Sine Qua Non

Forward-looking leaders who understand the significance of this exciting scientific development would be encouraging stem cell research. But apparently they are in short supply in Missouri and Illinois, where last week legislators refused to endorse these promising inquiries. In Jefferson City, lawmakers shot down a plan to issue $190 million in bonds for life-sciences buildings in the University of Missouri system, where they feared therapeutic cloning - the process that yields stem cells - would take place. Those actions send an unmistakable message that researchers should go elsewhere to pursue the kind of research both states claim is vital to their future.

There is room for thoughtful people to disagree about the ethics of certain aspects of stem cell research. The research involves the use of cells present in the earliest stage of human embryonic development; the cells can be coaxed into becoming any type of cell in the body. Eventually, we may learn how they could be used to replace damaged heart or nerve cells, curing heart disease or Parkinson's. But producing stem cells involves taking them from blastocysts - tiny balls of cells that have been induced to divide for less than a week. However, these blastocysts were never fertilized by sperm nor implanted into a uterus and could not develop into a human being.

Now, a growing chorus of conservatives who identify themselves as pro-life are publicly speaking out in support of stem cell research. Earlier this month, at a fund-raiser for juvenile diabetes in California, former first lady Nancy Reagan talked about her husband's long struggle with Alzheimer's. "I'm determined to do whatever I can to spare other families this pain," Mrs. Reagan said.

She has called on President George W. Bush to ease restrictions on federal funding for stem cell research. So have other leading conservatives, including Sen. Orrin Hatch, R-Utah, and former Republican Sen. John C. Danforth of Missouri.

In August 2001, Mr. Bush said he would allow publicly funded stem cell research only on what he then estimated were 78 existing stem cell lines. But most of those turned out to be either unavailable or not viable for the work. Mr. Bush should listen to the words of wisdom and compassion coming from within his own party.

The Federal Reserve should club the inflation beast before it wakes up and tramples our prospects for long-term prosperity. That means it's time for the Fed to raise short-term interest rates.

The old cliche holds that the Fed's job is to take away the punch bowl just as the party starts getting fun. The idea is to keep the good times rolling without producing the sort of wild economic bacchanal that results in a recession hangover.

By that measure, the United States is beginning to improve. The economy produced 288,000 jobs last month after adding 337,000 in March. That's strong evidence that the long job drought is behind us. Rising wages should follow as demand for labor grows.

Corporate profits were up 25 percent in the first quarter, and companies are again investing in new plants and equipment. The gross domestic product is growing at a healthy 4.2 percent rate.

All that's just ducky. What's worrisome is that prices seem to be rising, too. Consumer prices rose a modest 0.2 percent in April, the government reported Friday. But that monthly number tends to get knocked around a lot by volatile food and energy prices. So economists subtract food and energy to see what prices are really doing. That so-called "core" rate has been rising at a 3 percent annual pace over the past three months, up from 1.1 percent last year.
Historically, inflation has been a major economy party pooper. When out of control, it distorts business decisions, halts investment, cuts the standards of living, sends interest rates through the roof and brings on severe recession. No one wants to see mortgage rates above 15 percent again, as they were in 1981.

Once it catches on, inflation creates a psychology that feeds on itself. So history teaches that it's best to deal with it before it gets out of hand.

At its simplest, inflation is a product of supply and demand. As the economy heats up and more people get paychecks, consumers start to buy things faster than the economy can produce them. Prices rise. Other factors, such as the value of the dollar, federal deficit spending and oil decisions by the Organization of Petroleum Exporting Countries also play a role.

The trick is to let the economy grow as fast as it can without creating inflation. And that's where the Fed comes in. The Fed's lever is its ability to control short-term interest rates, which affect much business and consumer borrowing. Raising borrowing costs takes some steam out of the economy.

But the Fed's lever is slow-acting. It takes from six months to a year or more for a rate increase to slow the economy. That's why the Fed should act at its June meeting. On its present course, the economy could be getting wild and crazy a year from now.

Fed Chairman Alan Greenspan has been sending out smoke signals for a month or so, hinting that a slow, gradual rise in rates is in the offing. That's just what's needed. With current rates at a 50-year low, that policy should cause little real pain.

Opponents of higher rates note that American factories are still producing well below capacity, which argues against rising prices. But the actual inflation numbers belie such complacency.

Oil prices are the wild card. At $41 a barrel, they're at 20-year highs. They create drag on the economy, draining money out of the country and raising consumer prices at the same time. Chances are that oil prices won't decline very much any time soon.