WASHINGTON - The Treasury Department is projecting that interest rates on government securities could jump by 100 basis points, provoking other economic reverberations, if the Senate defeats President Clinton's $500 billion budget plan this month.

An analysis by the department's economic policy office, released by Treasury Secretary Lloyd Bentsen on Sunday, predicts both "substantial disruption of the financial markets in the short run" and "severe damage to the American economy in the medium and long run" should the plan fail.

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