President Carter has decided to propose no new energy taxes or gasoline rationing in his new budget, administration sources said yesterday.
The action kills for now a 50-cent-a-gallon tax on gasoline that had been under consideration by the administration.
Carter also has concluded that economic conditions are too uncertain and inflation too high to call for a tax cut to help life the economy out of a possible recession in 1980, the sources said.
The decisions came as Carter's main challenger for the Democratic presidential nomination, Sen. Edward M. Kennedy (D-Mass.), reiterated his charge that the administration had "invited" the recent round of price increases by the Organization of Petroleum Exporting Countries.
Carter apparently decided not to go ahead with new energy taxes or rationing because Congress still is working on several major proposals, including the president's proposed oil tax, the Energy Mobilization Board to help speed up new energy projects, and a new quasi-public corporation to fund synthetic fuel development.
Administation officials also are uncertain about how the latest round of OPEC price increases will affect retail gasoline prices and gasoline consumption, and for that reason reportedly felt it would be unwise to offer new proposals.
Carter's advisers apparently are still divided over what should be proposed later, if they conclude steps are necessary, sources said.
The decision not to go ahead with a general tax cut was influenced by new administration projections showing the economy still growing in the fourt quarter of 1979, rather than turning down, and the assumption that inflation would continue high for at least several more months.
Campaigning in New Hampshire, Kennedy returned to his attack on the administration's energy policies. In a statement issued in response to White House rebuttals of Kennedy's blast Thrusday, the Massachusetts senator said, "The Carter administration bears a heavy weight of responsibility for the recent price hikes by Saudi Arabia and other OPEC members. Mr. Carter's decision to decontrol U.S. domestic oil prices, Mr. Carter's stream of proposals to raise U.S. oil prices and finally the recent statements of Mr. Carter's treasury secretary invited OPEC to gouge the American public once more with more higer prices."
Kennedy said Carter "has done more to turn our destiny over to OPEC than any previous American president."
Kennedy's language yesterday was slightly altered from what had appeared in a prepared speech Thursday, in which he accused Treasury Secretary G. William Miller for "asking OPEC to raise oil prices rather than warning it to restrain them."
The lines were never delivered by Kennedy, but stories written from the advance text provoked an angry White House response later Thursday, and forced Kennedy in turn to issue his statement yesterday.
The White House reaction yesterday to Kennedy's renewed criticism was relatively good-natured.
"I'm sure they taught Senator Kennedy at Harvard the difference between analyzing and predicting a situation, or encouraging and condoning it," presidential press secretary Jody Powell said. "For example, I predicted that Senator Kennedy would continue to play fast and loose with the facts, but that doesn't mean I encouraged it."
Powell also gleefully told reporters that a similar charge against Miller was contained in a recent newspaper advertisement by Mobil Oil. When Miller objected, Mobil discontinued the ad, Powell said. With great relish, Powell then recalled that Mobil's former advertising director, Herbert Schmertz, is on leave from the oil company to work on advertising strategy for the Kennedy campaign.
Kennedy cited a series of newspaper reports on Miller's late November trip to Saudi Arabia, all indicating that it is "unrealistic not to expect some upward price adjustment" by the Saudis. He asked in his statement yesterday: "Did the president tell the secretary that he would be anything but understanding if OPEC raised its prices? Were any diplomatic notes sent to the OPEC countries stating that . . . further price increases would not be tolerated? The president did not communicate firmly, unequivocally or forecefully that OPEC had not right to raise its prices."
His statement went on to note that after Saudi Arabia and others announced Dec. 13 a $6-a-barrel increase, "there was no outpouring of protest by they White House. The most that could be heard was a bland statement of 'concern'."
Kennedy quoted Carter as saying in 1976 that if elected president, he would "exercise the federal government's obligation to . . . negotiate on behalf of the consumer to keep OPEC prices under reasonable control."
Kennedy then added: "The word of Mr. Carter, candidate, was broken by the inaction of Mr. Carter, president."