Presidential inflation fighter Alfred Kahn charged yesterday that the new contract between Chrysler Corp. and the United Auto Workers is inflationary and said President Carter may deny federal loan guarantees to the ailing auto giant until the contract is revised.
Kahn told reporters that he will send out a notice Monday that the Chrysler contract -- which is up for ratification votes today in UAW Chrysler locals all over the country -- is in probable violaton of the anti-inflation guidelines for pay increases issued by the Council on Wage and Price Stability, which he heads.
UAW President Douglas Fraser angrily responded through an aide that Kahn should focus on "ripoffs" by big oil companies instead of threatening to withold loan guarantees that will protect the jobs of hundreds of thousands of auto workers.
Denial of the loan guarantees on grounds that the contract is too rich could have large political impact. Withholding the guarantees could put out on the street not only hundreds of thousands of Chrysler workers, but workers in many other businesses that supply the automaker with parts. President Carter will need support from workers like these in the nation's presidential primaries if he is to beat off the challenge from Sen. Edward M. Kennedy (D-Mass.).
Kahn said the Chrysler contract, like the General Motors and Ford contracts that he had previously labeled inflationary, calls for wage increases totaling 30 percent over three years not including fringe benefits. His guideline would be about 22 1/2 percent a year.
"It is outrageous that the company and the UAW have agreed on a contract that we believe almost certainly will breach our standards," Kahn asserted.
"The UAW-Chrysler contract does not remotely approach the kind of sacrifice the affected parties have got to demonstrate as a condition of being bailed out" through a $1.5 billion package of federal loan guarantees the administration has proposed to save Chrysler from bankruptcy.
Therefore, said Kahn, "either the loan guarantee should not be authorized" by Congress or should not be "actually extended" unless the new contract is made less inflationary.
He said he has discussed the matter with the president and Secretary of the Treasury G. William Miller. He doesn't believe they would favor delaying the legislation allowing the $1.5 billion guarantee: they may withhold the actual guarantee until the inflationary impact of the contract is lessened.
Chrysler spokesman Wendell Larsen, reached at home in the Detroit area, said that the company would have no direct comment on Kahn's statement until "we sit down with them and see what's bothering them."
But UAW President Fraser was furious. "This is the first I've heard of this," he said through an aide. "I'm shocked. I deeply resent Kahn's gratuitous remarks on the eve of the big ratification vote. This is the same kind of insensitive and reckless performance we have seen from Kahn before.
"Chrysler workers have made substantial sacrifices in the interests of aiding Chrysler.
"We've said before that it's a fact of life that a negotiated agreement, once ratified, cannot be changed by some theoretician in another sphere.
"If Mr. Kahn would concentrate on ripoffs by oil companies who have made a mockery of administration attempts at controlling inflation, instead of obstructing a sensible collective bargaining agreement, he'd make a greater contribution."
Kahn said it is unacceptable for workers in one of the nation's best-paid industries to get raises in excess of the cost-of-living guideline when much less affluent workers elsewhere were getting 7 percent or so a year.
He said the only difference he could see between the Chrysler raises and the GM-Ford raises is that part of Chrysler's would be deferred for two years, then jump to close the gap.
One condition of the administration's backing for the $1.5-billion loan guarantee plan is that the company and its employes make substantial sacrifices to help keep Chrysler afloat he said, and the contract didn't indicate any such sacrifice. Asked if President Carter is as annoyed about the contract as he, Kahn replied, "Yes . . . I've discussed it with him."
Kahn also lashed out at Sen. Kennedy for declaring that there has been "virtual silence" from the administration after inflationary wage settlements are concluded.
He cited a dozen occasions when he had criticized wage settlements and 23 criticisms of price raises, and said the result was price adjustment or rollback by Sears Roebuck, Giant yfood, Scott Paper and various food processing companies, among others.