ETHICAL ISSUES AWAIT NEW CONGRESS.

Byline: Michael Wines The New York Times

As a new Congress convenes Tuesday vowing to cut taxes, tame Medicare spending and balance the federal budget, many in the Capitol believe the elements of success are in alignment for the first time in years, but only if the lawmakers can first deal with explosive ethical issues involving campaign finance and House Speaker Newt Gingrich.

The path of the new Congress is likely to be charted in its first weeks, when the House is expected to hold extraordinary public hearings and debate the fate of Gingrich. Perhaps a month later, in late February or early March, the Senate Governmental Affairs Committee will publicly investigate possible campaign-spending abuses by the Democratic Party, the White House and, probably, by Republicans as well.

But if Congress can address such combustible issues without burning all bridges between the two parties, it could be extraordinarily productive, some leaders say.

``The president has now said, `Look, I've got all my politics behind me now; I don't have to operate from a political point of view,' '' Rep. Dick Armey of Texas, the majority leader, said Sunday on the ``Fox News Sunday'' program. `` `Let's get down to the legislative work.' And he's anxious to do it, and we're anxious to get back to it as well.''

At the top of a legislative agenda nearly as ambitious as the one Republicans brought with them two years ago are a balanced-budget amendment to the Constitution, a binding plan to erase the deficit by 2002, an overhaul of the federal health-care system, and tax cuts for families, small businesses and investors.

Democrats would add the partial restoration of welfare benefits cut by legislation that President Clinton signed into law last summer. Some in both parties demand an overhaul of campaign-spending laws.

Much in the new Congress augurs well for optimists. There are lots of new faces: one of every five members is a freshman, nearly as many as in 1994. Excepting those House members who rose to the Senate, none carries scars from the last four years of political garroting on Capitol Hill.

The timing is also right. At the White House, Clinton has been transformed from election-year rival to lame duck in need of Congress' help to win a place in history. In the Capitol, the populist fires that led Republicans into disastrous confrontations in 1994 and 1995 appear banked.

The politics have changed, too. The balance of legislative power has shifted to the Senate, where the Republican majority leader, Senator Trent Lott of Mississippi, likes to cut deals. The House, where the November elections cut deeply into the Republicans' dominance, is a chastened place where moderates of both parties may comprise the margins of victory or defeat.

``You can do one of two things with a smaller majority,'' said Rep. David Hobson, an influential Republican from Ohio. ``You can try to force all your people in line, which is very difficult to do. Or you can build more consensus-oriented legislation and move it through.''

``It'll be less confrontational this time, it appears,'' he added.

That remains to be seen. In the House, many Democrats believe little can be accomplished as long as Gingrich remains speaker.

In the Senate, Lott's bent toward bargaining may be more than offset by the November election results, which vastly widened the ideological gulf separating Republicans and Democrats.

Republicans not only increased their majority by two seats, to 55, but also replaced a throng of moderates who had retired with conservatives from Gingrich's take-no-prisoners school of politics. Several come directly from the speaker's House ranks, including Sens. Sam Brownback of Kansas, Wayne Allard of Colorado and Tim Hutchinson of Arkansas.