Dukakis’ Job as Economic Manager Being Questioned

For more than a year, Michael S. Dukakis has been leading a charmed double life, managing to keep his duties as governor of Massachusetts from interfering with his pursuit of the Democratic presidential nomination.

But suddenly, that charm seems to be wearing off. Just as Dukakis is facing intense national scrutiny of his gubernatorial record, a vital part of that record, his performance as economic manager, is coming under increasing fire from all points on the political spectrum here in his state capital.

“There’s a smudge on the picture window,” acknowledged John DeVillars, the governor’s director of operations, who serves as unofficial liaison between the nerve center of state government in the Statehouse on Beacon Hill and the far-flung presidential campaign operation.

What gives the controversy over Dukakis’ handling of the state’s budget far-reaching implications is that no successful presidential contender in recent years has rested his claim for the White House so heavily on his accomplishments as governor. As a result, professionals in both parties agree, anything that tarnishes the image of Dukakis-the-governor could wreak havoc with the credibility of Dukakis-the-presidential-candidate.

Indeed, Dukakis’ Republican opponents in the fall are already rubbing their hands in anticipation of using the developing furor over Dukakis’ handling of the state budget against the man they expect to be Vice President George Bush’s opponent. “This helps us portray Dukakis for what he is, a runaway spender,” said Bush chief spokesman Peter B. Teeley.

The root of Dukakis’ problem is that as his totals of convention delegates have been rising in recent months, the flow of revenue into his state’s treasury has been slowing down, failing to keep pace with Dukakis’ budget projections and with his spending plans.

This sobering reality was driven home in recent days by word that the $12-billion state budget Dukakis had proposed in January for fiscal 1989, which starts July 1, is about $270 million out of whack, according to estimates by Democratic legislative leaders. Republican leaders claim the threatened deficit is nearly twice that.

This disclosure came as politicians and citizens were in the midst of protesting a series of spending cuts being implemented as part of a previously announced $230-million slowdown in expansion of state programs for fiscal 1988. This process, known in bureaucratic jargon as “reversion,” covered a myriad of activities from prison expansion to assistance for AIDS patients.

Similar Problems

Problems similar to those in Massachusetts are occurring in other states, notably the two most populous. In California, Gov. George Deukmejian faces a $1-billion shortfall for his $44-billion budget for 1989, and in New York, Gov. Mario M. Cuomo is confronted by a $350-million gap in his $25-billion spending plan.

But neither Cuomo nor Deukmejian is running for President, and neither is using his stewardship of his state’s economy and budget as the mainstay of a political candidacy, as Dukakis has done from the start of his campaign.

“I want Americans not only to imagine me in the White House--but also to study me in the Statehouse,” Dukakis urged in announcing his candidacy on Boston Common in April, 1987.

And in the first Democratic campaign debate broadcast over network television last December, he boasted: “I’m the only person up here who has to balance budgets these days. I’ve balanced nine in a row.”

‘Miracle’ of Resurgence

He has reiterated that statement countless times in his so-far successful march to the nomination, usually pairing it with a claim of having managed the “miracle” of resurgence in his state’s economy.

His critics have long jeered at these assertions, pointing out that he has had little choice except to balance the budget because his state’s constitution, like that of nearly every state, forbids deficits.

They also argue that the Massachusetts economic miracle was less a result of Dukakis’ skills than of the state’s ability to meet a surge in demand for advanced technology. The skeptics also note that much of this demand was generated by the Pentagon during the Reagan era of expanded defense spending.

Regardless of who is right, independent analysts believe that Dukakis will have to adjust his tactics and his rhetoric to match the changing economic conditions in his state.

“I don’t think Dukakis can keep saying in his speeches: ‘I’ve balanced the budget nine times,’ ” said Martin Linsky, public policy lecturer at Harvard’s Kennedy School of Government, who is writing a book on the Massachusetts Legislature. “He’s facing a real dilemma.”

Will Help Campaign

In the long run, Dukakis and his staff insist, the budget battle will help their drive for the White House. Taking heat for budget cuts, they predict, will provide Dukakis with a chance to show that he can stand up to “special interests” and will deflect attempts by Bush to label him a “tax and tax, spend and spend” liberal.

“What I’m doing, I hope, strengthens and expands my credibility,” Dukakis told reporters. “I don’t think it’s going to be damaging at all.”

DeVillars, Dukakis’ operations director, said the governor “has never said that it was easy to manage the budget,” adding that “as people focus on his efforts to solve the budget problems,” the public perception of Dukakis will be strengthened.

But first, Dukakis will have to deal with the Legislature. The Massachusetts House on Tuesday begins consideration of the 1989 budget; its deadline for final action is June 30. That is 2 1/2 weeks before the start of the Democratic National Convention, a time when Dukakis is expected to be deeply involved in hammering out a party platform and deciding on his choice for a running mate.

Money Getting Tighter

With money getting tighter and legislators complaining that the governor has failed to consult sufficiently on specific items in the so-called reversion, the governor-candidate faces challenges and criticism across the board.

To his right, the budget controversy has emboldened Dukakis’ long-quiescent Republican opposition in this Democrat-dominated state. GOP leaders last week called for Dukakis to take a leave of absence from office while he runs for President.

The dispute also has given old adversaries new ammunition for their contentions that Dukakis’ smooth managerial performance as governor has been more a product of good fortune than of Dukakis’ talents.

“They (Dukakis and his aides) haven’t had to say ‘no’ to anybody because they’ve had the money,” said a longtime conservative opponent, Barbara Anderson, who heads a group here called Citizens for Limited Taxation. “They could give 16% increases in welfare at the same time as $400-million tax cuts because they had the money.”

Among liberals and Democrats, these cutbacks have upset social service advocates and annoyed legislators whose help Dukakis will need in the weeks to come.

Closing Skirmishes

On the national scene, the budget trims have made Dukakis vulnerable in the closing skirmishes of the campaign to attacks from his sole surviving opponent for the nomination, the Rev. Jesse Jackson, who in recent weeks has sharply questioned Dukakis’ commitment to liberal causes.

Beyond all of this, Dukakis and his strategists must ponder what impression the continuing fracas here will make on a national electorate, which is just beginning to get familiar with his name.

“The public has little specific information on Dukakis,” said Mark Mellman, who polled for Tennessee Sen. Albert Gore Jr.’s Democratic presidential campaign. “So anything they get, positive or negative, can have a great deal of impact.”

Staff writer James Gerstenzang contributed to this story.