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Okun's plan was seriously discussed by the Carter Administration. At first, Charles Schultze, chief presidential economic adviser, wanted to adopt it. But then the Business Roundtable, which is composed of corporate chief executives, denounced it as unworkable, and labor leaders argued that it placed unfair restraint on collective bargaining. Thomas G. Moore, a senior fellow at Stanford's conservative Hoover Institute, dismisses both TIP plans as "gimmicks." Says he: "They are just a hidden form of wage and price controls, pure and simple." Barry Bosworth, President Carter's chief of the Council on Wage and Price Stability, complains that the Okun plan would require a whole new bureaucratic machinery and floods of forms: "It is too much control for the corner grocery store."
Okun concedes he has not worked out all the details, but he argues that his plan is not a form of concealed controls. Further, he maintains that the reporting procedures would not necessarily be more complex than those envisioned for the home-insulation tax credit. "TIP would be better," he says, "than the inequity and inefficiency of continued stagflation."
Stagflation contributes to high unemployment; many economists are seeking new ways of coping with the hard-core aspects of that problem, which is concentrated among the often unskilled young, blacks and Hispanics, and housewives seeking to supplement their families' incomes. In his budget proposal, President Carter asked for $400 million in grants to firms that hire and train unskilled people, mainly in the 18-to-24 age bracket. Even conservative business leaders have told the President that the sum is too small to make much impact.
Instead, M.I.T. Economist Lester Thurow proposes that the Government reduce the size of the proposed tax cut from $25 billion to $15 billion and use the $10 billion differential for direct subsidles to companies that hire and train unskilled youth. Thurow's program has the virtue of concentrating on the trouble areas without pumping up the whole economy and fanning inflation.
Going a step further, Harvard's Martin Feldstein suggests that the Government give what he euphemistically calls "youth employment scholarships to the unemployed and unskilled." Recipients would get 1,500 vouchers, which an employer could turn in to the Government in exchange for $1 each. The firm hiring and training the young person would collect one voucher per hour, thus substantially offsetting the burden of the rising minimum wage, which climbed from $2.30 to $2.65 an hour this year, and will increase to $3.35 in 1981. In the future, the vouchers might have to be worth well over $1. Says Feldstein: "We've got to get the effective cost of hiring those people down to $1 or $1.25 an hour." He thinks a voucher system, or some similar device, is necessary in order to make politically acceptable the tighter money and tougher fiscal policies that can reduce inflation.