Compromise Is Seen as ’92 Curtain Raiser

The compromise budget accord hammered out by the Republican White House and the Democrat-controlled Congress raises the curtain on the battle for the presidency in 1992--and foreshadows the major battle lines between and within the parties during the next two years.

Bush is banking on the hope that the harsh economic nostrums of spending cuts and tax increases prescribed for 1990 will be all but forgotten two years hence when, if all goes well, the revitalized economy will be soaring.

“The real goals are to get spending under control and economic growth going again,” said Charles Black, chief spokesman for the Republican National Committee. “That means a healthy economy and history tells us that the state of the economy is the biggest issue in presidential elections.”

To be sure, no one can guarantee that the remedies devised at the bipartisan budget summit will produce a rosy economic picture. But as congressional analyst Norman Ornstein of the American Enterprise Institute pointed out: “One thing the summit negotiators felt sure of, was that if they didn’t do anything at all, the economy would be that much worse in 1992.”

For their part, Democratic leaders backing the budget agreement see it as a chance to establish some voter confidence in their fiscal management abilities, an area where polls have long indicated their reputations to be sorely in need of repair.

For example, a recent Times Mirror poll showed that when asked which party is best able to generate economic growth, 40% of those interviewed chose the Republicans, while only 29% favored the Democrats.

“With this plan George Bush has given us an opportunity to take the high ground and show people that we put the national interest above the special interests,” said Al From, executive director of the Democratic Leadership Council, a group of centrist Democratic elected officials.

By regaining the confidence of the public and restoring their own confidence in themselves, Democrats believe that they will be in a strong position to raise their favorite issues of economic justice against incumbent Bush in the 1992 campaign.

“We think fairness is still our main issue,” says Richard Moe, a former Jimmy Carter White House aide and now an adviser to House Majority Leader Richard A. Gephardt (D-Mo.).

“And we believe that the whole debate over the budget has helped frame the issues we can use,” he added.

“Democrats went through an important baptism of fire by using the ‘tax-breaks-for-the-rich issue’ against Bush and forcing him to back off his campaign pledge to cut the capital gains tax,” said political analyst Kevin Phillips, author of the bestseller “Politics of the Rich and Poor,” which lambastes both parties for short-sighted economic policies.

Many Democrats contend that baptism lends further credibility to the charge that they plan to use against Bush in the 1992 campaign.

One big problem with carrying out these presidential campaign scenarios is that the intraparty disagreements on the budget are nearly as intense as the differences that pit the parties against each other. Thus, even if the package is adopted by Congress, it may be difficult for either party to muster the unity needed to exploit the potential political advantages it offers.

In both parties, prominent activists and officeholders--from House Minority Whip Newt Gingrich (R-Ga.) to New York’s Democratic Gov. Mario M. Cuomo--contend that the budget package is either bad politics or bad economics, or both.

“This package will lose jobs, raise taxes and deepen the recession,” Gingrich said. He and other conservative Republicans object mostly to the proposed tax increases in the package.

“The gasoline and liquor tax increases are directed right at the ethnic urban voters who swing back and forth in elections,” said David Keene, chairman of the American Conservative Union. He worries that these voters, who were attracted to Bush by his pledge not to raise taxes, might return to their traditional home in the Democratic Party as a result of Bush’s shift on that issue.

Cuomo, who many now consider a favorite for his party’s 1992 presidential nomination, will issue a statement today opposing the proposal, according to Brad Johnson, chief Washington lobbyist for New York state.

Cuomo objects, among other things, to the proposal to partly repeal deductibility of state and local taxes.

So far as the 1990 congressional elections are concerned, most analysts think that the net impact when voters go to the polls in November will be minimal. Some challengers in both parties will try to get votes by exploiting resentment of the tax increases in the package.

But incumbents who back the compromise will claim credit for avoiding the disruptions that automatic spending cuts would have brought.