THE CARTER ADMINISTRATION is now divided over whether - and when - to give up its crude-oil tax idea. The tax is caught up in the administration's great internal debate over the economy. Everything keeps coming back to three basic questions:
How to reduce the consumption of foreign oil in this country;
How to reduce the inflation rate;
And what to do about the decline of the U.S. dollar on the international currency exchanges.
The decline of the dollar frightens people in Western Europe and Japan, as much for the symbolic meanings that they read into it as for the purely economic effects. The United States has attempted to reassure them by promising to take action - to diminish inflation and cut oil imports. American officials have taken that pledge so many times that the energy bill is unfortunately, taking on a peculiar importance abroad. Mr. Carter is relying on that bill to pull oil imports down to safe levels in the 1980s, but it's been stuck since last fall in that interminable Senate-House conference. Viewed from across the water, the melancholy fate of the energy bill seems to demonstrate that the United States can't (or won't) carry out its commitments on oil. That, in turn, reinforces all of the anxieties over the sinking dollar.
The Treasury Department is in charge of worrying about the dollar. The energy bill would have restrained fuel consumption by a series of taxes-making it gradually more expensive. The Treasury thinks that the time has come to give up on that part of the hill and go to a much quicker and more direct expedient - a stiff import fee on foreign oil. Taxes have to be enacted by Congress, but the Supreme Court has said that Mr. Carter has the authority to impose an import fee as a national-security measure.
On the other side of the question, the Energy Department is in charge of getting the energy bill passed. It isn't ready to abandon hope just yet. The forcast from the Energy Department is that the long quarrel over natural-gas pricing will finally be resolved in early April, shortly after Congress returns from the present recess, and a compromise on taxes can then be worked out rapidly. As a matter of constitutional principle, it is obviously a great deal better to work through Congress than to circumvent it in matters of this magnitude. But the Energy Department has consistently underestimated the difficulties of getting its bill enacted, and the approach of the November election is not making things any easier.
Mr. Carter has to decide how much more time to invest in Strategy A, the bill with its taxes, before turning to Strategy B, the presidential order imposing import fees on oil. Either the tax or the fee will be inflationary, of course. It's an interesting little puzzle, isn't it?
To work out a solution, you have to start by deciding which of the three issues - oil imports, inflation, the dollar - is most urgently important. The priority, we believe, necessarily goes to oil. That is the key to the rest of it, and too much time has already been squandered. If the bill has not been passed by the end of April, Mr. Carter would be wise to cut his losses and go to import fees. The administration is discussing a fee of $5 a barrel on imports. That works out to 6 cents a gallon on oil products, presumably applied in several stages to avoid jolting the economy.
An inflationary effect is unavoidable. But to protect people's incomes and purchasing power, this stiff tax on oil might usefully be offset by a cut in taxes. The leading candidate is the Social Security tax, the most remorselessly regressive tax in the country. If Mr. Carter moves to protect families' incomes that way, he can properly ask for public cooperation in his campaign to hold down other prices when fuel costs go up. If he moves forcefully this spring on oil and inflation, the dollar can safely be left to take care of itself.