bangalore University, will take over as chairman. He will earn one-sixth the salary of his outsourced predecessor, N. Gregory Mankiw.

"This is all part of our new way of handling government business," said presidential spokeswoman Mairéad O'Connor during her daily briefing via teleconference from Dublin. "These are the kinds of gains that economists like Greg have been touting for years."

Moving the council to India will save more than $30 million, O'Connor said, while demonstrating the administration's commitment to reducing the deficit and holding down spending. "Outsourcing Mankiw's job alone will save nearly $200,000 in salary, benefits and what economists call 'fixed costs,' " she said. "For Prabhakesh, this is a net gain -- and we don't have to offer him health insurance. He's also more than willing to work out of his university office. It's a win-win."

The CEA's professional staff -- several dozen economists, as well as secretaries, research assistants and someone who writes talking points for Mankiw -- would be eligible for job training under the initiative announced by the president in his State of the Union message, said Emma Smythe-Hawkes of the Office of Personnel Management in Melbourne. "We are confident that all the staff members can find other jobs, many of them as good as or even better than the ones they have had here," Smythe-Hawkes wrote in an e-mail from Australia. "This is a vibrant economy, and we have put them all at the front of the line for the job training program, so they are likely to be retrained before their unemployment benefits run out."

The new CEA members will communicate with the president and other administration officials via wireless networking or through an 800 number leased through American Express. "We have a lot of experience in offshoring," said Amex senior vice president Martin Macintosh from a secure outpost in northern British Columbia, where he handles telecommunication needs for the Executive Office of the President. "We already have hundreds of people in Bangalore and Singapore handling billing inquiries for dozens of U.S. companies, and the White House can save a bundle by piggybacking on our phone lines."

Mankiw declined comment as he left his office, but later issued a statement praising the president for his "admirable consistency" on economic policy. "He believed what we told him about the value of outsourcing white-collar jobs when they can be done more cheaply in another country," Mankiw said. "I will return to Harvard, where at least I have tenure."

White House spokeswoman O'Connor said there are no immediate plans for additional outsourcing. But an extremely senior official in the vice president's office confided to reporters that the State Department's Middle Eastern desk and a part of the congressional liaison operation would be next to move -- with Guangzhou, China, the most likely destination.