Presidential anti-inflation advisor Alfred Kahn told a group of union leaders yesterday it would be "untenable" to continue holding wage increases to 7 or 8 percent a year if prices keep rising by 12 percent or more.
But he said he thinks prices are starting to level off and added that alternatives to existing wage-price guidelines - a recession or mandatory controls - are so unpalatable that "we really have no choice but to pursue our present course . . . with increased intensity."
Kahn's appearance before AFL-CIO President George Meany and his troops, who have been among the fiercest critics of the administration's program, amounted to a latter-day version of Daniel's visit to the lions' den.
The lions were polite but did not purr. Only once or twice and Kahn step on any exposed toes.
At one point, while deploring inflation's impact on older people, he spoke of the "retirement that awaits us all," and then, with the 84-year-old Meany sitting at his side, couldn't resist adding, "well, most all of us." The audience chuckled a bit, but Meany, who has rejected all suggestions of retirement, looked on impassively.
Later, however, Kahn brought Meany to his feet in protest when he rued the AFL-CIO's lack of support for the administration's now-morbund proposal for "real wage insurance" to give tax credits to workers who comply with the wage guideline.
The AFL-CIO was willing to work with Congress to improve the plan, Meany claimed, adding that it was the administration, not labor, that was dragging its heels. "It was an idea that looked good in a speech . . . I don't think the administration had any real intention of trying to pass that bill," he asserted.
The AFL-CIO's main/complaint about the guidelines program is that it holds down wages but not prices, and Kahn agreed that the labor federation was right - and the administration wrong - in anticipating the relative difficulties in enforcing the wage and price standards.
Asked why wages should not be allowed to rise and fall in concert with the consumer price index, Kahn said that holding annual wage increases to 7 or 8 percent, as the wage guideline proposes, would be "just unbearable . . . untenable" if the cost of living "goes up to 12, 13, 14 or 15 percent."
The government's Consumer Price Index rose by an annual rate of 15.4 percent in February. Over the last 12 months, the increase has been 9.9 percent.
Kahn said he "truly believes" the program will begin to show results in curbing costs. He suggested that wholesale price figures are already beginning to taper off - if cost of food and energy are not counted. The audience chuckled again.
As he has done before, Kahn said failure of the voluntary program could trigger mandatory controls, which the AFL-CIO wants, or a recession, which it doesn't want. President Carter is "determined" to avoid both alternatives, Kahn said, but added: "An honest person has got to admit that if this program does't work, we may get one or another of those alternatives, like it or not."
Asked about a Washington Post report that administration is considering recession-risking measures to curb inflation, Kahn said he was not surprised that officials in charge of fiscal and monetary policy were looking at such possibilities.
Kahn's appearance was occasioned by the official launching of the AFL-CIO's "Operation Price Watch," under which thousands of union members are to fan through stores across the country in order to monitor prices and report the results to Washington.
Kahn pledged his support for the venture. Meany predicted it will result in proving that only "mandatory, across-the -board controls on the price of everything and the income of everybody" will work. CAPTION: Picture, AFL-CIO President George Meany puffs cigar as inflation czar Alfred Kahn speaks.