President Carter will push for a "comprehensive" anti-inflation program regardless of misgivings voiced by AFL-CIO President George Meany, says chief economic adviser Charles L. Schultze.
Carter recognizes that getting a commitment from business as well as organized labor "to exercise restraint in the private sector" will be difficult, Schultze said in an interview.
Therefore, to avoid "waving red flags at people," the adminstration wants to limit public discussion of the program until it has had a change to discuss its ideas privately with Meany, other labor leaders and business representatives, Schultze said.
Carter and his principal aides haven't yet mapped out the scope of the proposed anti-inflation program, Schultze said. Discussions within the Cabinet-level Economic Policy Group may take a month or more to complete, he said. The EPG is co-chaired by Schultze and Treasury Secretary W. Michael Blumenthal.
"I don't want to go very far into this, simply on grounds that I don't want to shoot from the hip," Schultze said.
But schultze made clear that despite Meany's opposition, some form of advance notice of planned wage and price increases, on a voluntary basis, will be a key part of the program. "We want the chance to discuss with the relevant parties, before wage and price actions are actually taken, what the impact is going to be," he said.
The program will seek to boost suppplies of materials, eliminate governmental red tape, stimulate private investment and improve labor market efficiency, Schultze said.
The rationale for such a program is not only to prevent the danger of another "double-digit" price episode, but to bolster the chance of cutting the jobless rate, he added. "In the long run you've got to settle down inflationary expectations in order to get a healthy rise in employment."
To assuage business opoosition, Carter abandoned his campaign argument for standby wage-price controls, but lately has advocated strengthening the existing wage-price monitoring agency, the Council on Wage and Price Stability.
In his message to Congress asking for the economic stimulus package. Carter suggested that business and labor voluntarily report planned wage and price increases to the CWPS.
This proposal was publicly condemned by Meany, who said, moreover, that the CWPS should be junk-as a "dismal failure."
Federal Reserve Board Chairman Arthur F. Burns told the Joint Economic Committee of Congress last week that this is not the right time for "prenotification" of wage and price increases, although he has supported the idea in the past.
Schultze said in the interview that it is necessary to "beef up CWPS with the analytic capability to spot emerging problems so that you can begin to think about ways of dealing with them."
The kind of prior consultation Schultze has in mind - a sort of prototype of prenotification - was illustrated by a post-inaugural meeting initiated by Edgar B. Speer, chairman of the board of U.S. Steel Corp. Schultze, Blumenthal and Office of Management and Budget Director Bert Lance represented the Carter administration at the meeting.
"Speer came in and told us his problems, we told him our problems, and came up ultimately with an increase in tinplate prices which was significantly lower than (other) steel prices that had been rising," Schultze said.
Schultze took issue with the considerations he said are "underlying" a report last week by the Congressional Budget Office. The report suggested that the private economy would not grow fast enough by 1982 to reach full employment, even with a stimulus package like Carter's.
Without mentioning CBO directly, Schultze argued:
"There's just no evidence that there is something fundamentally wrong with the economy.
"I understand that there are some significant problems of restoring confidence, and that's what we're about. But what I don't buy is the sense that there's some fundamental malaise that would not be cured by a combination of the appropriate substantive economic actions and the restoration of some confidence in the future."
The key, he said, is business investment, which he predicted will respond to the stimulus program now working its way through Congress, and later Carter programs for tax reform, an end to burdensom government paperwork, "and the right kind of climate" in Washington.