WASHINGTON INSIGHT

From The Times Washington Bureau

PRESIDENTIAL PRESSURES: President Bush, understandably preoccupied with the crisis in the Middle East, faces a spate of demanding domestic issues early next month that could tip the balance in some congressional elections.

Negotiations with Congress over the budget deficit--stalled even before the Iraqi invasion got under way--are likely to be set back even further by the turmoil in the Middle East. Budget watchers say the cost of the massive U.S. military deployment--and the economic impact of skyrocketing oil prices--will throw the whole process into disarray.

But the White House also faces down-to-the-crunch bargaining over three of the toughest--and most politically sensitive--issues on Bush's domestic agenda: civil rights, crime and clean air. These are bills that the President sent to Congress more than one year ago, an Administration official complains--"and they are taking their time to get cracking."

Middle East skirmish or not, the election campaigns are certain to intensify. And the savings and loan scandal threatens to create political problems for the White House at home.

WINDFALL PROFITS: The Bush Administration may be sitting on a potential gold mine in its current reluctance to tap the nation's strategic oil reserve as a means of slowing the sharp rise in oil prices that has accompanied the crisis involving Iraq.

Senior Administration officials oppose such a move for now, saying they don't want to use the reserve just to calm oil markets. They argue it should be held in case of a further disruption, such as a shutdown of the even larger Saudi oil fields.

But tapping the 590-million-barrel reservoir could provide a mini-windfall for government budget planners. With oil now selling at $25 to $30 a barrel, selling a million barrels a day could net the Treasury $10 billion a year.

Even so, analysts warn that the oil revenues wouldn't necessarily be enough to ease the nation's budget deficit. If military costs soar--or the economy falls into a recession--the extra expenses would far outpace the oil earnings.

HOME FRONT: President Bush's decision to send U.S. armed forces into the Middle East has revived longstanding turf wars among the armed services to see which can exploit the situation to keep more of its budget in the face of expected congressional spending cuts.

The first forays are being aimed at Defense Secretary Dick Cheney, who is beginning an internal review of Pentagon spending. But observers say it's almost certain the infighting will escalate when the budget goes to Congress.

The Pentagon already is planning a major presentation to Congress outlining how proposed defense cuts would hamper the armed forces' ability to act against future threats such those posed by the Iraqi invasion of Kuwait.

The Middle East situation provides each service with ammunition to bolster its contention that its weaponry is crucial.

The Air Force, whose warplanes were dispatched to gain control of the skies over Saudi Arabia, is expected to argue that its own forces must be maintained because the Navy can't project large numbers of fighter and tank-killing aircraft from its carrier decks.

Navy strategists are expected to play on Cheney's often-quoted words that aircraft carriers are "the first thing the President asks for in a crisis." Admirals warn that if projected cuts go into effect, carrier operations in the Indian Ocean must be cut to two months.

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