The Carter administration yesterday rejected a plea by its Price Advisory Committee to relax the current guideline and allow firms to raise prices by an extra three-quarters of a percentage point between now and Oct. 1.
The six-member panel had suggested that the price guideline be liberalized to allow companies to finance higher pay increases that were authorized when the administration relaxed its wage guideline late last year.
However, in a letter to the price committee, White House anti-inflation adviser Alfred D. Kahn expressed apprehension that easing the price guideline now might damage the administrations's credibility and create compliance problems.
Instead, Kahn said the Concil on Wage and Price Stability would be "very receptive" to appeals from individual companies that were being pinched by the new, liberalized pay standard.
The developments came as, separately, the full House Banking Committee overrode a recommendation by one of its subcommittee and granted President Carter's request to triple the size and scope of the wage-price council.
The action came on a key party-line vote of 22 to 21 after Democrats became angered over efforts by some Republicans to upset a bipartisan agreement that would have backed the subcommittee's rejection of Carter's request.
The committee also rejected, by a resounding 32-to-7 vote, a proposal by liberals to give Carter stanby authority to impose wage-price controls -- a move that is opposed by the president but backed by Sen. Edward M. Kennedy (D-Mass).
Yesterday's action placed the House panel in line with its Senate counterpart in approving Carter's request to triple the size of the wageprice council -- a proposal the president unveiled as part of his March 14 inflation package.
The measure would increase the council's budget from the current $8.4 million to $13.7 million in fiscal 1980 and $25 million in fiscal 1981. The money would finance a tripling of the staff to 657 persons from the present 233.
Carter had sought to beef up the wage-price council's monitoring efforts in an attempt to bolster the administration's image as a serious inflation-fighter. The guidelines effort hasn't been popular on Capitol Hill.
The advisory panel's recommendation to change the price guideline would have increased the price standard to allow a 7.5 percent annual rate of increase between now and Oct. 1, up from 6.75 percent now.
The committee had urged the relaxation after the Pay Advisory Committee succeeded in liberalizing the wage guideline to permit pay hikes ranging from 7.5 percent to 9.5 percent for the current year, up from 7 percent before. f