Are Carter's new curbs fair to the average saver?

Does Jimmy Carter have it in for the small saver? A Washington D.C., resident with $100,000 to invest can earn $17,000 over the course of a year (at 17 percent interest) at his local commercial bank.

The best that a small saver can do with $1,000 to invest is earn 12 percent interest -- or $129 a year. The reason: federal bank regulators recently clamped a ceiling on interest for small savers.

If that same small saver puts his $1,000 into a money market mutual fund, his interest is also limited. Mr. Carter new anti-inflation program requires that 15 percent of this $1,000 money market investment be set aside in a non-interest bearing account. That means the total return will be well below market interest rates enjoyed by the well-to-do.

This tightening process, in the views of administration officials, will be "beneficial" to the US economy as a whole -- despite personal hardship, inconvenience, and lower rates of return on a number of savings accounts.

But to many critics of the administration plan -- including a number of congressmen -- the overall impact, based as it is on credit-tightening curbs, higher monthly interest payments from debtors, possible lifting of usury ceilings, and caps on what can be earned from savings and money market accounts -- looks suspiciously like a strategy put together by a convention of bankers.

The effect of the overall administration anti-inflation package, argues Wisconsin Democratic congressman Henry L. Reuss, respected chairman of the House Banking Committee, is to force the "small saver" to "bear" much of the "burden" of the inflation fight.

What then is the Carter rationale for imposing such a tough element in its inflation plan?

According to an administration official, there is "no way to curb credit" without cutting it back where it is most used -- at the consumer level.

So far as restricting money-market funds, very few "average families" have such investment, the official adds. "Heck, you're talking here about families with $40,000 or more. This isn't your typical "mom and pop" with their small savings in a bank or S&L."

The official also argues that the administration -- by supporting current congressional efforts to phase out passbook interest rate ceilings -- is still committed to eventually getting "market rates" for small savers.

Money-market funds, says Lyle E. Gramley, a member of the Council of Economic Advisers, and just nominated by Mr. Carter to be a member of the Federal Reserve Board, channel investment into business loans.

The effect, he says, is to "fuel a credit explosion which is a contributing factor to inflation."

"How do you curb inflation and restrict credit without not hurting anyone," is how one White House official poses the economic issue now coming face to face with thousands of families. All segments of the US society, says the official, must bear "equal sacrifice" in the new anti-inflation fight.

At the least, the implications of the administration plan for most families is now clear-cut:

* New credit curbs will make it more difficult to use, or obtain, credit cards and loans.

* The new curbs will make it harder to engage in "anticipatory buying" -- snapping up a product on credit before the item leaps in price.

* The new restrictions on money-market mutual funds plus new and existing federal curbs on interest rate earnings for savings accounts will make it harder to offset any continuing inflation in the immediate months ahead.

* Congress, ironically, is on the verge of enacting far-reaching legislation that could wipe out existing ceilings on bank interest earnings by 1986. The bill is expected to be signed this spring by President Carter. But the administration-supported bill also contains provisions eliminating usury ceilings -- which means that consumer loans could be even more expensive than is currently the case.

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