Treasurys Secretary W. Michael Blumenthal has formally urged President Carter to announce that the administration will impose special levies on oil imports unless Congress passes a tax on crude oil by May 1.
The special import fee would serve the same end as the president's proposed crude oil equalization tax: reduce domestic oil consumption by raising the price of the fuel.
Bluementhal outlined his concern about oil imports and the need for action in a long memo to the preisdent late last week, sources familiar with the memo said.
Congress has been deadlocked on a massive energy bill since well before Christmas.
Sen. Russell B. Long (D-La.), head of the Senate already has said that the tax on crude oil is dead in the Senate. The Carter proposal would tax domestic oil (now under price controls) in order to bring the price up to world levels.
The tax on imports would be designed to achieve the same increase in overall fuel prices tht a tax on domestic oil would generate.
Before Congress deals with the tax portions of Carter's energy package, it wants to iron out its differences on lifting prince controls on natural gas.
Although other administration economic officials are said to share Blumenthal's concern about discouraging oil consumption, none have joined the Treasury secretary informally urging a presidential announcement for fear tht such an act would end chances for passage of a crude oil tax.
New Federal Reserve Board Chairman G. William Miller, however, has said that the president cannot afford to wait very long before taking steps on his own to curb oil consumption. In testimony before Congress last week and in a meeting with a small group of reporters this week, Miller said the president must do something within a matter of weeks.
Both Blumenthal and Miller fear that the dollar will continue to decline on world markets unless investors are convinced the nation has taken steps both to reduce its dependence on foreign oil (thereby trimming its massive trade deficit) and to curb what seems to be accelerating inflation.
Miller said that a $5-a-barrel fee on imported oil would add 0.2 percent or 0.3 percent to inflation; the declining dollar already has added between 0.5 percent and 0.75 points to the inflation rate and will add more if the decline is not arrested. A falling dollar makes imports more expensive.
Sources familiar with Blumenthal's memo said the Treasury secretary also expressed his growing concern about the recent acceleration of inflation.
Earlier last week, Blumenthal and Charles L. Schultze, chairman of the Council of Economic Advisers, wrote a memorandum to Carter outlining his options for dealing with rising prices. The memorandum was based on earlier ones prepared by Barry Bosworth, director of the Council on Wage and Price Stability, and on discussions of the Cabinet-level economic policy group.
White House press secretary Jody Powell said yesterday that the president has not yet decided on his inflation strategy or when he will announce it.
Powell acknowledge that Carter had received "various sundry proposals" from advisers, but said there is a "distinction between suggestions to the president and decisions by the president."
Blumenthal and Schultze told Carter that in order to make his voluntary proposals work - in which labor and business moderate their demands this year enough to trim one-half percent from the underlying inflation rate of 6 percent to 7 percent - the government should take some actions on its own.
They suggested, among other things, trimming a pay raise for federal workers and directing agencies to consider the inflationary effect of their actions.
The president signed an executive order this morning on regulartory reform that, among other things, orders executive branch agencies to make an economic assessment of their decisions. In signing the order, he mentioned the contribution that government regulations make to inflation.