Increased consumer costs for heating as a result of the national cold spell are approximately $2 billion and could run as high as $5 billion, Charles L. Schultze, President Carter's chief economic adviser, told a Cabinet meeting yesterday.
The higher costs are a result of rising prices for an increasing volume of energy needed because of the cold.
The upper end of therange - $5 billion - would result, an aide to Schultze said, "only if there is a very, very long cold spell."
Although the increased fuel costs will reduce by that much the effectiveness of Carter's proposed $31.2 billion economic stimulus package, White HOuse sources said there are no plans as yet to increase the amount. "It will take two months to push what we've proposed through Congress," an economic aide said, "so we have plenty of time to add to the package later if we have to."
Schaltze, chairman of the Council of Economic Advisers, compared the weather's impact to "a federal excise tax" in a report to the Cabinet yesterday, according to presidential aide Jack Watson.
Schultze later told reporters that "at this stage, the package still looks right, but obviously we will have to keep (it) flexible."
Labor Secretary F. Ray Marshall estimated that as of the end of last week there were 450,000 additional unemployed because of the weather, but it is difficult to translate this into an unemployment percentage because some people lost jobs for days or only hours.
Meanwhile, Carter said yesterday that he would soon announce "a substantial strengthening" of the federal government's efforts to reduce inflation through voluntary wage and price restraint.
In a formal message to Congress outlining his $31.2 billion economic stimulus program, the President said theat the anti-inflation effort would be placed in the hands of a stronger Council on Wage and Price Stability, the existing machinery for monitoring wage and price developments.
The principal new mechanism mentioned by Carter was "prior notice" by business and labor, on a voluntary basis, "of important wage and price increase."
Carter he said he believe business and labor "will be willing to cooperate" in the voluntary effort, and that meetings among his economic advisers and business and labor representatives "will begin within the next few months."
Asked at a White House briefing what would happen if the voluntary effort fails, Schultze said, "We might want to look at other measures." But he hastened to add that neither wageprice controls nor standby controls would be considered.
Schultze was asked how the administration would deal with advance notice of a wage or price increase it thought too large, and which is not withdrawn. "You talk," he said. "Talk is not an unimportant part of the President's program."
The message contained few details of the proposed new wage-price policy, but is was learned that the Carter plan involves the following:
A request to business and labor for 30 days' notice to CWPS of price and wage increase.
An enlargement of the CWPS staff with "better quality" personnel and a new executive director who will command the confidence of business and labor.
An expanded effort by CWPS to deal with wages, especially by providing advance guidance of what actual wage patterns have been in the recent past. This would provide a basis for evaluating union demands for "catch-up" increases.
Carter's proposals, an administration official said, "are an effort to get people in and out of the government to listen to CWPS."
Clearly, the beefed-up voluntary effort will be the centerpiece of the administration's antiinflation effort, inasmuch as it has committed itself to stay away from formal wage-price controls, or even standby controls.
CWPS can be strengthened, according to infromed sources, without legislation, although there is a possibility that Carter may ask Congress to improve existing subpoena powers to make them wholly effective.
As it stands, if a company resists a CWPS subpoena by taking the issue to court, the information needed can be withheld long enough to make its use ineffective. This happens now in about 10 per cent of the cases, according to a government spokesman.
Officials say they prefer voluntary rather than mandatory prenotification of price and wage increase "because when they don't cooperate, it's obvious." Moreover, a voluntary system prevents the agency from being inundated with an avalanche of paper covering all wage-price decisions.
"There are two parts to this whole effort," one official said."First, we want to try to decelerate the ongoing inflation, and dealing with wages is an important part of that. And second, we've got to make sure that there will be no future shocks to touch things off again."