Top administration officials defended the president's anti-inflation program as fair and equitable yesterday and warned the alternatives being proposed by critics will not work.
In testimony before the Senate Banking Committee, Charles L. Schultze, the chairman of the president's Council of Economic Advisers, said either mandatory wage and price controls or a "harsh reliance" on monetary and fiscal policies to fight inflation would be "economically dangerous and politically naive."
The AFL-CIO has called the program inequitable because it will restrain wage increases without serving as an effective check on price rises.
Rudolph Oswald, research director repeated the labor federation's position before the committee. He said the Internal Revenue Service and the nation's employers will make sure that workers adhere to the 7 percent standard for wage and fringe benefit increases.
"We'd like to see a similar ability to monitor prices."
He said to be fair the administration should ask Congress for authority to institute a massive mandatory controls program for wages, prices, dividends and profits.
Sen. William Proxmire (D-Wis.), chairman of the Senate Banking Committee, said there is no possibility that Congress would enact mandatory controls in peacetime again, after their failure in the early part of this decade.
"Usually the ALF-CIO is realistic" in the positions it takes, Proxmire said. "There is no way you will get mandatory controls. So what you're really saying is that you want nothing," he told Oswald.
Oswald replied that the AFL-CIO's executive council is concerned with inflation and thinks a broad, mandatory controls program is the best way to attack the problem. We hope you do reconsider your position," Oswald said.
In earlier testimony, Alfred E. Kahn, the new top inflation fighter for the administration, said that he thinks it is "ludicrous" for Meany to criticize the President's program as inequitable then call for a mandatory program that will be more rigid.
All five members of the Senate Banking Committee present at the hearings - Proxmire, Edward Brooke (R-Mass.), John Heinz (R-Pa.), Adlai Stevenson (D-I11.) and Paul Sarbanes (D-Md.), - said they opposed mandatory controls. Proxmire said a poll of the committee showed unanimous opposition to mandatory controls.
The Senate Banking Committee has authority over any wage and price legislation.
Schultze said that the president's moves to protect the dollar - which include more sharp increases in interest rates here - will not trigger a recession as some critics charge. Instead, Schultze said, interest rates would probably have risen further without decisive presidential action.
"The risks of a recession on balance have been reduced," Schultze said.
Barry Bosowrth, director of the Council on Wage and Price Stability, said his agency may change the way the price standards apply to retail and wholesale stores, because of the way these establishments do business.
Instead of focusing directly on their prices, Bosworth said, the council may instead concentrate on the markups these stores add to the products they buy and then re-sell.