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THE NASTY mix of a tumbling dollar in foreign exchange markets and a mushrooming U.S. trade deficit ought to warn Washington to pay attention to economic fundamentals.

Symptoms of something amiss are painfully clear. The buck is scraping bottom in those international bazaars where greenbacks are exchanged for scarce Japanese yen. The battered dollar isn't much better against Germany's solid mark.

The reasons behind this include a lack of confidence in the dollar and other economic features of the American landscape, plus a huge surplus of dollars sloshing around in foreign channels. Part of the reason for that surplus, of course, is the persistent trade deficit caused by Uncle Sam selling lots fewer goods abroad than the value of goods from Asia and Europe and Mexico that Americans buy at home.

Though America's trade balance has long been sickly, it took an unsettling turn for the worse in January.

In round numbers, January's gap between imports and exports soared to more than $12 billion -- nearly 70 percent higher than comparable figures for the previous month and for January 1994.

A look at specifics is not comforting. The customary U.S. deficits with Asian nations like Japan, which sell us far more than they buy, continued. Deficits with the European community deepened. The biggest jolt was the turnaround from a trade surplus with Mexico in December to an $863 million deficit in January.

If the growing trade deficit and shrinking dollar together don't flash a warning to take America's global economic position seriously, what does?

The typical response to deepening trade shortfalls is to devalue the dollar in order to make exports cheaper and more competitive in foreign markets. Since the buck is so low, that's out. Besides, it hasn't been working.

Washington surely must continue to pressure Asian nations to open up their markets. It must continue to work to stabilize the feeble Mexican economy.

But longer term and more important, Washington must encourage greater savings for investment in the United States, which now has one of the lowest savings rates among industrial nations in the world. And the basic element in that effort: White House and Congress must bring federal budget deficits under control.

This urgent economic mandate of deficit-reduction is what makes talk of big tax cuts now in Washington -- by both the White House and some Democrats and Republicans in Congress -- so irresponsible.

The U.S. economy is strong. That's a plus. It gives Washington an opportunity to seize control of the deficits and close them.

But continuing to add $200 billion a year to the growing national debt that must be financed by borrowing only weakens confidence in Washington's economic leadership.

And it continues to propel more and more of those already-surplus dollars into the hands of creditors abroad.

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