Clinton Signals Willingness to Consider School Prayer : Congress: He says he supports voluntary concept. Panetta indicates areas of accord, conflict with GOP.

President Clinton signaled Tuesday that he might be able to reach agreement with the new Republican congressional majority on school prayer.

“I’ll be glad to discuss it with them,” the President said at a press conference at an economic conference in Jakarta, Indonesia. “I want to see what the details (of a school prayer proposal) are. I certainly wouldn’t rule it out. It depends on what it says.”

In Washington, White House Chief of Staff Leon E. Panetta indicated further agreement with GOP leaders, saying that trade and congressional reform are two issues that the two sides can agree on.

Emerging from the first post-election meeting between an Administration official and the new Republican leadership, Panetta rejected proposed Republican tax cuts, however, saying that they would swell the federal deficit and weaken what has been a strengthening economy.

“I have always supported voluntary prayer in the schools,” Clinton said in Jakarta. “I have always thought that the question was when does voluntary prayer really become coercive to people who have different religious views from those who are in the majority in any particular classroom. . . .

“Obviously, I want to reserve judgment, I want to see the specifics. . . . And again, I would say this ought to be something that unites the American people, not something that divides us. . . . The American people do not want us to be partisan, but they do want us to proceed in a way that is consistent with their values and that communicates those values to our children.”

Panetta made an hourlong “courtesy call” on Newt Gingrich (R-Ga.), who is expected to be Speaker of the House in the next Congress, and Sen. Bob Dole (R-Kan.), who is expected to be Senate majority leader, at Dole’s Capitol Hill offices.

After the session, Panetta said that if the Republicans are serious about balancing the federal budget in five years, their proposed tax cuts and increased defense spending would require cutting a trillion dollars from the federal government at the same time.

“Whatever the outcome of the election, we all have a responsibility of helping to move this country forward,” Panetta said. “We have to be very straight with the American people.”

Neither Dole nor Gingrich commented after the meeting.

Earlier, Alice Rivlin, director of the White House Office of Management and Budget, told reporters at a breakfast meeting that the proposed Republican tax cuts, if enacted, would swell inflation, ignite interest rates and “probably throw the economy into recession.”

The likely new chairman of the House Budget Committee, Rep. John R. Kasich (R-Ohio), accused her of “alarmist and inflammatory” rhetoric.

Panetta called the congressional vote scheduled for later this month on a new world trade agreement “the first test of the relationship” between the Democratic Administration and the new Republican majority in Congress--although that majority will not be seated until January.

Gingrich and other GOP leaders have generally indicated that they will support the trade agreement in the lame-duck session. But Sen. Jesse Helms (R-N.C.), the likely new chairman of the Senate Foreign Relations Committee, signaled his intention to delay consideration of the pact.

In a letter to the President, Helms threatened to make trouble later on foreign policy matters unless Clinton agrees to put off the trade vote until next year.

Helms’ letter said: “I can assure that it will have an exceedingly positive effect on my making certain that the Administration positions on all foreign policy matters during the 104th Congress will be considered fully and fairly.”

Panetta said that there are other reforms that the Clinton Administration and the Republican leadership agree on, including lobbying reform, campaign finance reform, welfare reform, health care reform and the line-item veto. Referring obliquely to the Helms threat, he added that foreign affairs is an area where it is “extremely important” that Congress and the White House work together.

He also said that he praised Gingrich for his promise to cut House committee staffs by one-third and noted that the Clinton Administration had cut the White House staff by 25% and the executive branch by some 270,000 jobs.

But on economic policy, Panetta declared: “As the President has made clear . . . the important thing is that (tax cuts) are paid for, and that they not increase the deficit. . . .

“That is a very fundamental discipline that we have put in place in the budget process here on Capitol Hill and throughout the government,” he said, and if tax cuts are not matched with spending cuts, “you are simply increasing taxes on our kids for the future.”

In their “contract with America,” House Republicans have promised what they call a middle-class tax cut, including a repeal of the so-called “marriage tax,” a tax credit to families making up to $200,000 per year for each child they have, and broader eligibility for individual retirement accounts.

Other Republicans, including the probable new chairman of the House Ways and Means Committee, Bill Archer (R-Tex.), have proposed cutting capital gains taxes.

“Whatever we do is going to be paid for by spending cuts,” Archer said in an interview on “The McNeil/Lehrer NewsHour.” He suggested that $50 billion could be saved over five years in welfare reform alone. “This is tough, but the American people are prepared for us to be tough.”

* POLITICAL VETERANS: Majority in new Congress have past political experience. A20

‘Contract with America’: The full text of the Republican “contract with America” is available on the TimesLink on-line service. Also available are biographies of Newt Gingrich and up-and-coming GOP leaders. Sign on and click “Special Reports” in the Nation & World section.

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