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GINGRICH COUNTING ON GOP TO DO `ADULT THING' ON BUDGET

Looking beyond the "Contract With America," House Speaker Newt Gingrich intends to convene a two-day retreat for Republican lawmakers this spring to help forge agreement on the steps needed to balance the budget.

In an interview, Gingrich said he believes the GOP majority will reach a consensus easily that "the adult thing to do" is to wipe out the deficit by 2002. Still, he forecast "a lot of tension and a lot of dialogue and a lot of conflict" as lawmakers spend months working out the details.Among the proposals under consideration, he said, is to "collapse at least three or four departments." Republicans have previously mentioned the Departments of Energy and Housing and Urban Development as candidates for extinction, with Education possibly to be merged with Labor, Gingrich notes in a lengthy briefing paper he has been writing in his Capitol office.

"Medicare must be transformed" and costs cut to head off reductions in services and financial crisis, the document argues. Social Security is off the table, it says.

The document paints a grim picture of the nation's future if deficits aren't eliminated. It holds out the promise of a "balanced budget dividend" if they are, consisting of lower taxes and lower interest rates for consumers on car loans and mortgages.

The document is expected to form the basis for Gingrich's speech to the country Friday night, an appearance unprecedented for a congressional leader.

After 16 years in the minority, Gingrich reflected on how different it is to be in the majority: "The minority passively waits and then takes its shot when it sees an opportunity," he said. "The majority has to get up every morning in a positive way and do something."

He said it was proving more difficult than expected to round up the votes needed to pass the Republican package of tax cuts, the last element of the contract.