Nor'easter In New Hampshire

Buchanan's ascent stuns the GOP-and business

It was five days before the New Hampshire primary, and William B. Lacy, deputy chairman of Bob Dole's Presidential campaign, was upbeat. After a solid, albeit unspectacular, Dole performance in the state's candidate debate, Lacy saw delegates--lots of delegates--in the senator's future. "If we win here," he said, "Dole becomes a charging rhino."

In retrospect, "hobbled hippo" would have been more apt. Dole's defeat at the hands of populist Pat Buchanan has dealt a severe blow to the Kansas senator's Presidential hopes. Buchanan won 27% of the New Hampshire vote, vs. 26% for Dole and 23% for former Tennessee Governor Lamar Alexander.

For Corporate America, which overwhelmingly backs Dole, Buchanan's ascent--and his penchant for jabbing rhetorical pitchforks into the hides of "corporate fat cats"--is troubling. It raises the specter of a GOP civil war that pits mainstream conservatives and social moderates against economic populists and religious fundamentalists. And in Buchanan, executives see a candidate unbeholden to them and uninterested in their priorities.

BACKLASH. To further heighten business fears, execs are only now focusing on Buchanan's platform. And they are finding precious little to like. The fiery commentator holds "transnational corporations with no allegiances" responsible for layoffs and stagnant wages. Philip W. Hummer, chairman of Chicago broker Wayne Hummer & Co., says Buchanan will be dismissed by Wall Street. "I don't think the investing world is factoring him in," he says.

Maybe not. But while Wall Street turns up its nose at Buchanan, his ideas are taking hold on Main Street. Business leaders don't consider Buchanan a threat to win the nomination. But they concede that he's shaping the dynamics of the race by ensuring that another Dole misstep could be fatal.

GOP leaders are also less than certain of Dole, particularly after his sleepwalk through New Hampshire. He may win the nomination, says a top strategist. "But there is no passion for Dole." Indeed, GOP leaders fret that a Buchanan backlash could wreck the Republican Revolution. House Speaker Newt Gingrich (R-Ga.) is among the worriers. "Newt has let it be known that the GOP's congressional gains could be in jeopardy if Pat is the nominee," says one conservative strategist.

If anti-Establishment fervor continues to drive the GOP primaries, though, Buchanan won't be the only threat to the erstwhile frontrunner. From the center-left, Dole faces a determined assault by Alexander, who appeals to moderates, independents, and younger Republicans. Alexander has lost no time portraying himself as gaining momentum after his strong third-place showing. And his campaign claims he raised $1.5 million this year.

Alexander Finance Chairman Ted Welch will go all out to shake the corporate money tree over the next few weeks. But Alexander doesn't have much time for black-tie dinners. South Carolina's Mar. 2 primary is looming as a make-or-break contest in the GOP's slugfest. "I have to win somewhere," Alexander concedes. But GOP pros doubt that the Tennessean has enough left for the costly contests in the offing.

Buchanan, meanwhile, is aiming for victory in Arizona, which would build up steam for a push into South Carolina. Says GOP strategist Mark Goodin: "The state has been whipsawed by plant closings and textile imports. Buchanan will play well here." Whoever Buchanan dispatches in South Carolina could be out of contention. He then hopes to wound the surviving centrist on Mar. 12 in the Super Tuesday round of Southern primaries.

As Buchanan's guerrilla war rages, though, his new stature will focus critical scrutiny on his economic program, a strange brew of conservative supply-side notions and liberal calls for economic democracy. Buchananomics starts with an endorsement of a balanced budget and a flat income tax. But Buchanan's 17% flat rate retains deductions for home-mortgage interest and charitable contributions, making it much more expensive than a less generous House Republican plan that some economists consider a $140 billion revenue-loser. Adding to the cost, he exempts small business from taxation.

CIVIL WAR. Buchanan wants to withdraw the U.S. from the World Trade Organization and ditch both NAFTA and the General Agreement on Tariffs & Trade. Then he would sock Asian imports with protective tariffs ranging from 10% to 20%. "We'd be heaping taxes and more taxes upon consumption," says William G. Gale, a Brookings Institution economist. Buchanan's trade ideas are "very disturbing," adds William Niskanen, a former Reagan economist who heads the Cato Institute.

So what's a worried Establishment to do about the Buchanan surge? Most likely, rally to Dole and press Alexander for a gentlemanly fade-out if he continues his third-place showings. "Either Dole or Alexander has to get out of the race soon or Buchanan's one-third base will win out over two candidates who are splitting the remaining two-thirds," says Republican consultant Thomas Edmonds. "Lamar is the most likely to bow out, perhaps with a deal for the Vice-Presidency. Otherwise, you'll start hearing the words `Jack Kemp' and `brokered convention."'

Civil war? A backroom deal for the Vice-Presidency? Brokered convention? Can this be the same GOP that thundered to majority status in the 1994 election? Unfortunately for Republicans, the answer is yes. "It's a real bummer," says Edmonds. Nearly everybody in the party but a maniacally grinning Pat Buchanan would agree.

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