The Carter administration is facing a series of new - and increasingly urgent - decisions on its beleaguered wage-price guidelines program.
The choices involve two separate issues: How to repair the damage from a recent U.S. District Court decision that invalidated using sanctions as the program's major enforcement device, and what changes to make in the remainder of the plan for the program's second year, which begins in October.
Although policymakers still have not reached anything approaching a consensus, insiders say they at least have agreed that it is important to decide both issues soon. The difficulty is that there still is no firm preference among top policymakers on which way to go.
The urgency for dealing with the impact of the court decision has been relieved temporarily by recent indications that a federal appeals court will act swiftly to review the sanctions case. If the appellate court decides quickly, the case can move rapidly to the Supreme Court for final disposition.
But the pressure is mounting for policymakers to decide on the longer-run changes involving the program's second year. Planners point out that if business and labor are to have time to comment on the new regulations, they must be published this summer. And that means a decision soon.
Policymakers concede that some changes definitely are needed. The current guidelines - a 7 percent limit on wage increases and a companion set of standards for price hikes - were set last October, when the inflation outlook seemed much brighter.
But in an unexpected spurt over the past five and a half months, consumer prices have soared at a staggering 13 percent annual rate, while wages have gone up at an 8 percent to 9 percent pace.Planners agree that the wage standard will have to give or unions won't stay within the guidelines for long.
The price standards need some work, too.
Policymakers are groping with these questions:
Wages. What should the new wage standard be for 1980 and beyond? With prices rising so much faster than wages, the White House will be under pressure to raise its wage standard. Some economists are proposing a limit of up to 9 percent or 9.5 percent.
The difficulty is that in increasing the wage standard for 1979-80, policymakers have to be careful not to push the limit so high that it will help build this year's inflation into the economy permanently.
There also is the question of how to allow workers to "catch up" with those union members whose contracts included cost-of-living "escalator" clauses that allowed them to fare decidedly better. The disparity is beginning to trouble those who didn't receive any.
Prices. Should the price standard be tightened? Officials began by asking firms to hold this year's price increases half a percentage point below the average rise for 1976-77, or to hold profit margins steady if cost increases proved too sharp to enable firms to keep prices in check.
The profit-margin alternative proved to be such a loophole that officials had to limit its use. But the recent spurt in raw materials prices is forcing more and more firms to switch to profit-margin test - a trend that could strain the small wage-price council staff if it continues.
At issue is how much to allow industry to raise prices to cover increased production costs. Some administration economists fear the guidelines already have begun to dampen incentives for businesses to expand, and that inhibits productivity growth, which further worsens inflation.
The debate now is whether to tighten the restrictions even further - possibly by limiting the so-called "base-period" that companies now are permitted to choose for the purpose of calculating their profit-margin changes.
Some policymakers also want to devise a test to determine what is a "normal" profit rate - and set the new standard based on that formula.
One partial solution, already suggested by wage-price council chief Barry P. Bosworth, would be to scrap the current price standard and instead publish price "targets" on an industry-by-industry basis. Individual companies would use a ceiling using a weighted average based on their sales.
B Other changes. Should the administration alter the scope of its program to reward companies and unions that have "behaved" well in 1979?
The thinking now is to measure price and wage increases over the two-year period that began with the birth of the guidelines last October. That way, if a company or union settled for a low increase in 1979, it would be "rewarded" with the opportunity for a larger one than others would get in 1980.
For all the complexity involved in setting standards, the problem involving the court decision is potentially more thorny. Despite the promise of speedy action at the next stage of the appeals process, the White House still is in something of a box.
The court ruling two weeks ago effectively took away the only real cudgel the administration could weld to obtain cooperation from companies and unions: the threat of losing lucrative federal contracts if they violated the guidelines.
Although the White House has insisted publicly that the program can go on without this, insiders concede that the ruling is a setback. A case in point is the current rubber workers' negotiations. If the unions and companies rebuff the administration, there's little now that the White House can do.
The problem in many ways is a political one. After all its rhetoric so far, the administration can't simply let the wage-price program die the way the Johnson administration guidelines did in 1967. But if the plan is to continue, it must have some sort of enforcement mechanism.
The most obvious solution would be for the White House simply to ask Congress to pass legislation providing such authority. But that entails a good deal of risk, specifically over whether the lawmakers might try to loak the legislation with their own wage and price standards.
There's also the question of how far the administration wants to go in requesting legislation. Should any new proposal merely provide the authority the court said was missing to deny federal contracts to violators, or should it delve into broader areas as well?
Some in the administration want to revive the notion of using the tax system to encourage more moderate wage-price behavior, such as resurrecting the now-defunct Real Wage Insurance tax credit or an alternative measure that would penalize firms and unions that exceed the guidelines.
The second option offers more pitfalls. The lawmakers already rejected the Real Wage Insurance plan, and organized labor seems no more ready to back the plan now than it did when RWI was being proposed. The likelihood is that the administration would suffer anothing defeat.
To many analysts, however, perhaps the most encouraging new development has been the apparent realization by top policymakers that this time the administration must consult closely with business and labor in drafting any new guideline changes - at least if the new rules are to work.
Although the Wlite House made some gestures before last October's plan, labor felt all but left out of the policymaking process. Officials didn't even tell unionists about the "real wage insurance" bill until the weekend before it was announced.
Still, by any measure, the administration must move rapidly. Pressure from both companies and the unions is building every day. Although Carter economic officials contend that 80 percent of the labor settlements this year have been within the guidelines, others say at least half the exceeded the standards.