If President Clinton's deficit reduction bill is killed, bond prices will drop, the stock market will soar, and the rich will drink champagne in their hot tubs in the Hamptons over the weekend and return to work Monday ready to hire more employees.

That's Ed Yardeni's view, and the chief economist at C.J. Lawrence Inc. is always worth listening to. He's almost certainly right about the bond market dropping if Congress fails to reduce the deficit by $500 billion over the next five years. If it does fall, there will be that much more short-term stimulus in the economy, and demand for funds and inflationary pressure will gain some strength.

It's still a good bet that a compromise deficit reduction bill will squeak through with roughly $250 billion of added taxes and $250 billion of spending cuts -- a recipe for continued sluggish economic growth, controlled price increases, and moderately lower long-term interest rates. But don't forget, when the five-year program has been completed, the national debt will have increased $1 trillion over five years. If the bill dies, the national debt will increase $1.5 trillion.

The Hamptons hot-tub tribe has never been keen on the long run, and its members would probably be happier with a stock market surge and a bigger national debt. Glitz, however, is unfashionable just now, and Washington will respond to more broadly felt, upcountry demands for deficit reduction.

If our hunch is right, members of Congress will not forget that Ross Perot's followers outnumber the bicoastal eat-drink-and-be-merry set. The President will get a barely acceptable bill before Congress begins vacation on Aug. 6.

Still, the five-year outlook, with or without deficit reduction, is worth pondering. Will the United States in 1998 be much different if the national debt is $5 trillion and not $5.5 trillion? In other words, is all the political effort to reduce the deficit really significant?

Last Friday, the White House ballyhooed Clinton's deficit-cutting budget plan as an engine to create 7 to 8 million jobs over the next four years, or enough to lower the 7% unemployment rate to 6% or lower by 1997. That seems crazily optimistic, an outburst of propaganda to energize House-Senate conferees. But deficit cutting is essential even if it won't produce economic miracles.

Bond yields moved sharply higher last week, their biggest rise in two months and a warning of what will happen if the budget plan is killed or watered down. If Congress heeds the warning and enacts $500 billion of deficit reduction, that will be a good first step -- mid-1993 is as good a time as any to begin regaining fiscal control. Then, as Federal Reserve Chairman Alan Greenspan said last Tuesday "we are going to need to take another shot at the deficit."

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