What Carter can do to cool US inflation

How much will Congress nibble away at President Carter's forthcoming anti-inflation package, and to what extent can the plan succeed? No one can be sure, as the President and congressional leaders wrestle toward final decisions, just what measures Mr. Carter will propose to clamp a lid on inflation, now running close to a 20 percent annual rate.

But experts can assess which things the President can do on his own, what elements require congressional approval, and how effective certain measures might prove to be.

The President's forthcoming package is designed partly to calm inflationary fears and to persuade Americans that the old-fashioned virtue of saving for the future can be sound policy again.

Two powers Mr. Carter already possesses, under existing law:

* He can, under the Credit Control Act of 1969, authorize the Federal Reserve Board to tighten credit in any way he chooses, though the board is not obliged to obey.

* Mr. Carter can impose an import fee on foreign oil to impel Americans to burn less fuel, principally gasoline.

The list of things for which the President requires congressional approval is longer.

It includes any tax on gasoline (as opposed to import fees), gasoline rationing, budget cuts, tax changes, reduction of the automatic link between benefit payments (including social security) and the consumer price index (CPI), and authority to impose mandatory wage and price controls:

Gasoline tax or import fee on oil: Congress is unlikely to approve a stiff retail tax on gasoline, such as the 50-cent-a-gallon levy proposed by Rep. John B. Anderson (R) of Illinois.

If Mr. Carter wants to encourage conservation by raising the cost of driving a car, he might slap a 50-cent-a-barrel fee on imported oil. This would be "targeted" on gasoline, said a senior administration official.

Either measure, tax or fee, would be inflationary. A gasoline tax, according to White House economists, would add nearly two percentage points to the consumer price index.

Selective credit controls: Curbs on credit for housing and automobiles apparently are ruled out for the time being, because these two bellwether industries already are depressed

This leaves the option of credit card controls to force Americans to reduce debt burdens. Possible requirements include larger down payments on "big ticket" items, higher interest rates on outstanding monthly balances, interest due from the day of purchase of items, and cuts in the amount of credit allowed.

Consumer spending comprises two-thirds of all business done in the United States. Selective credit controls would not directly affect soaring prices of gasoline, home heating fuel, other forms of energy, housing, medical care, and food. Thus, the early impact of selective controls on the CPI would be slight.

Balanced budget: Even a cut of $25 billion in the fiscal 1981 budget -- the amount that might be needed to erase its deficit -- would lower the CPI less than half a percentage point, most experts believe.

The value of a balanced budget, therefore, is partly symbolic -- a signal to Americans, and to the world, that the government is determined to live within its means in the battle against inflation.

But the 1981 budget offered in January by President Carter already was relatively austere, except for defense spending. Cuts of the size needed to balance the budget would have to come primarily from a wide variety of social programs, including federal aid to states and cities.

Linkage: Currently a wide variety of federal benefit payments, including social security and food stamps, rise yearly in tandem with the CPI. This July, for example, these benefits will increase by roughly 13 percent, because the CPI climbed that much last year.

But the measurement of the cost of buying a home, including mortgage interest rates, distorts the consumer price index, because it applies to only about 6 percent of Americans in any one month.

If mortgage interest rates had been excluded from last year's CPI, according to government economists, the overall index would have risen 1.3 percent less than it did.

This "overstatement" of inflation could be removed -- if Congress and White House agree -- by raising federal benefit payments, say, only 85 percent of the CPI, instead of 100 percent.

This would save several billions of dollars a year for the government and would exert some downward effect on inflation. But the losers would be those elderly Americans, dependent primarily on social security payments for sustenance.

More feasible might be to tax some portion of social security benefits. This would not increase taxes for low-income retirees, but would boost taxes somewhat for elderly Americans with private pensions.

Regulatory decontrol: Officials like Alfred E. Kahn, chairman of the Council on Wage and Price Stability, say they believe inflation can be shaved by eliminating, or reducing, government regulations which benefit specific interest groups, while raising costs for the economy as a whole.

Airlines already have been deregulated, resulting in lower ticket prices, until skyrocketing fuel costs sent them up again. Trucking is a major industry targeted by the White House for decontrol.

Wage and price guidelines: Now in their second year, Mr. Carter's voluntary guidelines are credited by many economists with holding down labor costs in 1979 .

Nonetheless, average American workers lost 5.2 percent of their purchasing power last year, after taxes and inflation, and labor costs are rising more swiftly, as workers strive to catch up.