AFTER PRESIDENT CARTER gets home tonight from his trip abroad, he's going to have to decide quickly what to do about the ominously rising inflation rate. If, that is, he intends to do anything serious. Last January, in his economic message, Mr. Carter outlined in rather vague and sketchy terms the beginnings of an attempt to push down the American inflation rate. Since then, the administration's record on inflation has been notable more for the exceptions than for the policy. The administration has newly discovered the old political truth that the world is made up exclusively of people who think that they are special cases. Late last year the inflation rate was a little over 6 percent. Currently it seems to have worked back up to a little over 7 percent.
The sad thing about it is that the policy remains, in principle, the right one. It is the strategy of gradual deceleration, to use Mr. Carter's word. He is not thinking about mandatory wage and price controls, a very dangerous approach. He is not inclined toward hard-and-fast guidelines, which always tend to become floors rather than ceilings for increases. The president recognizes that it will take time to work the inflation rate down, and the present target is a reduction of half a percentage point a year.
But now it's moving the other way, and the reasons are related to this administration's style of politics. It keeps getting itself into embarrassing jams, and it keeps trying to buy its way out by trading off pieces of the inflation strategy. The administration wrings its hands and explains how difficult its political position is on this or that passing question, and the first thing you know there's another special exception to the deceleration plan. Consider the most recent example, the steel price increase. Then consider the next one, the coming collision over federal pay raises.
By the time the coal miners' strike started last December, the administration had already accepted the idea that the wage settlement was going to be extremely large. It turned out to be 39 percent over three years, wildly out of line with deceleration strategy. But the miners were a special case.
Then one special case began to breed others. In its frantic efforts last month to bring the strike to a close, the White House leaned hard on the coal companies, and on the steel companies that own coal companies, to give in on certain key points. They gave in - but there is always a price for that kind of cooperation. Last week, even before all of the miners were back at work, long before any newly mined coal had actually moved, U.S. Steel announced a price increase of $10.50 a ton. That was on top of the industry's previous large increase last Feb. 1.
The new increase was answered with the ritual squawk from the White House. Economists there said that the coal settlement justified, at most, an increase of $4 a ton. hardly had those words appeared when the other big steel companies, led by Bethlehem, announced that they were going to raise their prices by the modest figure of $5.50 a ton. The White House, which doesn't have much stomach for fights, and which is indebted to the companies for their cooperation in ending the coal strike, managed to say that it was "pleased" at the lower figure. In other words, Mr. Carter accepts a price increase that runs one-third higher than the passed-through cost of the coal settlement.
That episode is an extremely clear example of the nature of American inflation today. It is the effort of some to catch up, and by others to move up their prices quickly in anticipation of it. You could call the jump in steel prices a lot of things - but not deceleration.
Meanwhile, in the next major case coming toward Mr. Carter, the federal government's employees are drumming up their very considerable political support for their next pay raise. Wages in the private economy have been going up around 8 percent a year, and the federal workers want exactly the same increment. Why should they get less? We could argue that there are important benefits attached to federal employment. One is the great stability and security of those jobs. Another is the exemption from Social Security taxation. But the main point here is that if everybody insists on catching up continuously with inflation - and perhaps getting a little more along the way, for safety's sake, like the steel companies - inflation is not going to wind down. To the contrary, it is going to wind up - precisely as it is now beginning to do.