The Battalion
Vol. 87 No. 42 GSPS 045360 12 pages
College Station, Texas
Wednesday, October 28, 1987
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sntributed.”
Love at first bite
Alan Gold, trainer of the “World’s Largest Mixed
Group of Lions and Tigers” in Circus Vargus per
forms the dangerous feat of placing his head in a
lion’s throat. The circus will be at Brazos County
Rodeo Arena through Thursday. Shows are at
4:30 p.m. and 7:30 p.m. See related story Page 3
Soviets: Gorbachev
ready for visit to U.S.
MOSCOW (AP) — Mikhail S.
Gorbachev is ready to visit Washing
ton this year and sign an agreement
scrapping medium-range nuclear
missiles without a link to restrictions
in the “Star Wars” system, Soviet of
ficials said Tuesday.
“We have no doubt that an
agreement relating to intermediate-
range missiles and shorter-range
missiles will be signed,” Foreign
Ministry spokesman Boris
Pyadyshev said at a regularly sched
uled news briefing.
In Washington, a U.S. official said
Foreign Minister Eduard A. She
vardnadze would visit the U.S. capi
tal, by Soviet request, at the end of
the week to discuss a third meeting
between the Soviet leader and Presi
dent Reagan.
Gorbachev surprised Secretary of
State George P. Shultz in Moscow
last week by saying he was not ready
See related story, Page 9
for another summit. Shultz said Gor
bachev had asked whether he could
expect an agreement on the Star
Wars space-based defenses.
At the United Nations in New
York, Soviet Ambassador Alexander
M. Belonogov said the Kremlin
would like the summit to reach an
agreement in principle on limiting
Star Wars, but indicated it was not
mandatory.
Shevardnadze met with U.S. Am
bassador Jack Matlock and another
State Department official in Mos
cow. A top officer at the Foreign
Ministry summoned Western Euro
pean ambassador countries to dis
cuss the Shultz visit to Moscow last
week.
In Brussels, officials at NATO
headquarters said the United States
had begun consulting its allies on a
timetable for implementing an
accord on intermediate-range mis
siles. The alliance has deployed, or
plans to deploy, U.S.-built Pershing
2 and cruise missiles in Britain, Italy,
West Germany, Belgium and the
Netherlands.
Shultz said there would be a for
mal announcement Wednesday.
While he declined to comment spe
cifically on it, he added: “It’s clear
h from all our contacts that an
intermediate-range
enoug
agreement
missiles is very close to being com
pleted, and we have made advances
in a number of other areas.”
Moscow claims Star Wars violates
the Anti-Ballistic Missile Treaty and
insists the United States commit it
self to honoring a strict interpreta
tion of that pact for at least 10 years.
South Korean voters
approve constitution
SEOUL, South Korea (AP) —
South Korean voters overwhelm
ingly approved a new constitution
Monday, establishing direct presi
dential elections and other demo
cratic reforms demanded in massive
anti-government riots last summer.
Riot police in downtown Seoul
battled protesters who urged voters
to boycott the referendum. Police
said about 40 demonstrators were
arrested.
In another political development
Tuesday, Kim Dae-jung formally
split the South Korean opposition by
announcing his candidacy for presi
dent.
Election officials declared the ref
erendum approved early Tuesday.
The approval rate was 93 percent
with nearly all the ballots counted;
only a simple majority was needed.
Officials said 80 percent of the
country’s 25.6 million eligible voters
cast ballots.
The constitution reduces the
power of the presidency and in
creases the authority of the legis
lature and the judiciary.
President Chun Doo-hwan, who
took power with military backing in
1980, bowed to opposition demands
for reforms in July and announced
that he would step down when his
term ends Feb. 25.
In addition to Kim Dae-jung, vy
ing for the presidency are rival op
position leader Kim Young-sam,
government candidate Roh Tae-woo
and former prime minister Kim
Jong-pil .
Kim Dae-jung told reporters he
had no choice but to run because of
the expectations of his followers.
Kim Dae-jung’s entry into the
presidential race means the breakup
of the main opposition Reunification
Democratic Party (RDP). Kim Dae-
jung, who has served as the party ad
viser, said he would be forming a
new party to back his presidential
bid and RDP lawmakers and officials
loyal to him were expected to defect
to the new group.
Opposition supporters had been
trying to get Kim Dae-jung and Kim
Ypung-sam, the RDP president, to
keep their earlier promises that just
one of them would run, but they
both refused to abandon their presi
dential ambitions.
The opposition fears the candida
cies of the two Kims will split the op
position vote during the mid-De
cember election and boost the
chances of Roh.
