The Carter administration denied yesterday that its plans to use a broad price guideline formula for the new wage-price program the president will announce Tuesday amounts to a retreat from the 5.75 percent price guidepost officials had been touting earlier.
However, this was immediately disputed by organized labor. A key labor official said Charles L. Schultze, chairman of the Council of Economic Advisers, and Labor Secretary Ray Marshall both cited the 5.75 percent figure as the guideline as late as last Thursday.
Moreover, other sources, from representatives of business and labor groups to others who have been briefed by top administration officials in recent weeks, confirmed they came away from these sessions with the clear impression that the 5.75 percent guideline was to stay.
The controversy came after The Washington Post reported yesterday that the adminstration had abandoned the 5.75 percent price guideline it had planned for the new wage-price program, and substituted a complex formula that officials said would allow prices to rise 6 to 6.5 percent.
The report said officials now planned instead simply to ask businesses to hold price increases to half a percentage point below the company's 1976-77 average price boost, with a bigger cutback sought if wages slow markedly, and less sought from firms with soaring costs.
As described to The post, companies which face sharp increases in costs over the year could raise prices enought to cover those higher costs, but they would be asked to hold their profit margins steady.
By contrast, the 7 percent wage guideline planned earlier would remain intact.
Key administration officials confirmed yesterday the accuracy of the description of the general price guideline, but insisted that the shift away from the 5.75 percent guidepost they had cited earlier was not an abandonment, but merely a "reinterpretation" of the previous rule.
One official asserted that the White House never had intended to propose a firm 5.75 percent price guideline, but only the more general formula seeking a "deceleration" of price increases from the 1976-77 pace. That formula is the same Carter has used since last April.
At the same time, however, key officials conceded that the administration made no effort to "correct" widespread reports over the past six weeks that the 5.75 percent figure would be the price guideline. And key administration officials have confirmed the figure on several occasions.
Moreover, the officials said President Carter does not plan to [WORD ILLEGIBLE] 5.75 percent figure as his price guideline when he formally announced the wage-price program on Tuesday. [WORD ILLEGIBLE] said Carter will refer instead [WORD ILLEGIBLE] percent limit or wages and the general "deceleration" formula for [WORD ILLEGIBLE]
The apparent bungling in the administration's presentation of the program is expected to pose some problems with organized labor. [WORD ILLEGIBLE] leaders have warned they will not co-operate with the wage-price effort unless prices and wages are treated at an "even-handed" fashion.
However, some analysts suggested yesterday the change in emphasis appeared to confirm labor's fears that the administration planned to increase a more rigid target on wages than the prices, despite officials' assertion that the 7 percent wage guideline would have some leeway.
And a key labor official told reporters several union leaders were fearing the White House may be preparing to tolerate a higher inflation rate than indicated earlier, without much companion adjustments in the 7 percent wage guideline for workers.
The decision to "reinterpret" and "clarify" the price guideline, with the 5.75 percent figure, apparently came after one top presidential nomic policymaker explained that the standard erroneoulsy in a briefing with businessmen, saying it would appear at each product line.
Although other officials later tried to correct the misimpression, the businessmen emerged confused over what was meant. One planner said it [WORD ILLEGIBLE] then that White House officials began to realize they had not thought out how they would [TEXT OMITTED FROM SOURCE]