6 Thursday, November 17, 1994 NATION/WORLD UNIVERSITY DAILY KANSAN Interest rate hike not likely to slow holiday spending The Associated Press NEW YORK — The latest spike in interest rates comes just as consumers are about to invade the malls for the annual holiday shopping binge. But fear of higher credit costs likely won't deter them from sliding up to the checkout counter with plastic in hand. Because there are so many new low-rate credit cards out there, many shopper feel they can easily afford to charge Dad's electric razor and the kids' toys. "Christmas is Christmas," said J. Lee Boucher, a small business owner in Easton, Pa. "People will spend if they feel comfortable about their jobs, and I think they feel that right now." Credit card usage has already skyrocketed this year because consumers are more confident about the economy and their finances. During the first nine months of the year, consumers charged $347 billion on their credit cards, a 26 percent increase over the same period last year, according to RAM Research Corp., a Maryland-based firm that tracks credit card trends. Report: No inflation threat consumer prices steady The Associated Press WASHINGTON — Consumer prices rose just 0.1 percent last month, the best inflation performance since spring, the government reported only a day after the Federal Reserve raised interest rates to dampen inflationary pressures. Federal critics quickly seized on yesterday's benign inflation report — energy and clothing prices actually fell — as proof the central bank had needlessly increased the threat of recession by voting the biggest increase in interest rates in 13 years. "Inflation is not a threat," said Jerry Jasinowski, president of the National Association of Manufacturers and a leading Fed critic. "The Federal Reserve's aggressive increase in interest rates yesterday was unnecessary." The central bank, making its sixth and largest rate boost this year, raised two key rates by three-fourths of a percentage point. Major banks followed immediately, raising their prime lending rate to 8.5 percent, meaning that borrowing costs will go up for millions of Americans. Critics argue that the central bank has failed to realize that dramatic changes in the U.S. economy, including increased foreign competition, mean that the economy can grow at faster rates with lower unemployment without raising inflation threats. "Yesterday's tightening looks a bit risky based on the inflation report," said Sung Won孙孝, chief economist of Norwest Corp in Minneapolis. "We could get a recession because the Fed overreacted." But other economists supported the central bank, saying that at this stage of the recovery, with U.S. industry operating at a 15-year high and unemployment down to 5.8 percent, there is a need to slow growth to keep inflation from getting out of control next year. "The Fed made a mistake in late 1992 and 1993 by taking rates down too low. They are bringing them back up to a level that allows them to be in control of the economy," said Stephen Roach, economist at Morgan Stanley & Co. in New York. Many economists insisted that the Fed's efforts to achieve a "soft landing" — growth slow enough to keep wage and price pressures under control — appeared to be working. The Clinton administration supported this view yesterday. Leon Panetta, White House chief of staff, told a Washington audience that even with the Fed's latest increases, "I think we can still have an economy that has strong growth, low inflation and high investment." White House rushing to pass GATT Democrats working hard for GOP support The Associated Press WASHINGTON — Fearing an embarrassing defeat, Vice President Al Gore and other senior administration officials worked feverishly yesterday to shore up wavering Republican support for the GATT trade accord. The efforts came a day after Jesse Helms, chairman-to-be of the Senate Foreign Relations Committee, hinted he would hinder the administration's foreign policy initiatives if President Clinton pressed ahead on the GATT vote, now scheduled for Dec. 1. Shortly before Gore spoke, Newt Gingrich, the next House speaker and a supporter of the pact to slash world tariffs, said he was very concerned about its prospects in the Senate. Gore said at a news conference organized by businesses supporting the trade agreement, "The Congress will decide whether the United States will continue to lead the world in global economic issues or not. That's really what it comes down to." Gore, White House Chief of Staff Leon Panetta and Treasury Secretary Lloyd Bentsen all said the pact, negotiated under the General Agreement on Tariffs and Trade, must be approved this year by the lame-duck Democratic Congress. "It is abundantly clear that a delay of the GATT would definitely kill the GATT ... and hurt our country immeasurably." Gore said. The vice president, flanked by Budget Director Alice Rivlin, White House Economic Adviser Laura Tyson, U.S. Trade Representative Mickey Kantor and senior lawmakers, said delay of even six months would reduce U.S. economic output after 10 years by $70 billion and block creation of 25,000 jobs. "I don't know why any member of Congress would want that on his or her record," Gore said. Gingrich, R-Ga., sent a letter to Clinton repeating his commitment to work toward "a bipartisan majority overwhelmingly approving" GATT in the House on Nov. 29. The letter was also signed by the outgoing speaker, Rep. Thomas Foley, D-Wash., the outgoing majority leader, Rep. Dick Gephardt, D-Mo., and the outgoing minority leader, Rep.Bob Michel, R-III. Republicans learn from Clinton's mistakes The Associated Press WASHINGTON — Mindful of the damage President Clinton suffered in the gays-in-the-military debate, Republican leaders are determined not to wander far from their budget and government reform agenda into fights over abortion and other divisive social issues. Much of this approach stems from the GOP's analysis of Clinton's efforts to allow homosexuals to serve in the military. The effort sent Clinton's support in the South and among white men into a tallspin from which the president has yet to recover. Their caution reflects a desire to solidify the GOP's newfound support among white women, to avoid overreaching the mandate of their midterm gains, and to deny Democrats an early opening to reenergize their despondent base. And it invigorated conservative groups, particularly the Christian Coalition and other religious conservative groups, and these organizations were significant players in the Republican midterm sweep. Now, if Republicans rush forward with a controversial social agenda the Democrats could find a new spark to help them organize for the next elections, said Ann Lewis, a veteran Democratic strategist and a senior official at Planned Parenthood. Sofar, Rep. Newt Gingrich, who will become House speaker in January, has kept his focus mostly on economic and reform issues. Gingrich has offered vague criticisms of liberal housing and education programs but with the exception of school prayer and welfare reform, has spoken sparingly about social issues. The House GOP agenda does include social policies certain to prove controversial. But in picking these battles, Gingrich and his allies were careful to put reform items first. TELL US WHAT YOU THINK! SUA is planning its Spring '95 schedule and we want to know what you want to see! Call our 24-hour program line November 14-18, and tell us what movies, comedians bands and speakers you would like to see at KU and we'll try our best to bring them to you! Call 864-SHOW SUA LOWEVERYDAY CD PRICES & BUY 5-GET 25% OFF MFG LIST 4th & Iowa St. PO.Box 2 Lawrence, Ks 6081 AUDIO/VIDEO CAR STEREO CDs & TAPES 913*842*1811 913*842*1436 913*842*1544 International Students Association Presents International Night Featuring Song & Dance from North & South America Saturday Nov. 19th 7:30 - 10:30 Lied Center Admission is free