Carter, Congress hope to erect an anti-inflation fortress
Congressional leaders and Carter aides are wearing a path between White House and the Hill, as they struggle for agreement on how best to combat the soaring US inflation rate.
Spurring their search is fresh evidence that prices so far this year are climbing at nearly a 20 percent annual pace, with no relief in sight.
Though the anti-inflation package will be announced by President Carter, its success or failure will depend in large part on legislative action by Congress.
Hence the day and night consultations now under way, to find an aproach on which a majority of Democratic and Republican legislators -- together with the White House -- can agree in this election year.
"Painful" and "unsettling" are words which Mr. Carter is using to describe the package, which most analysts believe will center on trying to balance, or at least reduce the deficit of, the fiscal 1981 budget.
How hard that will be is underscored by the Congressional Budget Office (CBO) , whose director, Alice M. Rivlin, says the shortfall will be much higher than the $15.8 billion estimated by Mr. Carter less than two months ago.
Dr. Rivlin, in an updating of the budget to Congress, says the 1981 deficit shapes up to be at least $20 billion and perhaps as high as $24 billion, giving White House and Congress a lot more red ink to erase.
Inflation alone, Dr. Rivlin points out, is driving up the cost of government, quite apart from any additions to existing programs. For example:
* Interest on the national debt will cost $4.5 billion more than the Carter budget estimates, because of soaring interest rates.
Like families and businessmen, the US Treasury has to pay higher interest to borrow money to pay government bills.
* Rising oil costs may add as much as $4.1 billion to the fuel bills of the Pentagon, as American warships and aircraft step up their movements in the wake of US-Soviet tension.
* Social security and other benefit payments, indexed to inflation, may cost the government $2.2 billion more than the Carter budget provides for, according to the CBO.
To cut the fiscal 1981 budget in any meaningful way, experts agree, will require trimming a iwide variety of social programs, especially since defense outlays appear to be excluded from pending budget cuts.
House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts, calling himself "an old liberal," opposes budget cutting that hurts the poor and elderly, and says that balancing the 1981 budget will do little to reduce inflation.
On the last point, many people agree. Hikes in energy costs and housing, plus catch-up wage demands, may contribute more to the current inflation than does the budget deficit.
But millions of Americans, according to polls, blame deficit government spending for inflation. Balancing the budget, therefore, is seen to be a key to restoring public confidence in government.
Interest rates, meanwhile, continue to climb, with some US banks closing their mortgage loan windows and others selling mortgages at a record 17 percent interest rate.
At 10 percent, a typical $50,000 mortgage costs a family $439 in monthly payments. At 14 percent, this rises to $592.50. The same mortgage at 17 percent costs $713 every month.