The Carter administration has run into another one of those nasty billion-dollar mistakes in the newly revised budget that the president sent Congress just three weeks ago:
Somebody forgot to account for rising auto imports.
Whenever import competition contributes to layoffs in U.S. plants, workers here are entitled to federal adjustment assistance payments -- a form of unemployment compensation designed to tide them over temporarily.
In the budget President Carter sent Congress last January, he estimated these payments would total a relatively modest $381 million in fiscal 1980 and $414 million in fiscal 1981. They vesied budget in March showed little change.
But as headline writers have known for months, the U.S. auto industry is in a slump, in part because Americans are buying more imports. And laid-off U.S. auto workers have been rushing to apply for adjustment assistance.
Last week, the Labor Department finally finished totaling up its past few months' approvals, and discovered that the program now is likely to run a full $1.1 billion over budget in fiscal 1980 and $400 million more in fiscal 1981.
That means that, barring offsetting reductions elswhere, the $36.5 billion deficit Carter has projected for fiscal 1980 has swelled in only three weeks to $37.6 billion, while the $16.5 billion fiscal 1981 surplus is now $16.1 billion.
Moreover, budget planners warn that unless something is done soon, fiscal 1981 spending ultimately could be bloated by $2 billion or more, particularly if U.S. steelworkers begin climbing on the adjustment assistance bandwagon.
The error, discovered last week but kept under wraps until yesterday, disturbs White House budget planners. "We're talking about a pretty big leak in the dike," one said yesterday. "This could really get out of hand."
The flap also has intensified the longstanding feud between the Labor Department and the Office of Management and Budget, which now is embarrassed about having to revise the budget once again so soon after the March overhaul.
"If we had known about this situation a few weeks ago, we would have done some things differently," one key official groused yesterday. "The department clearly should have informed us about it."
Labor Department Officials contend they found out about the situation only last week and couldn't have done anything about it anyway even if they had known before. "It's just one of these things," one planner said.
Right now, the administration is scrambling to figure out how best to plug the dike, including possibly interpreting the adjustment assistance law more stringently and proposing new budget cuts elsewhere to offset the loss.
The White House also is considering asking Congress to tighten eligibility requirements for the program. And Carter may move to try to head off a bill by Rep. Charles A. Vanik (D-Ohio) that would ease them even further.
The problem stems from two developments:
First, in 1974 Congress significantly liberalized the eligibility requirements for adjustment assistance, demanding only that import competition be an "important" factor in forcing layoffs at a U.S. plant rather than a "primary" cause.
Second, the failure of U.S. automakers to shift to small-car production quickly enough sent Americans rushing to foreign-car dealers instead and brought on a slump in the domestic auto industry.
Part of the rise in import sales comes from increased purchases of Japanese autos here, but a significant portion involves U.S.-brand cars manufactured in Canada. Automakers often have laid off American workers rather than Canadians.
One of the problems with the adjustment assistance program is that once a U.S. plant is certified as eligible for benefits, its entire work force remains qualified for a full two years, even if the workers are rehired.
In some cases, U.S. workers receive combined adjustment assistance and unemployment insurance benefits that amount to as much as 150 percent of their regular weekly wages. (If a worker is rehired, some is returned.)
Moreover, many economists believe the benefits being provided to the auto workers violate the spirit of the adjustment assistance program because the layoffs stem from a variety of factors of which import competition is a small part.
Analysts note that American automakers are having no trouble selling all of the new small cars they are producing. Their major problem is that they waited so long to switch to small cars that they cannot manufacture enough.
Also, the wages of auto workers are far above the average for the rest of American labor. And despite the sluggish market, the industry agreed to a sizable wage boost in contract negotiations last year.
Meanwhile, policymakers are worried that any new attempt to tighten the program's eligibility requirements will run into stiff opposition from the United Auto Workers union, threatening Carter in an election year.
"It's another one of those things that we wish we'd anticipated," one official said yesterday.