South Korean newspapers an
nounced the referendum results in
banner headlines in today’s editions.
News reports said the government
Would accept the constitution Friday
after final vote tabulations.
The governing Democratic Justice
Party welcomed the results.
A party statement said, “All par
ties now should make their utmost
efforts for a smooth execution of the
agreed political timetable, including
fair cotnpetition and elections.”
Teacher’s retirement system loses profits in crash
Foreign gains induce investors to put money into market
By Bridget Harrow
Reporter
ting a college
hanajob.
e Kinney Shoe
Dting entry level
s who haveatrus
id reward them
The recent stock market crash
[cost the Texas Teacher Retirement
iSystem $1 billion in profits from its
|$19 billion fund. But the system still
[showed a $1.8 billion profit in its
[stock portfolio late last week, a sys-
Item official said.
George Reagan, the system’s equ
ity manager, attributes this remain-
ling profit to the system restraining
from selling out at the bottom of the
market.
“The only time you lose in the
arket is when you panic,” he said.
[‘When you panic you either buy to
high or sell to low. And we did not
anic. We had not put any new
money in for nearly 12 months and
tve had made one half billion right at
the top of the market before the
crash, so there were no significant
losses in our equity portfolio.”
I The Teacher Retirement System
serves the employees at most of the
state’s public schools and state-sup-
Borted colleges and universities, in-
* eluding Texas A&M. About 500,000
employees pay into the fund and the
state matches those funds. Benefits
are then paid out to those who are
NEW YORK (AP) — Stock prices rose $37
billion on Wall Street on Tuesday as earlier
gains in Asian and European markets encour
aged investors to shift some money back into
the jittery stock market.
The Dow Jones industrial average, which
on Monday lost nearly 157 points in its sec
ond-worst point decline ever, reversed course
and rose 52.56 points to 1,846.49. Nine stocks
rose for every eight that fell in price.
In early trading Wednesday, prices moved
higher on the Tokyo Stock Exchange for the
second consecutive session.
Euphoria from higher prices on Tuesday
in Tokyo and Hong Kong had sparked a
quick rally in New York, sending the Dow av
erage soaring nearly 90 points in early trad
ing.
But traders chipped away at the advance as
the day wore on, selling stocks that had made
gains during the morning. The Dow slipped
to a gain of about 29 points shortly after noon
before regaining ground later.
The rush of money out of stocks and into
bonds slowed on Tuesday, with some money
heading back into equities, breaking a trend
that had helped depress stock prices since the
devastating 508-point drop in the Dow on
Oct. 19.
Another factor pushing the Dow higher
was an announcement by International Busi
ness Machines that it would spend an additio
nal $1 billion to buy back its own stock. IBM,
one of the 30 companies in the Dow average,
rose $6.50 a share to $118.50.
The market paid scant attention to news
from Washington that orders to factories for
“big ticket” durable goods rose 1.1 percent in
September, the first increase since June.
The biggest problem facing Wall Street,
analysts said, remains a lack of confidence,
both in the market itself after last week’s $500
billion collapse and in the ability of the White
House and Congress to trim the federal bud
get deficit.
In Washington, President Reagan and con
gressional leaders were optimistic negotia
tions would result in a plan to cut the deficit.
Reagan said Tuesday the stock market
plunge “has alerted us of potential dangers
on the economic horizon.”
Analysts said it was a lack of trust that
caused prices to slip from their early gains
Tuesday.
Hugh Johnson, a senior vice president with
First Albany Corp., said, “There has to be
some light at the end of the tunnel or some
confidence that the markets will stabilize.
The shift from bonds to stocks caused
bond prices to drop sharply, with the Trea
sury’s 30-year issue off about $18.75 per
$1,000 in face value. Its yield, which moves in
the opposite direction of its price, jumped to
9.07 percent, from 8.90 percent late Monday.
In London, prices seesawed before closing
marginally higher. The Finanical Times-
Stock Exchanges 100-share index rose 1.1
percent, or 19.2 points, to 1,703.3.
In Tokyo earlier, the Nikkei stock average,
which lost 4.7 percent of its value on Monday,
closed nearly 3 percent higher. In Hong
Kong, share prices tumbled but then recov
ered as the government and banks an
nounced new measures to help prop up the
market. —
leaving the system, disabled or re
tired.
Reagan said all funds not needed
to pay benefits — about 42 percent
— are invested into blue chip stocks,
which were hit the hardest last Mon
day. But he said all the pension ben
efits are perfectly sound.
“Our cash flow is more than two
times the benefits we pay out, and
money is readily available,” he said.
