Miami Hurricane, February 09, 1982

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THE MIA
UI\MC
Volume 58, No.31
Tuesday, February 9, 1982
Kahn Attacks Reaganomics
By PAMELA LIVINGSTON
New.. Writer
Alfred Kahn, chief inflation fighter for the
Carter administration, told why he thinks Reag-
onomics isn't working. Ue spoke to about 300
persons in the Ruth King Stanford Lounge Wednesday night.
As chairman of former President Carter's
Council on Wage and Price Stability, Kahn
worked two years to bring down inflation that
rose from nearly 10 percent when he began office to nearly 20 percent when he left.
The former chairman of the Civil Aeronatics
Board rushed onto the stage some 30 minutes
late. His plane had been delayed.
"This is not the consequence of airline deregulation," he quipped about his role in getting
airlines the freedom to cut fares and enter new
markets.
Kahn held the audience's attention with
humor, but between rapid-fire jokes he packed
information and opinion.
Kahn praised the Reagan administration for
cutting $40 billion from the federal budget. "We
|the Carter Administration! were only able to
cut about $l.r> billion,"he said.
Cutting federal spending theoretically will
decrease government demands on goods and
services that push prices up; decreased federal
spending likewise will reduce the amount of
money that the government borrows from the
Federal Reserve, thus lowering interest rates
and making low-interest loans available to business and industry.
Using low-interest loans, businesses would
reinvest and expand. Production would increase, and the taxes on the earnings of expanded production would bolster the federal budget.
But  the  Reagan  administration also plans
"an extraordinary increase in defense spending"
that will be larger than the decrease in spending
for civilian programs, Kahn said. The Reagan
administration proposed an increase in defense
spending of $33.1 billion and a cut in domestic
spending of $43 billion. The Miami Herald reported Saturday.
Reagonomics is "schizophrenic," Kahn
charged. The administration's "tight money policy" contradicts its "loose fiscal policy" of large
tax reductions, he said.
"The fiscal policy says 'giddyap' and the
monetary policy says 'whoa,' " he said. The 25
percent tax cut is "an enormous leap into the
unknown."
By cutting taxes, the government depletes a
big source of income that it needs to run federal
programs. Without needed revenues, the government must borrow from the Federal Reserve. Government demand for dollars competes
with demand from the private sector and pushes
interest rates up. The Federal Reserve raises the
discount rate at which banks borrow money to
prevent too many dollars from flowing into society and aggravating inflation.
"The monetary policy is the only way the
administration is fighting inflation," Kahn said.
The restrictive monetary policy will continue until the federal budget is balanced, he
predicted. The deficit for the current fiscal year
will be a record $96.8 billion, and the proposed
deficit for 1983 will be $91.5 billion.
The current high interest rates defeat reinvestment, Kahn said. "Nobody wants to save
and nobody wants to lend."
The country is in its deepest recession since
1938; unemployment is at 8.9 percent, Kahn
said.
The recession, or stagflation — rising prices
without increased productivity — is not wholly
the fault of the Reagan administration, Kahn
said. The Vietnam war demanded a sharp increase for petroleum products and excessive expenditures from an economy that was at almost
full employment caused stagflation. So.too, did
the enormous cost increases for energy, brought
about by OPEC.
Kahn said the United States has "advanced
welfare state capitalism," another cause of stagflation.
"We demand tax breaks and shelters, tax-
free financing, government loans, all sorts of
deductions on property taxes. We're the only
major industrial nation in the world that allows
deductions on mortgage interest, he said.
"We are suffering from a growing gap between our expectations of what we want to get
out of our economy and our real ability for the
economy to supply it."
"We're trying to subsidize everybody at the
expense of everybody."
Nevertheless, Kahn said some of the Reagan
administration's budget cuts were "outrageous."
The administration has failed "to distinguish
between investment and consumption," he said.
By cutting food stamps and subsidized day
care, for example, the government takes away a
poor working mother's incentive to work.'
Working mothers will leave the job market for
welfare benefits under the Reagan administration, Kahn said. Supplying food stamps and
low-cost day care would be investment in this
instance, he said.
Kahn's speech was sponsored by the University Lecture Series. Kahn's lecture will be
screened twice this week by the economics department. Call the department for details.
Miami Hurricane/BOB ANTHONY
The Coral Gables Rescue Squad helped an unidentified UM student who suffered from a shortage of
breath outside of the Riehter Library Friday. The Coral Gables Police, who had arrived first on the scene,
assisted with the administration of first aid.
Football Coach Praises Fraternities
By LOURDES FERNANDEZ
Head Newa Writer
Coach Tom Olivadotti, defensive
coordinator for the Hurricanes, was
the highlight of the Third Annual
Interfraternity Council Banquet
held last Wednesday at the Faculty
Club.
Also on the banquet's program
wa.s an awards presentation and installation of the new IFC officers
The original guest speaker. Head
Football Coach Howard Schnellenberger. was unable to attend because he was snowbound in Chicago, where he was recruiting. Olivadotti, Schnellenberger's replacement, thanked the fraternities for
their support of the football program.
"You're the backbone of our
school spirit," Olivadotti said.
"Your attendance at the games is
important. In fact, your support at
the Florida game helped us win."
Olivadotti also thanked the fraternities for letting those in charge
of recruiting attend fraternity parties in order to scrutinize possible
recruits.
"We have to see the young men
we're recruiting in every social aspect," he said. "We turned down
one guy based on his actions in a
fraternity party. He had a deep severe ego problem . . . besides, he
wasn't that good a player."
Lastly, Olivadotti expressed his
gratitude towards the fraternities
for their positive influence.
