President Carter's new "real wage insurance" tax credit proposal ran into a wall of skepticism in the House Ways and Means Committee yesterday, confirming that the measure faces a decidedly uphill fight, if it gets out of committee at all.
In the opening day of hearings on the plan, both Democrats and Republicans criticized the $2.5 billion measure as too costly and questioned whether it was workable. Only five of the panel's 36 members publicly endorsed the proposal.
Although the reception was not quite as frosty as expected, the cmmittee's initial reaction did little to encourage the administration. Panel leaders have warned unless there is more enthusiasm, the committee may scrap the measure.
Carter administration officials have asked for some indication of the prospects for passage of the measure in time to influence the current Teamsters union contracts talks, which are scheduled to close by March 31.
However, even the program's few supporters seemed unenthusiastic about the proposal yesterday. Rep. Sam Gibbons (D-Fla.), who said he "may support" the plan, complained it was "like putting a Band-Aid on a broken arm."
The Ways and Means action came as, separately, the administration won its first full-fledged endorsement of the plan by organized labor when United Auto Workers President Douglas Fraser spoke out in favor of the measure.
In a speech in Detroit, Fraser said his own union would be unlikely to follow Carter's new wage guidelines this year unless Congress enacted the tax-credit program. As for Congress' complaints, Fraser said: "That's what they said about safety standards."
Fraser is the first prominent labor leader to support the wage insurance measure. The AFL-CIO, which opposes the entire wage-price guidelines program, has criticized the tax-credit plan as inequitable.
At the same time, Federal Reserve Board Chairman G. William Miller criticized the tax-credit proposal, saying he thought it was "an interesting concept" but was "not sure it fills the bill under these circumstances."
During a luncheon meeting with reporters, Miller cited the $2.5 billion estimated cost of the measure as a major drawback to the plan. He also said he thought defeat of the proposal would "not undermine" Carter's guidelines program.
Yesterday's Ways and Means Committee hearing was marked by a visible effort by panel members to avoid seeming to reject the real wage insurance plan in advance. Several congressmen asserted they would approach the proposal with "an open mind."
However, the questions they asked indicated panel members were skeptical about everything from the complexity of the plan to what impact it might have on future pay levels of workers who accepted the proposal.
Rep. Bill Archer (R-Tex.) led several Republicans and Democrats on the panel in asking how the government would be able to cut off the tax credit in future years without seeming todeprive workers of a benefit.
And Rep. Willis D. Gradison (R Ohio) told administration officials he found it "hard to see how any rational person would buy this wage insurance plan that you are offering to them." Other objections were more muted.
The administration several times offered to compromise on the legislation. Treasury Secretary W. Michael Blumenthal, who appeared as a witness yesterday, said officials were "open-minded on any changes" that do not alter the thrust of the plan.
However, it still appeared doubtful that the proposal would be adopted. The panel has scheduled another several days of hearings on the measure before deciding whether to consider any legislation.
The real wage insurance plan, announced publicly by Carter along with his October wage-price guidelines, was designed to offer workers a sweetener by providing them with "protection" in case inflation outstrips the guidelines.
Under the proposal, a worker who agreed to follow the guidelines would receive a tax credit of 1 percentage point of his first $20,000 in wages for each percent inflation exceeded 7percent to a maximum of $600 a worker.
The plan, which Treasury officials estimate could lure 21 million workers to hold their wage hikes within the guidelines, would cost an estimated $2.5 billion in fiscal 1980 -- an average $5 billion for each percentage point that inflation tops 7 percent.
However, the tax credit itself would be subject to taxation. And the credit would not go to self-employed persons, farmers or groups which did not go along with the wage guidelines.