Judge Barrington D. Parker's decision yesterday invalidating President Carter's use of sanctions in the wage-price guidelines plan leaves the White House with essentially no more options for controlling inflation.
While publicly insisting that the program can go on without Carter's ability to deny federal contracts to violators, administration officials conde privately they are fresh out of ideas on what to do next.
They also fear the possibility that the ruling may open the floodgates for organized labor to seek big new wage increases despite the president's appeal for moderation.
With a few notable exceptions, unions generally have been restraining their demands so far this year. But with prices rising at approximately a 14 percent annual rate in the first four months of this year, union leaders are under pressure to step up their demands.
Parker's decision may not be as devastating as some of the administration's previous rhetoric might imply.
Anti-inflation chief Alfred E. Kahn has often warned that if the wage-price guidelines fail, the only choices left are a deliberate recession or mandatory wage-price controls. But the president has rejected both.
What the ruling actually does, however, is to leave the administration with nothing but the slow approach of prolonged sluggish growth to dampen inflation on which Carter had embarked before the guideliness were established.
And with the presidential elections just around the corner, that's not a campaign plank on which an incumbent chief executive would want to run. Carter soon could find himself under new pressures to come up with a new program.
The administration no doubt will stand firm on continuing the guidelines program intact on a purely "voluntary" basis. Wage-price council chief Barry P. Bosworth effectively said as much to reporters yesterday.
But the White House has little idea of where it wants to go from here, beyond appealing Parker's ruling to a higher court. That appeals process could take months.
Until yesterday's decision came down, Carter's top policymakers were reluctant even to discuss what to do if the ruling were adverse. Officials feared any "contingency" plans inevitably would leak out and become selffulfilling.
Essentially, however, the administration has three options; continue the program in its crippled state, allow it to die quietly, or seek new legislation from Congress granting the authority Parker said does not exist.
The last of these options clearly is the most risky from a tactical view point: As the lawmakers have shown so far, they hardly are shy about bucking the administration. Carter could get more congressional meddling than aid.
But the others aren't a great deal more appetizing. Without the threat of a federal contract cutoff, the program loses more of its dwindling clout over big labor and big business. The first side to break could start a stampede.
Admittedly, some onlookers may argue that the loss of the guidelines won't really hurt the anti-inflation fight. The standards weren't very effective in holding prices in check. Carter's main anti-inflation tool was budgetary restraint.
But the guidelines program helped serve as a cover to give the administration more leeway to pursue its new austerity policies - and in that sense it may be missed.
Carter launched his guidelines program last October not just because he thought it could help shave the inflation rate but because he was under mounting demands that he "do something" to combat wage-price pressures.
Ironically, the Parker decision comes just as the administration is beginning to see some results from its earlier tightening of fiscal and monetary policy. The latest economic indicators show the economy is slowing from its earlier spree.
The major uncertainty now is whether Carter will have enough time for that slow-growth policy to work - if indeed it can still do the job in the wake of the past six months' sharp food and fuel price increases.
With the election campaign scheduled to begin in earnest eight or nine months from now, there's no time for change of policy and precious little room for the budget-tightening to have much impact on inflation.
When the guidelines program was being formulated last year, some of Carter's advisers expressed apprehension that the wage-price plan would become so visible that it would repalce Carter's budget-tightening in the public eye.
Their fear was that if that happened, if the guidelines program appeared to be flagging, then workers and businessmen might conclude the entire anti-inflation effort had failed and the country might embark on a new inflationary binge.
In a sense, that still is the biggest danger now, in the wake of Parker's decision. If the wage-price program can't be sustained, the administration may be under pressure to come up with a replacement.