The Carter administration is setting a relatively modest goal for the second year of the president's beleaguered wage-price program: the hope that the guidelines plan can "muddle through" the rest of 1979 and 1980 without falling apart at the seams.
Although officials won't be phrasing it this way, that, in reality, is where the wage-price effort stands. With inflation sharply higher than it was when the guidelines started, the program is facing a new set of pressures that threaten to shatter the already cracked standards.
In effect, the program is paralyzed, says one official. Because of political and economic limitations, the administration can't make the major changes needed to bring the program into line with altered conditions. At the same time, it can't totally ignore the shifts in the the economy.
The dilemma will be dramatized this week when the White House hedges on unveiling plans for the program's second year, which begins this Oct. 1. Planners had hoped to unveil specific new proposals now to allow time for public comment, but it's unlikely they'll meet that deadline.
Instead, the Council on Wage and Price Stability merely will publish a list of "issues" and delay any decisions on specifics until late this month or next, officials say. The exercise will be simply to buy time. Officials still haven't decided what, if any, changes they want to make.
The delay stems in art from the recent White House Cabinet shakeup, which ousted W. Michael Blumenthal as Treasury secretary and upset the administration's new economic policymaking apparatus. It will be several more weeks before Blumenthal's successor, G. William Miller, takes hold.
But the uncertainty also reflects the sheer complexity of the problems that the program faces:
Prices have soared at a 13.2 percent annual rate so far this year - twice the pace that policymakers expected when the administration launched its guidelines program in October 1978 - exerting heavy pressure on workers to increase their wage demands to make up for it.
By the planners' own admission, the biggest challenge the administration faces in the program's second year will be to stop the sharp boost in prices from spilling over to spur higher wage settlements. Soaring wages buildhigher prices into the economy by increasing business costs.
The program is faced with a major round of auto workers' union bargaining that, for all the softness in the economy, still threatens to break the guidelines - and for a variety of reasons, the White House hasn't much political clout with labor and management.
Although the administration won its case in court reaffirming its legal right to deny government contracts to wage-price violators, officials have yet to use that cudgel against a single company or union. And with the president's standing in the polls down sharply, his jawboning ability is more limited.
Apart from the Cabinet reshuffling, the administration is facing a management void in running the wage-price program. Barry P. Bosworth, the plain-spoken economist who headed the wage-price council during the program's first year, is tired and has returned to the Brookings Institution.
His successor, former deputy council director Robert Russell, is a competent economist but is viewed as decidely less aggressive. The prospects are that the program will come more under the wing to presidential anit-inflation advisor Alfred E. Kahn, who has other jobs to do as well.
By far the most controversial issue facing planners is whether to liberalize the current 7 percent wage guideline. Labor Secretary F. Ray Marshall is pushing for a boost to, say, 8 percent, in recognition of the higher-than-expected inflation rate.
White House inflation-fighters are arguing for a hold-the-line stand, contending that to ease the pay standard now would encourage big unions to exceed it. But the administration is caught in a box: Retaining the 7 percent limit may be so unrealistic that it might invite big unions to ignore the standard.
Another question is how to figure cost-of-living adjustments in union contracts. At present, the guidelines call for counting all such COLAs as if they were figured under a 6 percent inflation rate - a formula that allows room for substantial under-the-table increases when inflation is 13 percent.
If the 6 percent limit goes unchanged, it would give the auto workers and others room to drive a truck through in figuring their new settlement costs. If the 6 percent ceiling is raised, it would tighten the wage guidelines signigicantly - but at a time when prices are going throuth the roof.
Officials also must decide how to treat workers who aren't covered by cost-of-living clauses. Staffers have been concerned for months that the guidelines are giving an unfair advantage to those who are covered by escalator clauses, but the solutions are politically difficult.
The decision making comes after a mixed performance by the guidelines program so far. White House analysts argue that, except for the increases in food and energy prices - which are beyond the scope of the wage-price standards - the program has been successful.
As consumer price statistics show, were it not for food and energy prices, the inflation rate actually would be decelerating. And real average hourly earnings, a key measure of wage increases, actually have declined during the nine months since the program began.
At the same time, however, those two major categories are too big to dismiss in evaluating the administration's anti-inflation efforts, and wage increases - as measured by the Labor Department's figures on major collective bargaining settlements - are back on the rise so far this year.
Most important, policymakers concede privately they have no conclusive indication whether the guidelines are working. Some economists insist they've been "helpful," but others point to distortions the guidelines have created that have helped spur prices faster.
Although the chips aren't all in, the odds are that the White House will take a middle path of least resistance and simply hope that the program doesn't end in disaster before the 1980 elections. But don't look for any magic solutions.