President Carter last night voiced fears that continued talk of a possible recession might turn into "a self-fulfilling prophecy," and called on top business leaders to help counter apprehensions about a slump and to comply with his new wage-price guidelines.
In a late-evening speech to The Business Council, an organization of 100 corporate executives, Carter insisted that, despite glum forecasts by some economists, "we do not anticipate a recession next year" and "we don't see any" signs that one is imminent.
He also made repeated appeals to the business leaders to "give me your pledge of compliance" under the new anti-inflation program. "There's no excuse now to delay," he said, "and it would mean a great deal to me and to my influence" if they would co-operate.
The president spoke after officials of the Council on Wage and Price Stability announced "significant" changes in the wage-price guidelines the administration published in October, but insisted they would not make much difference in the program's overall impact. (Story on Page D1.)
Carter also made these points last night:
He confirmed that top economic policymakers are considering "slight modifications" in the minimum wage law that would propose a reduced minimum wage for teenagers, but said these have not reached his desk yet, and that he does not plan to seek a delay in January's rise in the minimum wage.
He told the businessmen his economic policy has been "much more consistent" over the past few months, and said Treasury Secretary W. Michael Blumenthal is his spokesman in economic issue, while wage price director Alfred E. Kahn is his spokesman on inflation matters.
He denied reports that the administration is about to abolish the Commerce Department. Carter said he may decide on "shifting major programs form one department to another," but said "I don't have any plans to eliminate the department."
Carter's warning that continued talk of a coming recession might prompt businesses and consumers to retrench and thus guarantee one has been expressed privately by several top administration policymakers. The White House has been predicting slower growth, but no recession.
The president said last night that "we don't see any of the basic imbalances that precede a recession," such as a large buildup of business inventories, a housing slump or a cutback in retail sales. He said the forecasts of a slump "could become a self-fullfilling prophecy" before long.
The changes the administration announced essentially will allow unions - particularly the Teamsters - to negotiate fatter wage increases despite sharply rising fringe benefit costs, and would limit the ability of firms to use a loophole in the price guideline to reap extra profits.
Kahn told reporters that the liberalized standards effectively would boost the wage guideline by 0.1 or 0.2 of a percentage point above the previous 7 percent limit, and probably would be offset by the companion tightening of the price guideline.
Kahn said that, in the case of the Teamsters' negotiations, the union could come in with a 7.3 per cent settlement and remain within the guidelines. And some analysts suggested that the increase could mean even more for the Teamsters and other unions.
Reaction from business and labor was mixed. AFL-CIO President George Meany criticized the changes as "not logical," and warned that they would "only create confusion at the collective bargaining table." Meany said the administration had done "nothing to eliminate the inequities" in the program.
Businesses generally praised the more liberal wage guideline, but Jack Carlson, economist for the U. S. Chamber of Commerce, complained that the changes could put some companies in a squeeze by countenancing higher overall labor costs while at the same time limiting their ability to increase profits.
The announcement came as the White House won an initial skirmish in the wage-price war as the Chicago Board of Aldermen, which had violated the guildelines by voting itself a hefty salery boost, agreed formally to pare the increase in line with administration wishes.
Although Chicago officials earlier had defended the increases as "catch-up" pay, the board agreed to a request by Kahn to limit members' salaries to $22,000 a year rather than the $28,000 the group had agreed to before. The aldermen had been getting $17,500 a year.
Kahn yesterday praised the Chicago aldermen for "setting a kind of example" in the anti-inflation fight. Although the first year's increase still will amount to a sizable 3u percent, the cutbacks will hold the rise in city managerial salaries to 5 percent - within the 7 percent guideline.
Meanwhile, a group of 13 members of Congress headed by Rep. Clarence J. Brown (R-Ohio), announced that they have filed a friend-of-the-court brief to support a suit by a West Coast paperworkers' union challenging the constitutionality of the new guidelines program.
Brown said in a statement that the imposition of wage-price restraints without specific legislative authority "is an unconstitutional invasion of Congress' . . . power." The case is scheduled to come up tomorrow in a court in Portland, Ore.
Kahn, in his briefing yesterday, disclosed plans for two new steps to help consumers spot wage-price violators; he said the administration soon will begin publishing lists of firms that exceed the price guidelines, and will "set up some channel" for consumer groups to obtain advice.
However, he backed away from his previous call for outright consumer boycotts of campanies that violate the guidelines, saying he was worried about the term boycott and "uncertain about what the proper posture of the government is."
President Carter Tuesday threw cold water on the boycott notion.
The changes announced yesterday would not formally alter the basic guidelines announced in October for wage and price increases. Unions still will be asked to keep contract settlements below 7 percent, and companies will be urged to hold price hikes half a percentage point below 1976-77 increases.
However, they would significantly alter the way individual wage and price increases are measured to determine whether they fall within the guidelines-effectively lineralizing the wage standard while tightening up on the price rules.
Among the key changes:
Unions will be allowed to figure the size of the settlements they negotiate without including the cost of maintaining previously won pension benefits-an important factor in the Teamsters' case, where federal requirements are likely to send pension costs soaring.
Increases in the cost of mainatining existing health benefits-for example, a large jump in health-insurance premiums-would be counted as part of the wage settlement until they reached a level 7 percent above the previous year's. Costs beyond that would be exempt.
Comapnies that find themselves unable to meet the basic price guideline still may choose, as an alternative, to keep their profit margins steady, but now have to meet an additional test as well, designed to prevent firms which suffer big cost increases from reaping profits on markups.
The change essentially limits firms to holding the rise in their profits to 6.5 percent above the previous year's level plus the percentage increase they enjoyed in sales volume. A firm that raised prices 6 percent and saw sales jump 14 percent would rate a 20-percent profit gain.
The administration's announcement came a day before the Teamsters union and trucking industry leaders are scheduled to exchange initial proposals for a new contract. The negotiations are expected to provide the first major test for the new guidelines program.
Kahn said yesterday that the administration had been working closely with the Teamsters, but said it was too early to make any predictions, and that "there have been no commitments, either by us or by the Teamsters" in advance.