President Carter yesterday gave the go-ahead to his widely touted wage-price guidelines program, designed to establish voluntary limits of 7 percent for wage increases and 5.75 percent for price boosts, to be enforced by a variety of government sanctions.
In a 2 1/2-hour meeting with his economic advisers, Carter agreed tentatively to make the plan public in a nationally televised speech Tuesday evening, and to increase the staff of the Council on Wage and Price Stability to monitor compliance.
Administration officials briefed leaders of the AFL-CIO and the Teamsters union on the program for more than an hour yesterday, to try to win their support before the plan is made public. Insiders described the labor leaders' reaction as "guarded."
At the same time, the Council on Wage and Price Stability, preparing for the new program, began efforts to draft economists and analysts from other key federal agencies to help get the plan off the ground. Some were ordered to report as early as this morning.
Meanwhile, these new details of the plan emerged:
The use of government sanctions to enforce the new guidelines - by withholding federal purchases or construction contracts, deregulating some industries, and allowing more imports - will be far more extensive than reports so far have indicated, according to officials. Carter has ordered planners to set up new procedures for enforcing the guidelines, including day-by-day monitoring by the wage-price council, formal involvement by inflation-fighters in drafting new regulations, and an expanded White House agency for meting out government sanctions.
The wage guidelines are expected to have some room for exceptions, to avoid hamstringing workers unfairly. Carter yesterday approved a "low-wage exemption" that will remove any restrictions on pay hikes for workers earning less than $3 to $4 an hour. And, the administration has agreed not to apply the new guidelines to contracts that are inexistence when the program is announced next Tuesday. The wage limit also will allow extra increases to cover employer taxes and other government-mandated costs.
The program will include at least a partial freeze on government hiring - a step the administration has been considering for several months. Agencies will be allowed to replace a handful of key workers, but the federal work force essentially will be held stable.
The developments came as, separately, the administration received a setback as a group of 19 labor and environmental groups wrote to Carter to protest a White House plan to get inflation-fighting involved early in decision-making of new federal regulations.
Reacting to an article in yesterday's Washington Post, the group charged that Carter seemed to be trying to limit the total number of new regulations that could be issued a year, or place a ceiling on the total they could add to costs. White House officials deny those allegations.
In the anti-inflation plan, the 7 percent guideline would apply to the average pay raise for any one company, including union and nonunion wages, executive pay, cost-of-living increases, and fringe benefits. For multiyear contracts, the various years' increases would have to average 7 percent a year.
The price guideline of 5.75 percent would apply as an average for the overall economy. Officials would judge a price rise by an individual company on the basis of whether the firm had slowed its price increases from the 1976-77 pace in line with any improvement in its labor costs.
The guidelines program, most of which was disclosed previously, has aroused considerable skepticism, both among labor and business leaders and within the administration. Some of Carter's top advisers have expressed doubt it will reduce inflation.
George Meany, president of the AFL-CIO, urged Carter last week to go to mandatory wage-price controls rather than use a voluntary approach, which he said was unlikely to work. However, officials say the president has emphatically rejected controls.
The formal wage-price guidelines program is expected to be accompanied by a concerted government effort to hold down the overall cost of federal regulations and the pledge by Carter on Tuesday to cut back on federal spending.
Top administration budgetmakers have been discussing the possibility of holding spending to $530 billion for fiscal 1980, in the budget due Jan. 1. Carter was undecided yesterday whether to pledge a ceiling on Tuesday, or simply promise to exercise restraint.
A budget ceiling of $530 billion essentially would mean that spending would increase only barely to what is needed to keep pace with inflation. That in turn would force cutbacks in a number of key spending areas, possibly defense.
To help run the new wage-price program, Carter is approving an increase in the size of the Council on Wage and Price Stability, which will grow by 100 to 200 staffers in the next several weeks. The agency has been virtually dormant since the Nixon administration.
Carter also is expected to name a new wage-price czar, to replace special trade negotiator Robert S. Strauss, 60, who has been running the administration's existing anti-inflation program. Virutally all sides agree the current effort has been a failure.
The administration has narrowed its search to one candidate, Alfred Kahn, chairman of the Civil Aeronautics Board. However, as of late yesterday, the two sides still had some differences to work out before Kahn would agree to take the job. Kahn, 61, is an economist.
Three-part enforcement procedure Carter is setting up would include these elements:
Day-by-day monitoring of wage-price increases by the Council on Wage and Price Stability. The watch-dog agency would be given new facilities and manpower to help keep tabs on major price actions and collective bargaining settlements.
A new procedure under which anti-inflation fighters, using a beefedup existing White House task force, can join in the drafting of federal regulations to force agencies to take more account of the potential cost of their actions before the rules are issued.
Actual enforcement of the gudelines would be performed by a sharply expanded bureau of the president's Office of Management and Budget, which would manage government contract and procurement policies to withhold federal business from companies or unions that do not cooperate.
As an example, if plumbers in San Francisco were to continue insisting on wage increases that exceeded the national average, the administration would declare a labor shortage in the area and cancel plans for construction would declare a labor shortage in the area and cancel plans for construction projects there until the wage demands moderatged some.
Administration officials plan to hold a series of briefings over the next few days for other bushness and labor leaders and members of Congress. Carter is scheduled to go on nationwide television at 10 p.m. Tuesday to give his address.