Azacitidine and Arsenic Trioxide in Treating Patients With Myelodysplastic Syndromes or Chronic Myelomonocytic Leukemia

DISEASE CHARACTERISTICS: * Diagnosis of myelodysplastic syndrome or chronic myelomonocytic leukemia * International Prognostic Scoring System (IPSS) score ≥ intermediate-1 * Low IPSS score allowed provided patient meets ≥ 1 of the following criteria: * Platelet count ≤ 50,000/mm\^3 * Required platelet or packed red cell transfusions within the past 4 weeks * Neutropenic (i.e., absolute neutrophil count \< 1,000/mm\^3) AND has infections requiring antibiotic treatment * No prior leukemia or refractory anemia with excess blasts in transformation PATIENT CHARACTERISTICS: Age * 18 and over Performance status * ECOG 0-2 Life expectancy * More than 12 weeks Hematopoietic * See Disease Characteristics Hepatic * Bilirubin ≤ 1.5 times upper limit of normal (ULN) * AST and ALT ≤ 2.5 times ULN Renal * Creatinine ≤ 1.5 times ULN Cardiovascular * No symptomatic congestive heart failure * No unstable angina pectoris * No cardiac arrhythmia * Baseline QTc \< 500 msec * QTc interval \< 460 msec with potassium \> 4.0 mEq/L and magnesium \> 1.8 mg/L Immunologic * No history of allergic reaction attributed to compounds of similar chemical or biologic composition to study drugs * No ongoing or active infection * HIV negative Other * Not pregnant or nursing * Negative pregnancy test * Fertile patients must use effective contraception during and for 6 months after study participation * No psychiatric illness or social situation that would preclude study compliance * No other uncontrolled illness * No other malignancy within the past 12 months PRIOR CONCURRENT THERAPY: Biologic therapy * More than 4 weeks since prior administration of any of the following: * Interferon * Filgrastim (G-CSF), sargramostim (GM-CSF), epoetin alfa, or other hematopoietic cytokines * Thalidomide or thalidomide analogs * No concurrent epoetin alfa Chemotherapy * More than 4 weeks since prior chemotherapy * No prior arsenic trioxide or azacitidine * No other concurrent chemotherapy Endocrine therapy * More than 4 weeks since prior steroids * No concurrent androgenic steroids * Concurrent steroids for adrenal failure or as prophylaxis for nausea allowed Radiotherapy * Not specified Surgery * Not specified Other * More than 4 weeks since prior retinoids * No other concurrent investigational agents * No other concurrent anticancer therapy