A House Banking subcommittee announced plans yesterday to begin hearings next month on new legislation that would require President Carter to establish voluntary wage-price guideposts to help combat inflation.
The bill, sponsored by eight liberal Democrats, including subcommittee chairman William Moorhead (D-Pa.), would reject mandatory controls. Instead, it would set voluntary guidelines designed to trim the inflation rate by one-fourth each year.
Although the subcommittee is not expected to push for enactment of the measure this session, the sponsors hope to lay the groundwork for passage in 1979, when authority for the present Council on Wage and Price Stability expires.
However, the more is likely to stir substantial debate. Conservatives argue that even the introduction of a bill involuving voluntary guideposts could exacerbate business fears of mandatory controls.
The guidelines proposal is part of a broad package drafted by the liberals aimed at requiring the Carter administration to adopt a "comprehensive anti-inflation plan" beyond what it already has announced.
Along with the guideposts plan, the measure also calls for setting annual inflation targets and consideration of a series of new actions intended to reduce the government's contribution to inflation.
If also recommends - but does not mandate - the use of tax incentives to help prod workers and companies into paring back their wage and price demands. The Carter administration earlier rejected this approach, but is now reconsidering it.
The provision involving guideposts doesn't say specifically what wage-price limits the government should seek. But it does suggest a "possible" formula for Carter to use in calculating any voluntary ceilings.
Under the panel's recommendation, the wage guidepost would limit pay increases to 25 per cent below the combined rise in living costs and productivity, or output per hour of work. Price rises would decelerate by 25 per cent a year.
The measure provides no means for the administration to enforce any guideposts it sets. Staff members stressed that the guidelines would be voluntary, to be applied across the board to every union and industry.
Ironically, the measure was introduced on the eve of the seventh anniversary of the Nixon administration's ill-fated wage-price controls program, which went into effect on August 15, 1971.
It was Nixon's experience with mandatory controls that led both business and labor, which earlier had favored that approach, to reject the notion altogether. Both sides now vigorously oppose any form of controls.
The Carter administration has said repeatedly it will not impose mandatory wage-price controls and there currently is no legislation on the books that would enable the President to establish economywide controls.
However, Moorhead's subcommittee will reconsider the question seriously next year when it takes up legislation to renew the legal authority for the Council on Wage and Price Stability, the present inflation-watchdog agency.
The present legislation expires on September 30, 1979.
Besides Moorhead, the Democrats sponsoring the new wage-price bill include Joseph L. Fisher (Va.), Andrew Maguire (N.J.), Barbara A. Mikulski (Md.), Abner J. Mikva (III.), Edward W. Pattison (N.Y.), Paul Simon (III.) and Stanley Lundine (N.Y.).