Business: Battling the Inflation Bears

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Indeed, since the Administration has already promised NATO allies that it will increase defense spending by 3% a year, there will be no money for any new civilian programs, and some existing ones will have to be reduced. The paring is being done by Budget Boss James McIntyre, who vows to leave "blood all over the carpet." Budget slashers are even talking of making small cuts in Social Security and other federal pension payments, supposedly the most politically sacrosanct of all federal outlays. Samples:

1) At present, a person who reaches age 65 on, say, the 29th of a month draws Social Security retirement benefits from the first of that month; the Office of Management and Budget wants to start the payments on the 15th.

2) A veteran's family can now draw death benefits from both the Social Security and Veterans' Administrations; the budget cutters want to stop one or the other.

3) Federal pensions are increased twice a year to reflect rises in living costs; the budget planners want to make only one annual adjustment.

Another element in the anti-inflation strategy is a presidential promise to reduce Government regulation of business, and last week brought a welcome indication that this pledge is more than talk. A. Daniel O'Neal, chairman of the Interstate Commerce Commission, outlined a plan to deregulate trucking. Briefly, he would make it much easier for new truck lines to enter the business and would end the practice under which conferences of truckers, with ICC blessing, set freight rates. That would open the industry to more rate-cutting competition, a prospect that established truckers are likely to fight against; the ICC will need Carter's backing to put it through.

The President also faces a stiff fight to get his wage-price guidelines obeyed. The Administration has been counting on the Teamsters to settle next March within the guidelines, which call for wage-and-benefit increases averaging 7%. But last week Teamster President Frank Fitzsimmons announced that "if [Carter] said we endorse his program, then he is wrong." On the price side, major railroads applied to the ICC for an 8½% increase in freight rates, setting the stage for an important test. A staffer of the Council on Wage and Price Stability observed that at first glance the increase would far exceed the guidelines; the railroads contend that the hike is being forced by wage contracts signed before the guidelines were announced.

On all these fronts, Carter is promising a dedicated battle. In his press conference last week, he vowed to present a "very tight, very stringent" 1980 budget and said he would "do everything I can that is legal" to see that the guidelines are observed. Unfortunately, however, the disarray in Administration policymaking continues. Carter at his press conference said that he has "no present plans" to call for a rollback of Social Security tax boosts; the next day Chief Economic Adviser Charles Schultze said that "we are sure going to look at" a rollback and came close to implying that the boss had simply been wrong. Such a mix-up in signals is a luxury that cannot be afforded. No more quick touchdowns are in sight; from now on the gains, if any, will be small and hard-fought.