President Carter's voluntary anti-inflation program may not have been mortally wounded yet, but it clearly is in critical condition, even according to the assessment of top administration officials.
Some of the injuries are self-inflicted. Considerable damage was done to the public's perception of the 7 percent pay standard's fairness by the way in which the latest exception-tailor-made to fit the Teamster union demands for a big settlement-has been handled.
Some blows are being struck by others. Last week the House Budget Committee all but killed Carter's real wage insurance tax credit, an integral part of the anti-inflation program's rationale: take less in pay now and if inflation does not come down, a tax credit will ease the pain.
The effective end of real wage insurance was the coup de grace for the pay standards, in the opinion of one official of the United Auto Workers, whose contracts expire this fall. "The guidelines are now mortally wounded and may have to put to rest," he said.
By far the most serious damage to the program has come, however, from the hammer blows, month after month, of inflation running of double digit rates. Wholesale prices for finished goods for instance, rose at a 14.1 percent annual rate in the last three months. Consumer prices have not been behaving much better.
But for all the wounds, administration officials intended neither to loosen the standards nor to abandon them. They feel that they have no choice, because they have nothing else to take their place.
The administration fully expects the bad price reports to continue for another two months at the least. Given that, and the damage flowing from the public attitude toward the Teamsters negotiations, can the waning credibility of the program last until some better price news appears, probably this summer?
"I think we very definitely need a couple of good breaks to keep this thing going now," said oneinvolved official. "If we can keep the credibility on the wage side, I think we can still run it . . . but we can't keep taking these blows one after another."
Aside from the high inflation rate, the apparent stretching of the pay standard to give the Teamsters more room under its lid has been the worst recent problem. "What's happened with respect to the pay standards, at least the wayit's gotten handled publicly, right or wrong, has been damaging." conceded a Carter adviser.
"There has been some reduction in the last couple of weeks (according to polls) in people's belief that the pay standards have been kept equitable and fair and are applied equally to everybody," he said. "I guess I still feel that some of that criticism of what's happened is not justified. Some is , and certainly the whole thing wasn't handled well for a variety of reasons."
What happened was that the administration decided, in the middle of the Teamster negotiations, to allow an exception to the pay standard regarding cost-of-living adjustments, COLAs, that were "earned" during the last year of an old contract but not due to be paid until a new agreement is signed.
Some union COLAs come every three months, some are semiannual, and a few, like those of the Teamsters and the electrical workers-another big union with a negotiation coming up-are paid once a year.The rubber workers, whose contract expires this month, have a COLA at the other extreme: it is paid on the last day of the old contract.
How should these different situations be treated to apply the pay standards equitably to all unions?The issue was never raised by anyone during the period for public comment on the pay standard last fall, officials said. Not even the Teamsters brought it up in a series of meetings with administration officials at that time.
Then it came up in the current negotiations. The first response of the Council on Wage and Price Stability was that if the money was paid during a new contract, it counted against the standard. And complaints started flowing in, not just from the Teamsters, but from other unions and labor relations specialists from businesses. The message, official recall was that CWPS was not being fair.
So, to add a bit more interunion equity, an exception was added: the part of the COLA payment due to the fact that inflation was running above 6 percent would not be counted, just as it already was not counted for purposes of the standard in estimating the value of future COLA payments.
But there was no immediate announcement out of fear of upsetting the negotiations. That is what heightened the damage, according to another Carter adviser. "The story got out first from the parties and no matter how you look at it, I think the vast majority of the American people probably says, "No, it was a deal cut with the Teamsters" he said unhappily