President Carter's "real wage insurance" tax credit proposal failed a preliminary test in the House Ways and Means Committee yesterday as panel Democrats proved too unenthusiastic to take any action.
After 2 1/2 hours of closed-door caucusing, Democrats on the 36-member panel postponed serious consideration of the measure until sometime later this month -- well past the time the White House had hoped to have a yes-or-no answer on the proposal.
The Democrats did agree informally to recommend to the House Budget Committee next week that it set aside a $2.5 billion allotment for the plan in the fiscal 1980 congressional budget resolution that planel is preparing. That was described as only a courtesy to Carter.
Rep. Al Ullman (D-Ore.), chairman of the panel, made clear the move was merely a holding action designed to give the administration another chance and not an endorsement of the bill. "We're going to have to have some meetings," he said, "before we can vote."
The lackluster reception appeared to bolster earlier assessments that the tax credit plan is in trouble. Conservatives have attacked it as too costly and complex, while organized labor appears to be split over the issue.
Fthe measure, a key part of Carter's new anti-inflation program, is designed to provide an incentive for labor to go along with the president's new wage standard by offering to give workers a tax credit if inflation out-strips the 7 percent guideline
The version proposed by Carter would allow workers who stay within the guideline a tax credit amounting to 1 percent of their first $20,000 in wages for each percentage point that inflation exceeds 7 percent No one could receive more than $600.
Carter has estimated his plan would cost $2.5 billion if inflation reaches 7.5 percent this year -- a projection most analysts now view as far too optimistic. Congressional staffers are predicting inflation will be 8.2 percent, and peg the cost at $6 billion.
Indications yesterday were that if the Ways and Means Committee approves any version of the plan at all, it will be a sharply-scaled-back form, designed to keep the cost down. Many members are fearful too generous a measure would bloat the budget and make inflation worse.
At the same time, the committee is under pressure from the AFL-CIO to increase the number of low-wage workers who would be eligible for the tax credit, and to tack on a form of excess profits tax on business. Republicans on th panel are solidy against the Carter plan.
Ullman, who himself never has been enthusiastic about the tax-credit measure, hinted yesterday the panel was even less-enamored of the plan now that inflation appears to be accelerating again.