OUTLINE: This is a nonrandomized, dual institution study. Patients receive paclitaxel IV over 1 hour twice a week for a total of 8 weeks. This is started within 1 week of a tumor biopsy. Patients receive radiotherapy 5 days/week for 5.0 weeks within 1 week of the first paclitaxel dose. Operable patients who have progressive disease with the above therapy undergo a modified radical mastectomy (MRM), then receive 4 courses of doxorubicin IV and cyclophosphamide IV, administered once every 21 days. Inoperable patients receive this same chemotherapy regimen, then are reevaluated for surgery. Patients who have stable disease or who respond to the paclitaxel/radiation regimen undergo a MRM, then receive 4 courses of doxorubicin IV and paclitaxel IV (over 3 hours) once every 21 days. All patients with hormone receptor positive tumors receive tamoxifen for 5 years after all other therapy is completed.