The Democratic majority on the congressional Joint Economic Committee, in its annual report called for tough legislation empowering the government to require advance notice of wage and price increases and to delay those it judges inflationary.
That form of mandatory price wage controls, and all nonvoluntary measures to stablize wages and prices, have been repeatedly rejected by the Carter administration.
But the JEC majority predicted that iflation will gain force in 1977, citing the recent increase in natural gas prices, prospective food price increases, "and the fact that a number of major collective bargaining agreements will be negotiated this year."
Although a minority report rejected the majority conclusions on mandatory controls, a statement of agreement between the Democrats and Republicans on the committee called for business "restraint" in pricing decisions, saying "the recent behavior of industrial prices is not dictated in most cases by tight markets."
The Democratic majority also recommended that president Carter's budget for fiscal 1973 be increased by $5 million to create jobs, and that taxes be reduced by an additional $6 billion.
Those two steps, over and above Carter's proposed stimulus package, would boost the budget deficit from $57.7 billion to about $69 billion.
These recommendations run counter to the expressed policy wishes of the spokesmen for the President have consistently argued that any substantial increase in the federal deficit would be inflationary and weaken business confidence.
The JEC argues that an extra $11 billion of fiscal thrust will be necessary to allow the private economy to grow rapidly in 1978.
A collateral reason tax reduction, the report says, could be achieved by going beyond mere extension of the current personel income tax burden after the expiration of this year's large tax rebate.
The suggested tax reduction, the report says, could be achieved by going beyond mere extension of the current personal tax credits. The credits could be enlarged, or rates reduced.
Sens. Lloyd Bentsen (D. Tex) and William proxmire (D. Wis.) dissociated themselves from the recommendations that would add $11 billion to the fiscal 1978 deficit.
The separate minority report, while not dealing specifically with the tax reduction recommendations of the majority, in general condemned the Carter fiscal package and its emphasis on temporary tax rebates. The Republican members urged a permanent tax cut instead.
The extra spending for jobs would provide an unallocated fund of $5 billion in addition to the anti-recession spending increases provided in the Carter budget.
The majority said that the extra jobs fund would provide a necessary "flexibility," without which an economic growth target of 6 to 7 per cent for 1978 was not likely to be achieved.
Rep. Richard Bolling (D-Mo.), chairman of the JEC, praised the Carter administration for producing "a good program (that) will do much good for the economy "But he said the JEC proposals "would make it even better."
In advocating a much stronger wage-price stablization policy, the majority said that the first step should be to strengthen the existing Council on Wage and Price Stability by giving it authority to require advance notice of wage and price increases, and to delay such increases for modest periods of time. "The second step is for the President to put the full weight of his office behind the council," the report said.
Sen. Edward M. Kennedy (D-Mass) dissented, arguing that the first step should be the development of essentially voluntary, cooperative measures among business, labor and the government, short of mandatory controls like prenotification and delay.Voluntary measures are more in keeping with the Carter administration thinking at the moment.
The majority contended that "the public is entitled to know the facts and consequences" of proposed wage and price increases. In addition, the report said that the executive branch must do a better job of managing procurement, and that Congress should take steps to assess the economic effects of legislation before enacting it.
In assessing longer-range economic problems, the report took issue with "perhaps the majority of private economists" who have rejected the "interim" definition of full employment as 4 per cent unemployment.
Those who say a target of 4 per cent unemployment might touch off inflation have reached their conclusions "on the basis of highly fragmentary evidence," the report said. "We decline to join the chorus of those who have concluded that the full employment rate is necessarily higher than it was 10 to 20 years ago."
The report also attacked the conclusion of the final report of the Ford administration that in estimating potential gross national product, a 4.9 per cent unemployment rate rather than a 4 per cent rate be used.