Protests Aside, Action May Aid President in Long Run : Politics: Breaking his campaign promise may bring a boost to the flagging economy. If so, Bush and the GOP could ultimately benefit.

Back in 1988, when he accepted the Republican presidential nomination, George Bush declared that the Democratic-controlled Congress “will push me to raise taxes, and I’ll say no, and they’ll push, and I’ll say no, and they’ll push again, and I’ll say to them: ‘Read my lips: No new taxes.’ ”

Now, by abandoning the promise that became the ringing battle cry of his campaign and the watchword of his presidency, Bush has sown dismay among his supporters and robbed his party of what Republican strategists call their strongest single issue--the one that best differentiates the GOP from the Democrats.

Paradoxically, however, many political strategists in both parties agree that--in the long run--breaking the most explicit promise Bush has made to the American electorate could benefit him politically.

So long as any tax increase that may eventually emerge from the continuing budget negotiations is viewed as dealing with the deficit and helping provide a healthier economy, even Democratic strategists see little or no permanent damage to the President.

Indeed, if opening the door to new taxes does give a boost to the flagging economy, Bush could reap positive rewards from Tuesday’s move.

A prominent Washington lobbyist and former senior official of the Richard M. Nixon and Gerald R. Ford administrations, who declined to be identified, said: “This hurts Bush’s credibility in the short run, but his target is long-range and reelection in 1992. The deficit and a possible recession are the biggest threats to his reelection.”

And, despite the dramatic nature of his shift, Bush has done no more than open the door to discussions with congressional Democrats about tax increases. He did so safe in the knowledge that in an election year the Democrats will be no more eager than he is to impose higher taxes unless economic conditions appear to demand it.

In any event, with GOP congressional leaders telling him budget negotiations might collapse unless he relented, the President had little choice but to scrap his read-my-lips pledge. The alternative was to accept even graver political risks: being blamed for the looming possibility of a runaway budget deficit, the threat of higher interest rates and the danger that a recession in the Northeast would spread throughout the nation.

Moreover, Bush drew surprising support from Housing and Urban Development Secretary Jack Kemp, whose political career and beliefs have been based on faith in supply side economics and the doctrine of cutting taxes, not increasing them.

Kemp, whose opposition to tax increases led to a dramatic break with President Ronald Reagan over the 1982 tax hike, insisted that President Bush’s statement only meant that he wanted to boost tax revenues, not taxes. “When he (Bush) talked about tax revenue increases I don’t think he was violating his pledge,” Kemp said in a telephone interview.

“I think he was acknowledging that we need revenues to grow. And he thinks and I think with him that getting the economy back on track, getting interest rates down, getting the capital gains tax rate down will do a lot more for added revenues than putting a surtax on the backs of the American people, which seems to be the Democratic idea,” Kemp added.

The housing secretary said that he had talked to Bush; Richard G. Darman, director of the White House Office of Management and Budget, and presidential Chief of Staff John H. Sununu after the announcement and said that he is “very comfortable” with what the President said. For the most part, Democrats, who have insisted all along that a tax increase would be necessary to reduce the budget deficit, applauded Bush’s decision.

“He’s doing the right thing, it’s a very positive step,” said former Democratic Chairman Robert S. Strauss. “The risk to his presidency is not taxes, it’s failing to deal with the budget. He was shooting dice with the economy by not dealing with the budget, but now he’s taking the lead and that will enable the budget summit (among Administration and congressional leaders) to function better.”

Nonetheless, Bush’s action brought cries of anguish from many in his own party.

Although Republican leaders in Congress endorsed his statement Tuesday that “tax revenue increases” should be included in a new budget deficit reduction package, it caused an immediate uproar in the party’s congressional ranks.

Ninety House Republicans fired off a letter to the President declaring that they were “stunned” and would not support a budget package with tax increases. Some Republican strategists said that they fear Bush’s decision will cost the GOP in the 1990 elections, when all 435 House seats and a third of the Senate seats are up for reelection.

The decision also could hurt Bush’s credibility and political popularity, at least temporarily.

Some Republican strategists who fear the tax decision will hurt their party in this year’s elections say that the President was outfoxed by Democrats, who favor tax increases but protected their political flanks by persuading Bush to get out front on the issue.

“He let the Democrats snooker him,” declared Lyn Nofziger, who served as Reagan’s top political adviser. “He has taken away a major issue from his candidates for election and reelection out there and that will cost the Republicans seats in the House and Senate.”

Some right-wing congressional Republicans were incensed at Bush’s about-face. Rep. Dana Rohrabacher (R-Lomita), a former Reagan White House aide, said that raising taxes “is bad politics and bad economics” and “it’s absolutely ridiculous even to put this on the table.”

Rep. Robert S. Walker (R-Pa.), a deputy to House GOP Whip Newt Gingrich (D-Ga.), circulated the letter to Bush that--in just a few hours--drew the signatures of more than half of the House’s 175 Republican members. “We were stunned by your announcement that you would be willing to accept tax revenue increases. . . . We will not vote for a budget package that increases tax rates for the American people,” the letter said.

Walker called Bush’s statement “a fairly dumb trial balloon” and predicted only a handful of House Republicans would support a tax increase in a budget compromise.

Howard Phillips, chairman of the Conservative Caucus, called the President’s statement “really stupid” and said it “cut the ground out from under every Republican candidate for the Senate and House.”

“Higher taxes was the only real dividing line left between the parties,” Phillips said. “We’ve seen Bush move toward pro-abortion, funding homosexual groups, embracing Nelson Mandela, the clean-air bill and a delay in off-shore oil drilling. He’s appealing to the constituencies of the Democratic Party instead of the constituencies that supported him in 1988.”

Some Democrats also reacted critically.

Rep. Beryl Anthony Jr. (D-Ark.), chairman of the Democratic Congressional Campaign Committee, caustically referred to Bush’s “sudden case of honesty,” which Anthony noted “has already caused problems in his own party.”

Anthony, declaring Bush’s statement an admission “that the Republican economic policies of the last 10 years were a dismal failure,” pointed out that Ed Rollins, head of the GOP House campaign committee, has said that Bush’s abandonment of the no-new-taxes pledge would result in election day losses for his party.

Staff writer Robert Shogan contributed to this article.