The White House is considering scrapping its current wage-price guidelines program next year and replacing it with a controversial new plan to give federal tax breaks to workers and firms who hold wage and price increases down.
The options are now under review by top White House economic advisers, with plans to draft a formal proposal for the president after the November election. Specifics would be sent to Congress in January if Carter is re-elected.
Sources said the move may be proffered as part of a board "social contract" between Carter and business and labor leaders that includes a shift away from numerical guidelines and an intensified crackdown on government regulations considered to be inflationary.
However, strategists said such details still are not decided.
Carter already has proposed, as part of his new industrial policy, a campanion AFL-CIO plan for a national committee to monitor the economy, possible with power to waive environmental restrictions and other "bottlenecks" to industrial growth.
The White House moved this year to establish a series of tripartite committees -- comprised of representatives of government, labor and management -- to work out problems in the auto, steel and construction industries.
The push to develop new tax incentives to encourage wage and price moderation is being led by Charles L. Schultze, chairman of the president's Council of Economic Advisers. Other top presidential economic aides reportedly are split over the proposal.
Strategists cite two reasons for the shift: First, mounting disenchantment with the present program by business and labor and the possibility that the current restraints cause distortions in the economy if continued too long.
Second, the feeling among some key Carter economic advisers -- notably Shultze -- that the government must bolster its voluntary wage-price efforts somehow if inflation is to be wound down.
The current wage-price program has been under attack recently by union and corporate leaders, with both sides urging the president privately to eliminate the existing plan.
Earlier this summer, the Business Roundtable, a onetime supporter of the current guidelines plan, called formally for dismantling the program. And labor leaders have made clear they want the numerical guidelines phased out quickly.
Largely because of such opposition, the wage-price council announced last week it would not issue new, tighter guidelines now, as had been scheduled, but would continue the current standards intact for the rest of this year.
R. Robert Russell, director of the wage-price council, told the congressional Joint Economic Committee yesterday that no decisions have been made yet on what to do about the program in January.
"I agree with Charlie Schultze that either this portion has to be fortified or we have to find some viable alternative to it," Russell said. However, he declined to say definitely what the administration might do.
Republican presidential candidate Ronald Reagan already has said he will scrap the guidelines program completely if he is elected president in November. Both Reagan and Carter have said they are opposed to wage-price controls.
Details of the tax plan now under discussion were not yet available yesterday. One plan involving business would set standards for profit margins and impose a tax to take away any earnings that exceed them.
Other elements now being discussed as possible companion proposals would:
Scrap the current economywide numerical pay and price standards and substitute more general, separate wage-price "targets" on an industry-by-industry basis -- hand-in-hand with Carter's new industrial policy.
Take the existing Council on Wage and Price Stability away from its guidelines enforcement role and use the agency instead to police government regulations that the White House decides are exacerbating inflation.
Work out a broad "social contract" involving the government, business and labor, much along the lines of the "national accord" that the White House signed with AFL-CIO leaders a year ago.
The tax incentives now being discussed are built around an idea known as a tax-based incomes policy (TIP) that would allow workers a tax break on their federal income taxes if their wage demands fell within federally set targets.
The administration proposed a similar provision in the form of a "real wage insurance" plan in 1979, but business and labor opposition turned out to be so heavy that Congress never considered the plan formally.
However, administration sources say they believe the earlier objections to a TIP-style plan are fading. The idea recently drew support from the Federal Reserve Board Chairman Paul A. Volcker.
Officials say whether the administration actually goes ahead and proposes the tax-incentive plan, if Carter reelected, will depend heavily on how it is received by key lawmakers in private talks after the election is over.