WASHINGTON -- Manufacturing executives are worried that an election-year round of tax cuts will undermine the bond market and send interest rates higher.

In a breakfast meeting yesterday with reporters, Jerry Jasinowski, president of the National Association of Manufacturers, said the bond market is right to worry that the budget agreement may unravel.

Mr. Jasinowski said manufacturers do not expect much from the tax proposals offered by congressional leaders, such as Senate Finance Committee Chairman Lloyd Bentsen, D-Tex. The White House also is reviewing the idea of tax cuts with Republican allies in Congress.

"There's just no confidence that Washington will fashion as sensible pro-growth package," Mr. Jasinowski said. "The downside risk is that we'll scare the hell out of the bond market, have a big political bloodbath in Washington, and partially raise the federal budget deficit."

Manufacturers do favor tax cuts and other measures to help longterm growth, but any legislation should be postponed until election year political passions have died down, Mr. Jasinowski said. Ideas for tax cuts beign discussed now, he warned, "amount to a bidding war" that threaten to undo the budget pact and "drive up interest rates."

In other comments, Mr. Jasinowski said yesterday's durable goods report showing orders fell 3.2% in September was not as bad as it appeared because it reflected big declines in aircrafts, ships, and tanks. Excluding the volatile transportation sector, orders were up 0.9%.

A survey of the manufacturers association's members found that companies expect slow economic growth in the next 15 months, with real gross national product rising between 1.8% to 2.4%. "We believe we're out of the recession, we're moving ahead very modestly, and there's almost no chance of a double dip," Mr. Jasinowski said.

The survey also found, however, that nearly two-thirds of the executives questioned said they believe the Federal Reserve has been too tight with monetary policy and more reductions in short-term rates are needed to boost the economy.

Mr. Jasinowski said he talked Wednesday on the telephone with Federal Reserve Board Chairman Alan Greenspan and urged him to consider a cut in the discount rate or other measures to boost the money supply, including a reduction in bank reserve requiements. Mr. Greenspan did not give any indication of his thinking, Mr. Jasinowski said, other than to say the manufacturers' predictions for the economu were in line with the findings of the so-called beige book, released this week by the Fed.

The Fed's report, an assessment of business conditions in the 12 Federal Reserve bank districts, found that the U.S. economy is generally slow or weak, with only some parts of the Midwest showing much evidence that recovery is taking hold. It also provided evidence that the industrial sector is slowing after a burst of activity during the summer.

"There was a little growth in the steel and auto-related industries, but now that seems to have been completed and things are leveling off," said Stuart G. Hoffman, chief economist for Pittsburgh National Bank. "The manufacturing sector may make very little, if any, contribution to growth in the fourth quarter."

Mr. Hoffman added, "Statistically, we're in a recovery, but it's one of the better-kept secrets among economists."

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