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Transportation Secretary Federico Pena got out the budget shears today and proposed deep cuts in his federal department that will save $6.4 billion over five years. Pena proposed collapsing 10 DOT divisions into three, reducing staff 12 percent by 1999 and privatizing several key functions. Under the plan, most of the department would be consolidated into an Intermodal Transportation Administration, which would assume the functions of highway, railway and other transit offices. Air traffic control would handled by a quasi-independent body outside the Department. Legal and accounting duplication would be eliminated. Pena will send a detailed plan by March to Congress, which must approve the changes.