President's new steel-industry plan delays air clean-up to save jobs

President Carter has sought to shore up his election drive across the nation's pivotal industrial belt with a "new steel revitalization plan" girder. With employment flagging in steel towns from Buffalo, N.Y., to South Chicago, Mr. Carter Sept. 30 anounced his second major economic tuneup proposal. The first covered autos.

Environmentalists as much as voters have had their eye out for the President's steel industry proposals -- particularly their impact on Clean Air Act enforcement. Steel ranks third among the nation's polluters, behind only autos and utilities.

In broad stroke, the environmentalists think the President has put together a "realistic" package that promotes steel plant modernization, delays but otherwise leaves uncompromised enforcement of air quality standards, and preserves jobs in current steelmaking centers.

Carter called his new steel program "noninflationary." Economists, however, disagree. "You're substituting more expensive domestic steel for cheaper imported steel, and that's inflationary," says Bill Zentz, economist for Cincinnati's Huntington National Bank.

Even the plan's job impact might prove limited, asserts Mr. Zentz. "The steel plants that are going to close are closed. I don't think extending the controls will save plants that are clearly outmoded.It might give them another year before closing down."

Steel recovery will likely be linked to US auto industry recovery, he adds.

The President's program would:

* Liberalize depreciation rules for the steel industry by 40 percent, adding an extra 10 percent credit for investment in distressed areas, to stimulate steel-plant updating.

* Set aside for the steel industry an undetermined part of the $600 million in research and development funds proposed under Carter's broad economic revitalization program.

* Reinstate the trigger price mechanism (TPM), suspended earlier this year when United States Steel Company filed anti-dumping lawsuits against seven nations, to fend off "unfair import competition."

* Amend the Clean Air Act to defer up to three years, on a case-by-case basis , steel company compliance with anti-pollution standards. The steelmakers would be required to invest funds thus "saved" in plant modernization.

The Carter plan resembles an earlier steel industry proposal by Ronald Reagan. The Republican presidential candidate also called for reinstating the TPM, shortening depreciation schedules, and stretching out pollution regulations. The Reagan plan, however, pointedly promised "higher profit levels" for the industry. It stressed across-the-board, not case-by-case, delay of pollution standard compliance.

The Carter plan offers aid to workers, families, and communities affected by steel industry changes: 13 extra weeks of unemployment compensation, $300 million in added job-training funds, and economic development funding of $1 billion in fiscal 1981, and $2 billion in 1982 for steel communities.

Judging by steel industry, labor, and environmental group responses, the President's plan -- based on a two-year "steel tripartite advisory committee" study -- meets their chief objectives.

The American Iron and Steel Institute's chief public exception to the plan was to propose that "specialty steels" also be protected by the trigger price mechanism. The institute said that American steelmakers would need $5.5 billion a year over the next five years to modernize and meet environmental and health standards -- without any expansion of capacity. Without the President's plan the industry would fall short by $1.7 billion to $2 billion a year in meeting its capital needs.

Richard Ayres, the Natural Resource Defense Council's air quality expert, says approvingly of the plan: "I'm glad they're taking steps to create a cleaner and modernized steel industry. Preserving jobs in existing steel communities should lessen labor concern about pollution controls. The proposals give the steel industry the assurances they wanted to on the Clean Air Act."

Mr. Ayres estimates perhaps a third of the steel industry to date has achieved the compliance levels required by federal law, the worst record among the major polluting industries. By contrast, automakers "as of this year, will be putting cars on the road that meet statutory standards," he says.

Sen. Jennings Randolph (D) of West Virginia, a key Capitol Hill figure on steel industry matters, urged the President to press for congressional action on the new plan immediately after the election, instead of waiting until 1981.