NEWS ANALYSIS : Bush’s Waffling Reflects Lack of Fallback Stance

President Bush’s conspicuous waffling over tax issues this week reflects two fundamental problems:

First, there are sharply conflicting pressures on the chief executive in this area, even from his own party.

Second, the White House has not staked out any real fallback position in the wake of Congress’ rejection of the bipartisan budget agreement that negotiators worked out during 4 1/2 months of talks.

“Confused?” the President asked reporters as he took a midafternoon jog after a campaign rally in St. Petersburg, Fla., for Florida Gov. Bob Martinez, in what appeared to be as much an answer as it was a question.

To a reporter’s question about whether he had changed his position on a capital gains tax rate cut, Bush responded: “Read my hips” as he jogged by.

Bush’s zigzagging has been a boon to Democratic congressional leaders, who lost no time in declaring that in view of the President’s reversals, they now see no need to make difficult decisions of their own until Bush makes clear what he wants.

And it has highlighted the sharp divisions within the GOP between those such as Senate Republicans, who want foremost to reduce the deficit, and those who believe that the party can make hay by opposing all tax increases--blaming the deficit on the Democrats later.

The confusion became vividly public Tuesday and Wednesday on the key budget question--whether Bush would accept a trade-off that would give him the reduction he has been seeking in tax rates on capital gains in return for a Democrat-sponsored tax hike on wealthy Americans.

Bush had argued vigorously for a capital gains cut during his 1988 campaign and had made the cut his chief domestic priority. But he had also campaigned against new taxes, and holding the line on income tax rates has become a litmus test for many conservative Republicans.

Throughout September and into the first week of this month, Bush and his advisers said he would not accept a trade. Tuesday morning, at a press conference, Bush changed his mind, saying that the idea of a tax rate trade-off was “on the table.”

Then, after protests from Senate Republicans who opposed the trade, Bush invited the senators to the White House for a meeting and told them that he was taking the idea off the table again.

Wednesday--at least for a while--the White House tried to backtrack once more, sending word that Bush still had an open mind on the issue. “I’m leaving everybody’s comments out there,” Press Secretary Marlin Fitzwater said. “We’re not taking a position on any specific item.”

By midday, Bush seemed to have given up entirely. “Let Congress clear it up,” he said.

At the root of the confusion is the defeat last week of the bipartisan budget agreement that Bush’s advisers--Budget Director Richard G. Darman and Chief of Staff John H. Sununu--had negotiated during months of talks with congressional leaders at a so-called budget summit.

Darman had devised the summit approach following the conventional wisdom in Washington that no budget agreement could ever be reached in public because, by definition, cutting the deficit requires politically unpopular tax increases and spending cuts.

If the leaders of both parties--the President and Congress--agreed on a deal, Darman believed, everyone would be given enough political cover for the accord to pass.

But Darman and Sununu had placed such faith in that theory that they had neglected to prepare a fallback plan. When conservative Republicans turned against the deal and liberal Democrats joined them, Bush was left twisting, figuratively, in the wind.

Since that defeat, last Friday, Senate Republican leaders, joined by Sununu and Darman, have advocated essentially resuscitating the bipartisan agreement.

Their hope, Sen. Bob Packwood (R-Ore.) said, is that members of Congress, having had a chance to vote against the plan once, now will vote for a close replica, seizing on whatever small changes are made around the margins to justify their change in position.

House Republican conservatives, joined by Vice President Dan Quayle and other Bush advisers who disliked the summit agreement from the start, argue that Bush should drop the bipartisan approach and move to unite his party by turning the budget into a partisan issue.

By contrast, most Senate Republicans are traditional fiscal conservatives, who dislike high taxes but think high deficits are worse. (In the House, a large percentage of the GOP caucus, led by Rep. Newt Gingrich (R-Ga.), is made up of believers in supply-side theories, who say deficits are not nearly as bad for the economy as high taxes.)

The problem may be compounded by the fact that Bush admitted during his press conference Tuesday that he is not particularly interested in the entire issue of economic policy, preferring instead to concentrate on foreign affairs.

“When you get a problem with the complexities that the Middle East has now and the (Persian) Gulf has now, I enjoy” working on that, Bush said.

“I can’t say I just rejoice every time I go up and talk to Danny Rostenkowski, my dear friend, about what he’s going to do on taxes,” he said, referring to the Illinois Democrat who chairs the House Ways and Means Committee.