Four days after launching his new anti-inflation program, President Carter is preparing to take actions that probably will raise prices in the two most inflationary sectors of the economy - food and fuel.
Sometime soon, the president is expected to sign legislation to deregulate natural gas prices by 1985. He's also facing a decision on how much to ask farmers to cut back on feed-grain production.
It's not all that clear that Carter has much leeway on the natural gas bill, which he fought for in the closing weeks of Congress. While the measure is opposed by some consumer groups, some economists say it won't raise prices all that much. And it may help free up supplies.
But the feed-grain issue is another question, and it has sparked vigorous debate within the administration. Carter's decision could help set the tone for his program.
Together, the food-fuel issues underscore the realities of the anti-inflation effort the president announced Tuesday.
It's clear that, despite Carter's program, the economy remains vulnerable to price increases that the White House can't avert and the wage-price effort can't deal with.
At the same time, the two issues reinforce warnings by economists that Carter is going to have to be far tougher than he has been about resisting government actions that exacerbate inflation.
Carter was widely criticized in 1977 as giving in to inflation-worsening legislation such as sugar-price measures and a big minimum wage hike. A decision to ask formers to keep land out of production could renew that criticism.
Worries about the inflationary impact of the natural gas bill may be overdone. Deregulation will affect newly discovered gas, and will be slow in coming anyway. And prices would have risen even if the bill hadn't passed, although not by as much.
Supporters of the bill have argued that it may avert further price surges by ending the split market that now keeps so much of the nation's gas supplies in the gas-producing states. As such, it could help hold down energy costs all around. But that won't be clear immediately.
The feed-grain debate is more complicated. The question is, should the government prod farmers to cut production - in hopes of averting big price swings over the long run - at the risk of raising prices now?
The decision involves a proposal to increase the proportion of land a farmer must set aside - take out of production - to qualify for subsidies. Last year, the minimum was 10 percent. Agriculture officials want to make it 15 percent.
Proponents of the increase concede that raising the set-aside will bolster corn prices - in opposition to the goals of the wage-price program - but they argue it will help avert shortages in coming years by keeping farmers from going bankrupt.
But administration officials are divided over whether it's necessary to keep land out of production next year to prevent farmers from getting caught in a squeeze. Carter promised Tuesday to monitor farm prices closely in his new program.
Critics caution that if Carter agrees to boost set-asides from their current levels he will be eroding the credibility of his new program. The White House already approved a 20 percent set-aside for wheat farmers in August.
The decisions involving food and energy provide a dramatic example of the sort of flaws labor leaders are finding in a key element of Carter's new plan - his proposal to offer workers a tax rebate as inflation insurance.
Under Carter's proposal the government would underwrite workers against inflation by making up the difference between their wage increases and inflation if price-boosts exceeded 7 per cent.
Key White House officials have argued that the plan is "self-correcting." If a lot of workers "sign up" for the plan, wages will slow down and prices will follow suit. If most workers balk, the government won't owe much.
But critics have cautioned that the arrangement could be in jeopardy if inflation accelerated because of other factors, such as food and energy price increases. No matter how many workers held their wage-demands down, inflation would rise.
There's no saying for sure yet how Carter finally will decide on either of these issues. He's expected to sign the natural gas bill. The set-aside question must be decided by Nov. 15, but Carter could act as soon as Monday.
In any case, however, the issues show how rapidly the administration is likely to run into a testing-point in its new war on inflation. The ink hasn't even dried on the anti-inflation plan, and already there's danger of a smudge.