The system expects to make about
10 percent annually from stock equi
ties to be able to meet its obligations
and pay out its benefits. Reagan said
as ot Oct. 21, the system’s total real
ized return was $3.9 billion, which is
more than double the amount
needed for obligations and benefits.
But, he said, these market figures
can be misleading, because on any
given day the system could lose or
gain $500 million, and it could have
no real effect on the funds. It is
more of a paper profit or loss than
anything else, he said.
Reagan said the system is sound.
“We have the same stake in the
market as before,” he said.
“Whether that stake is as valuable is
left to be decided. But if you look at
agencies or businesses that manage
money the way we do, I would say
we stand in the top five.”
Reagan said the system has no im
mediate plans to change its reinvest
ment plan because of the recent un
predictability of the market.
“It is difficult to make sound deci
sions at a time like this, with the mar
ket going up and down 50 to 100
points,” he said. “We like to all think
we’re level-headed people, but
something like this can leave a
squirmish feeling in the pit of the
stomach.”
enate works to implement new insurance bill for elderly
uickly, to mai#
Wh6th6fyOU5P ■ WASHINGTON (AP) — The Senate rules allowing unlimited de
S®, Lady FOOt!''- Senate worked toward passage bat left uncertain when the floor
nifuesday of a catastrophic health in- vote would come on the measure,
oncamousoc^ su rance bill to protect America’s el- which was approved urtanimausly by
Blerly against the devastating costs of the Senate Finance Committee last
Iff ice fordetas fcriousillness
CORPORATICt-
H Opportunity Empl
interest!
eds. Call 845-2(11.
I Debate leading to votes on a hand
ful of amendments and the bill itself
■ame after weeks of behind-the-
scenes negotiations that gained
I^Vhite House support for a compro
mise version that closely tracks basic
provisions of House-passed legis
lation, but contains important cost-
jeontainment provisions for a new
prescription drug benefit.
I That administration support —
coupled with the already wide bipar-
sian backing for the measure — as
sured eventual passage. However,
summer.
Moreover, differences between
the House and Senate versions made
inevitable the need for a conference
committee to work out final details.
But the eventual parameters of
the basic benefit and financing pack
age that eventually will emerge from
those House-Senate negotiations —
as well as the virtual certainty that
some legislation will be passed and
signed by President Reagan — came
into focus with word that the admin
istration supports the compromise.
Both the Senate and House bills
would inject into the Medicare pro
gram for the first time an element of
so-called progressive financing — a
mechanism by which elderly Ameri
cans with enough income to make
them liable for federal income taxes
would pay a proportionately larger
share for the additional catastrophic
coverage.
That feature would require a rela
tive few of the wealthiest older
Americans — those with annual in
comes of about $ 100,000 a year — to
pay a maximum of $800 each in ad
ditional 1988 premiums under the
Senate bill. This would be just one
facet of the new plan to help those
elderly people who are not as finan
cially stable where medical costs are
concerned.
But the 60 percent of the elderly
who now pay no income tax would
be charged only a modest flat pre
mium for the additional catastrophic
coverage — about $6 a month under
the Senate bill. This part of the plan
was also implemented to aid those
people who were facing financial in
stability.
Sen. Lloyd Bentsen, D-Texas, the
Senate Finance Committee chair
man who pushed the Senate bill to
the brink of passage insisted that the
Medicare program, optional under
the Senate version, will remain a bar
gain even for those hit with the high
est additional premiums. All law
makers involved with the bill felt it
essential to contain the costs for all
of those in the program. However,
most senators feel that this is the
most beneficial plan for all involved.
Both the House and Senate bills
would include, also for the first time,
an outpatient prescription drug ben
efit under the Medicare pro
gram.The scope of that prescription
drug benefit was the major differ
ence between the House and Senate
versions.
While the House bill would pay 80
percent of drug costs after a $500
annual deductible, the Senate ver
sion — pending expected acceptance
of a floor amendment to the com
mittee bill — would pay 80 percent
after a $600 deductible and, even
more significantly, phase in the drug
coverage so that all drugs would not
be covered until 1993.
The Senate version contains a
built-in cost containment measure by
which the additional flat monthly
premium to cover the drug costs
could not exceed $8.10 in 1993.
If the program proves at that
point to be more expensive than
projected, the secretary of the De
partment of Health and Human
Services would be authorized to scale
back benefits to keep costs within the
amount of money set aside in a spe
cial trust fund to pay for them. This
way, the plans of good intentions
would not be fouled because of a
deficit in the plan that is trying to
help those people who face a deficit
in their current financial situations.