President Carter, calling on business and labor to follow the federal example in fighting inflation, said yesterday he will freeze executive salaries in the government and seek to limit this year's general pay raise for other workers to about 5.5 percent.
In speech to the American Society of Newspaper Editors, the president threatened widespread use of his veto power against what he considers inflationary spending measures. He specified farm subsidies, tax credits for tuition, highway and urban transit programs, postal service financial and the defense budget.
But, as in the past, Carter rejected at the outset of his speech the use of mandatory wage and price controls to fight inflation, and he pledged not to let unemployment rise while attempting to control wages and prices.
Instead, the president renewed his call for compliance with the administration's anti-inflation program a voluntary effort announced in January asking business and labor to hold this year's wage and price increases below 1976-77 levels. He announced a series of steps the federal government will take and said he expects business and labor to match the federal example.
"Inflation cannot be solved by placing the burden of fighting it only on a few." he said.
In addition to seeking a cap on a federal pay raise and freezing executive salaries, Carter:
Announced the appointment of special trade representative Robert S. Strauss as a special counsel on inflation, the latest example of Strauss' growing power in the administration.
Said federal deparments will report to him in 30 days on steps to increased timber production on federal, state and private lands in an effort to hold down lumber prices and housing costs.
Called on Congress to enact airline fare deregulation and hospital cost containment which he described as the two most important pieces of pending legislation in the inflation fight.
Asked the nation's governors and mayors, in letters sent from the White House earlier, to hold down pay raises for their employes and to consider lowering sales taxes.
Said federal agencies will tailor their procurement policies to the anti-inflation campaign, reducing or eliminating the purchase of goods and services for which prices are rising rapidly.
Once again called for enactment of his energy legislation and threatened administrative action - most likely a $5-a-barrel oil tariff - if Congress does not act.
"One way or the other, oil imports must be reduced," he said.
The president's audience at the Washington Hilton Hotel applauded only once, at the end of the speech. Reaction was predictable, with business leaders generally praising Carter's rejection of wage and price controls and offcials of government employe unions denouncing the pay raise lid.
"We are encouraged by President [TEXT OMITTED FROM SOURCE] tration is ready to follow anti-inflationary policies in the management of the federal government," the influential Business Roundable said in a statement.
But Jerry Wurf, President of the American Federation of State, County and Municipal Employes, called Carter's pay lid proposal "sheer nonsense . . . Denying federal employes a small portion of their pay increase is silly symbolism that will have no impact on inflation."
The speech was a politically important one for Carter on an issue that some advisers believe poses his greatest threat. Administration economists expect the inflation rate to be between 6 and 7 percent this year and fear a further escalation compounding the president's numerous political problems.
But rejecting wage and price controls limits Carter to holding down federal spending while exhorting business and labor to follow his example.
The heaviest burden from the actions announced yesterday will fall on federal employes.
The pay freeze Carter announced, although it will affect only slightly more than 2,000 of the 1.4 million federal civilian workers, will cap the salaries, of the administration's top officials.
Moreover, White House officials said the president is expected to ask members of Congress to freeze their salaries and those of federal judges as part of the effort.
Although Carter can recommend that other federal workers be given only a 5.5 percent pay raise next fall, he cannot impose such a limit. Either chamber of Congress is empowered to reject the president's any proposals. Under normal procedures, federal workers could expected about a 6.5 percent raise in the fall.
In his speech, Carter made clear that he expects these example to be followed. He all but called on business and labor leaders to freeze their own salaries.
"Just as I will freeze the pay of the top executives in the federal government, the American people will expect similar restraint from the leaders of American business and labor," he said.
"What he was saying " White House press secretary Jody Powell said later, "is that if they (business and labor leaders) fail to do that they will owe the country an explanation."
Quoting columnist Walter Lippman on the eve of World War II that "there is nothing for nothing any longer," Carter's central message was a call for sacrifice.
"Let me be blunt about this point," he said. "I am asking American workers to follow the example of federal workers and accept a lower rate of wage increase. In return, they have a right to expect a comparable restraint in prices increased for the goods and services they buy. Our national interable increases in prices and wages."
Following the speech, the president answered questions from a panel of the editors, reiterating his threat to veto the farm nill and any version of a tuition tax credit.
He said that even if inflation continued to escalate he would reject wage and price controls unless there were a "national emergency, like an all-out war, some tragedy of that kind where normal economic processes would not be at work.