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A Rumbling On The Hill

A Rumbling On The Hill

His face was lined from too many late-night war briefings, his gaze at times seemed far away. Before a joint session of Congress, President Bush declared on Jan. 29 that through force of will and "the hard work of freedom" the U. S. will defeat not only Saddam Hussein but economic and social ills at home.

And, for a few moments, the intensely partisan struggle between the White House and Capitol Hill gave way to a rare spirit of national unity. But the cease-fire won't last long. Soon, George Bush, despite the patriotic surge that has lifted his popularity, will find himself fighting on a familiar domestic battlefield: rocky Capitol Hill terrain controlled by dug-in Democrats.

The Administration's bare-bones domestic agenda underscores White House aversion to a third grueling year of partisan struggle with Congress (table). Bush all but threw in the towel on his plan to cut capital-gains taxes by relegating the idea to a committee headed by Federal Reserve Chairman Alan Greenspan. In a curtsy to conservatives, the President will seek to re-package some housing and education programs to give recipients more choice concerning where they live and the schools their children attend. And echoing Reagan-era "New Federalism," Bush proposes to fold $15 billion in existing federal programs into grants for states.

The only major new initiative in the President's State of the Union message was a plan to revamp banking regulations and shore up the depleted insurance fund that guarantees deposits. But even Treasury Secretary Nicholas F. Brady admits that divisions within the financial-services industry make reform iffy.

Why the minimalism? In a year when political unity both at home and abroad could be essential to bolster the war effort, the President sees little percentage in renewing ancient vendettas with Hill Democrats. Instead, he'll try to use his 83% popularity rating to protect defense spending from big cuts and to fend off Democratic sniping at management of the gulf war.

ASSAULT. Democratic leaders, who can clearly see the outlines of Bush's "stand by me" strategy, are temporarily frozen in place by the blare of patriotic trumpets. But sensing that Bush's political strength will inevitably sag, they're preparing a domestic assault that will characterize the Administration as too attentive to far-off foreign policy concerns and not mindful enough of the agonies caused by recession. "We have a crisis abroad," says Senate Majority Leader George J. Mitchell (D-Me.). "But we also have a crisis here at home."

To reinforce that message, Democrats will unveil a string of new antirecession proposals. The 102nd Congress will ring with calls to create jobs, fund "safety net" programs for the poor and unemployed, repair roads and bridges, accelerate environmental cleanup, and boost education spending. An example: House Democrats will push a new "Infrastructure Development Bank" that would allow states to borrow directly from private pension funds rather than issue bonds for public works. The Treasury would guarantee repayment, thereby lowering states' borrowing costs. Democrats are also pushing to expand medicaid benefits for the poor and will try to provide more workers with unemployment insurance payments beyond the current 26 weeks.

The White House is convinced that by mounting this show of concern for the downtrodden, Democrats will revive their "tax-and-spend" image, alienating voters on the eve of the 1992 election. And even if Democrats win the votes for some of their ideas, they first must cross a mine field laid by Budget Director Richard G. Darman. New "pay-as-you-go" spending caps in last year's budget accord force Congress to find offsetting revenues for any new outlay, a rule that could push some Democrats into calling for hefty new taxes to fund their initiatives. Already, some Capitol Hill liberals are proposing a "windfall profits" levy on oil companies, a temporary war tax, and another tax hit on the wealthy.

So sure is John H. Sununu that the opposition will self-destruct that the normally pugnacious White House staff chief has all but given up his quest for a capital-gains cut. Bush's idea of fobbing the proposal off on a study commission has convinced veteran GOP pols that capital gains is dead. "It's the great non-starter of the decade," says Republican strategist Thomas C. Korologos.

That realization, and the President's decision to pare his domestic agenda to bare essentials, bothers conservatives. They gripe that by failing to strike with bold programs while his political strength is at its peak, Bush has squandered a rare opportunity to put an imprint on his free-form Presidency. "Bush has miscalculated," says Burton Yale Pines of the Heritage Foundation. "He is conceding the domestic agenda to his opponents."

With the blood of young Americans now being spilled in the Arabian sand, there's no question that Bush's attention to domestic policy--which he relishes as much as broccoli--is at an all-time low. Indeed, it was in his report on the war that Bush displayed his greatest satisfaction: "Iraq's capacity to sustain war is being destroyed. Our investment, our training, our planning--all are paying off."

But the President will soon find himself drawn into the domestic fray. Democrats have decided they want their first showdown with the White House to be over a revived version of the civil rights bill Bush vetoed last year. By daring another veto, Democrats hope to underscore their contention that the Administration is insensitive to claims of job discrimination by blacks and women.

Bush may also be forced to veto several other pet Democratic proposals. High on the hit list: a measure granting up to 12 weeks of unpaid family leave to workers, legislation that bars employers from permanently replacing strikers, and a campaign reform bill that includes public financing for congressional elections. Democrats will also try to assume a larger role in gulf strategy and in plans for postwar reconstruction. The first challenge will come in February, when Congress considers a supplemental spending bill to cover the war's cost.

For now, Republicans are confident Bush's stratospheric popularity will enable him to weather the winds of war on Capitol Hill. Says Senator Phil Gramm (R-Tex.): "No President since George Washington has had a stronger base of political support." From a Bush partisan, that can be dismissed as so much hyperbole. For even George Bush's most ardent admirers would concede that poll ratings boosted by war can come crashing down--and that inattention to the home front has been more than one war-hero President's undoing.

BUSH'S DOMESTIC AGENDA

BANKING REFORM Bush will propose freeing banks to branch across state lines, sell insurance, and issue securities

CAPITAL GAINS Bush wants Fed Chairman Alan Greenspan to determine the economic impact of a capital-gains tax cut

NATIONAL ENERGY POLICY The Administration wants to step up domestic exploration and encourage alternative fuels

SAVINGS Bush wants tax-deferred savings accounts and penalty-free IRA withdrawals for first-time home buyers

TRANSPORTATION Bush will propose a new program to rebuild the nation's roads, bridges, and mass-transit systems

DATA: BW