BUDGET CHIEF MILLER WARNS FED ON INTEREST RATES
  White House Budget chief James
  Miller said he was concerned that the Federal Reserve might
  "overreact" to the decline in the value of the U.S. dollar by
  raising interest rates, a move he said could cause a recession
  next year.
      "Our greatest danger is overreaction," Miller told newspaper
  reporters yesterday. "I'm concerned about the Fed's
  overreaction. I'm concerned about what I see in recent data
  showing a substantial fall in the money supply."
      Edwin Dale, Miller's spokesman, said the remarks, published
  in the New York Times today, were accurate.
      Miller said he was concerned the Fed might overreact to
  signals of rising inflation by tightening credit -- a move he
  said could have "political consequences."
      The White House budget chief appeared to be referring to
  the effect an economic slowdown could have on the presidential
  and congressional elections next year.
      "My fear is that if we get into a recession we are in deep
  soup, and there is no question about it," he said.
      Miller said an economic slowdown could lead to lower tax
  revenues and a widening of the budget deficit.
      Miller's remarks reflected concern that the U.S. central
  bank might feel compelled to tighten credit as a means of
  bolstering the dollar.
      Both Treasury Secretary James Baker and Federal Reserve
  Board Chairman Paul Volcker recently have warned that further
  declines in the value of the U.S. dollar could jeopardize
  global growth prospects.
      U.S. officials have urged Japan and West Germany to
  stimulate economic growth in their countries -- a move that
  could boost U.S. exports and relieve trade protectionist
  pressures in the United States.