"It's easy to be negative on a col
lege campus, since its the easy way
out. But, we've had your continued
support and commitment. Without
your help we just can't make it,"
said Olivadotti.
Olivadotti's speech was followed
by an awards presentation. One
award given during the evening
was the Plato Award, a prestigious
honor bestowed' td a fraternity
member that has contributed much
of his time to the greek system at
the University of Miami.
This year, the award was given
to Edward Pozzuoli, 1981-82 IFC
president, member of Lambda Chi
Alpha and many other student organizations.
The 1982-83 members of the IFC
executive council were inducted by
Craig Mattox, 1981-82 IFC vice-
president. The new executive council consists of Larry Baum, president; Mark LeFerrara, vice-president; Scott Batcheller, treasurer;
Bill Dykes, secretary; and Craig DuBois, member-at-large.
Miami Hurricane/STU BAYER.
Former Carter Aide Allied Kahn
Spanish Leader
Tells Problems
Of Spain, Europe
<:°aeh Tom Olivadotti At IFC Banquet
Miami Uumcane/tLISA OLDKRMAN
I
By MARY CRONIN
Head News Writer
At age 70, Lieutenant General
Manuel Gutierrez Mellado has seen
a great deal of change in Spain and
has contributed to that change.
A former Vice President of the
Spanish Government from 1976 to
1981, he was appointed by King
Juan Carlos I and President Adolfo
Suarez. As the Minister of Defense
from 1977 to 1979. Mellado was
cited for his opposition to the attempted coup last February in the
Spanish Parliament.
During that encounter, he rose in
defiance of the coup members to
show that Spain's armed forces did
not support their movement.
Despite his firm denial that he
has ever been a politician, Mellado
bas often worked within Spain's
political ranks and was a co-signer
of thp Spanish Constitution.
Mellado's military career began
at the Military Academy of Zarago-
za in 1929. and he fought in the
Spanish Civil War.
He is well known in Spain for
having restructured the Ministries
of the Army, Navy, and Air Force
into one Ministry of Defense.
While at UM to speak at a symposium on "Spain and America,"
Mellado was interviewed about the
future of Spain and his involvement
in its history.
Hurricane: Do you feel that the
armed forces will accept the entry
of the Spanish government into
NATO? Can the Spanish forces be
properly integrated into NATO ?
Mellado: I think that they |the
armed forces| are in perfect condition for integration into NATO. It
can'l be done overnight, though.
There would be negotiation, then
discussion, then a gradual adaptation into NATO. In any case I think
it will depend heavily on the negotiations, as it would for any European organization. We won't enter
into it with blind eyes; it will be negotiated and it has to be beneficial
for the two sides.
Hurricane: All of Europe, including Spain, is having a difficult time
coping with unemployment. What
is being done in Spain to combat the
problem?
Mellado: That is a priority problem. I believe that important agreements have been made between the
government and opposition groups
to try to solve it. I consider it difficult, however, to solve the Spanish
crisis if it isn't done as a function of
the international crisis.
But. if the important nuclei —
the employers, workers, government and syndicates — cooperate,
and if they all want to solve the
problem, it can be done little by little. The immediate future is a bit
brighter, but it is a very difficult
question.
Hurricane: Do you think that the
regionali/.ation of Spain in the long
run is beneficial to the democracy?
Mellado: The problem with the
autonomies is important. It's being
done bit by bit with great difficulty.
I think there is a necessity and a desire to reach an agreement.
On the other hand, Spain has
known autonomies, reigns, different regions, and nationalities. That
word |autonomy| that has been discussed in detail in the constitution
has had its days of splendor in the
past.
The problem is to give the autonomies certain powers and decisions,
while maintaining to the state those
matters necessary to the state.
Autonomy is one thing, separatism is another. The majority of
Spaniards admit that autonomy i*
good but we don't permit separatism.
There are always minorities that
take advantage of autonomy to go
too far and that is not accepted, and
others who would like to see everything centralized. The balance that
we have to attain is difficult, but
we are getting there.
Miami Hurricane IGIN A MOLINARO
Mellado
Hurricane: As there appears to be
a considerable amount of strife in
Spain's ruling party, the UCD
(Union of Democratic Center), do
you think its time as a ruling party
has ended?
Mellado: First, I am not a politician and I don't belong to UCD, although I have been part of UCD'
governments in which I was responsible for and in solidarity with
what the governments did.
That question is a matter for
prophets and I am not a prophet.
But, I do believe that UCD is an important political ower that has its
ups and downs, but I don't dare predict what will happen.
Hurricane: What about the possibility of Spain becoming a Socialist
nation? Felipe Gonzalez (the head of
Spain's Socialist Party) is very popular right now.
Mellado: We check all that
France does because they are very
close to us. We check the Socialist
experiment and everything else because it concerns us as France is
one of our neighbors. But we are
sometimes not very happy with
what they do.
Concerning Felipe Gonzalez and
the particulars of the Socialist
party, it's the same as before — it's
an important power |France) and
Gonzalez's Socialism is also, but we
don't know what can happen.
In such an important country
such as the United States, with the
electoral predictions, I remember
that the public predictions and opinions have failed many times.
Hurricane: What of Gibraltar,
and the current Spanish position orl
I don't know what can happen if
Spain enters NATO, but I can say
that the decision that Spain keep
Gibraltar is permanent and continues in Spain, with all due respect
to the inhabitants of the region.
Note; The interview mu conducted in Sptm*
tak, and (he translation of the Lieutenant
General's, answers was done by Conv Editor
Charles Lavin. vy
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