Republican President-elect George Bush, saying "the people have spoken and the verdict was clear," moved swiftly Wednesday toward forming his administration, designating campaign chairman James A. Baker III as the next secretary of state.

Bush announced the choice of Baker at a news conference in Houston hours after his victory over Democrat Michael Dukakis was assured. (See Baker profile on A2.)Voters tempered the Republican victory in the battle for the White House by strengthening the opposition Democrats' control of both the Senate and House.

When a reporter suggested that the victorious candidate looked subdued, Bush replied that he felt "somewhere between total exhilaration and recognition that the challenge ahead is going to be awesome."

Bush, 64, shied away from using the word "mandate" for his victory but said that "I don't think it was overly close."

He received 54 percent of the popular vote, "which I think most people would consider a big win . . . big strong support from many, many states. So, I would simply say the American people have spoken," Bush said.

With 99.5 percent of the nation's precincts reporting, Bush had 47,601,312 votes. Dukakis had 40,767,121 or 46 percent.

In the critical tally of electoral votes, Bush won 40 states for 426 electoral votes. Dukakis won 10 states and the District of Columbia for 112 electoral votes.

But Democrats padded their advantages in both houses of Congress. They picked up at least one seat in the Senate and were leading for another - in Florida - which would give them a 56-44 edge. They had a likely pickup of five in the House for a 262-173 advantage.

In addition to designating Baker as successor to Secretary of State George Shultz, Bush chose his chief of staff Craig Fuller and pollster Robert Teeter as co-directors of his transition. Sheila Tate, his campaign press secretary, was given the same role for the transition.

The vice president predicted "a major turnover" in personnel from the Reagan administration, which he said would "reinvigorate the process."

With the bow to the man he has served for eight years, Bush said, "I note the obvious, President Reagan is still the president of the United States, and I will not be using the transition to try to make or unduly influence decisions that are properly the president's."

Bush was up early Wednesday, despite late-night celebrating, and went to St. Martin's Episcopal Church in Houston with family and friends.

When a questioner suggested he would face problems in the Senate, now more firmly in Democratic hands, he replied simply, "A few problems everywhere."

He was returning to Washington later Wednesday to

talk over the election - and the future - with Reagan in the Oval Office.

Bush won the election convincingly - the third straight Republican presidential victory - but he fell short of the 49-state sweep by Reagan four years ago. That was little consolation for the Democrats, who now have lost five of the last six presidential elections.

"He will be our president and we'll work with him,"

Dukakis said Tuesday night in a gracious yet unbowed concession speech.

"God knows, there's lots of work to do," said Bush, looking ahead to next January when he will succeed Reagan after eight years as loyal understudy.

"The people have spoken," Bush told cheering supporters in Houston. "And with a full heart and with great hopes, I thank all of the people throughout America who have given us this great victory. To those who supported me, I will tryto be worthy of your trust. And to those that did not, I will try to earn it."

Bush became the first sitting vice president to win the presidency since Democrat Martin Van Buren in 1836. An ominous note for Bush: Van Buren was defeatedfor re-election.

According to surveys of voters as they left polling places, a big factor working for Bush was the continued popularity of his boss.

Dukakis closed out his campaign with an exhausting 48-hour race from state to state with no break for sleep. All the same, he was out power-walking on Election Day and when he appeared before supporters for his concession speech they chanted, "92, 92, 92, 92."

The weary candidate looked not quite ready to plunge into the next presidential campaign.

The man he beat for the Democratic nomination, Jesse Jackson, said Wednesday, "Our next political season really does begin today." But Jackson, appearing on "CBS This Morning," quickly added, "It's much too early to talk about 1992politics."

Bush and Dukakis ended their campaign, noteworthy for its bitterness, with words of conciliation and cooperation.

Bush said he had received a call from Dukakis, "and I want you to know he was most gracious. His call was personal, it was genuinely friendly and it was inthe great tradition of American politics."

Dukakis also referred to the conversation and told his supporters, "This nation faces major challenges ahead, and we must work together."

Dukakis returned to the Massachusetts statehouse, where he has two years remaining on his term as governor. His running mate, Lloyd Bentsen of Texas, easilywon re-election to his Senate seat from the Lone Star state.

Vice President-elect Dan Quayle told supporters in Washington that "you need never question the devotion and dedication I will bring to this job."

After the polls closed in California, Reagan called both Bush and Quayle, speaking to each for a few minutes and "offering his congratulations to both," said White House spokesman Marlin Fitzwater.

Reagan's chief of staff, Kenneth Duberstein, said the president was ready to name the members of his transition team _ the White House group that will manage the transfer of power to the next commander-in-chief. "Certainly, the president wants to be helpful to the vice president" Duberstein told reporters. "Ronald Reagan doesn't want the country to change course."