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CLINTON AIDE ADMITS DEFICIT MAY RISE IN THE SHORT-TERM

SHARE CLINTON AIDE ADMITS DEFICIT MAY RISE IN THE SHORT-TERM

The incoming Clinton administration conceded Friday that the federal budget deficit may have to rise in the short-term if an economic stimulus package is enacted.

"OK, I'm not ruling it out," said Clinton spokesman George Stephanopoulos when pressed by reporters.President-elect Clinton has said two key goals of his administration will be to produce a short-term economic stimulus package to create jobs and a long-term reduction in the budget deficit.

Most economists believe a short-term stimulus will inevitably produce some increase in the gap between the government's spending and its receipts.

However, the issue of a short-term rise in the deficit and the possible increase in long-term interest rates that could produce has been neatly avoided so far.

Stephanopoulos had been briefing reporters on talks here and in Washington between Clinton and congressional leaders.

He said the talks had brought agreement in principle on a strategy for revitalizing the U.S. economy. The incoming president was encouraged by "the extreme willingness on the part of members of both parties . . . to get something done," Stephanolpoulos said.

"There was a general agreement in principle that we had to have a program that addressed both economic stimulus and job creation and long-term deficit reduction."

House Democratic leader Richard Gephardt predicted Friday that the new Democratic president would offer a program that would enlarge the already-swollen federal deficit in the first year but reduce the flood of red ink sharply over four years.

But Stephanopolulos said that Clinton and the congressional leaders "didn't get into a hard nuts-and-bolts kind of markup of legislation" in their discussions.

Stephanopoulos tried to avoid being drawn into discussing whether economic stimulus would get higher immediate priority than reducing the deficit, pointing out that it was possible, for example, to generate jobs by accelerating spending on roads, bridges and other transportation projects.

These projects were provided for in a $13.2 billion bill that President Bush signed into law earlier this year.

But when reporters noted that he did not seem to be ruling out a short-term deficit increase, Stephanopoulos replied: "OK, I'm not ruling it out."

Clinton planned to take the weekend off to review a list of proposed heads of "clusters" to conduct the agency-by-agency reviews for Clinton's takeover of the federal bureaucracy. Those names may be announced next week, Stephanopoulos said.

The pace of the transition will probably pick up in early December, he said, when Clinton returns from a brief vacation over the Thanksgiving weekend.