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White House Split on How to Beef Up Domestic Policy : Presidency: The New Right wants controversial programs included in the State of the Union address.

TIMES STAFF WRITER

The Bush Administration is embroiled in an intensifying internal battle over how to beef up the President’s threadbare domestic agenda in the coming year to counter the Democrats’ recent success in pushing a populist theme of economic and social “fairness.”

The split, which pits conservatives within the Administration against pragmatists such as Budget Director Richard G. Darman, is rapidly turning into a public feud over a New Right drive to prod President Bush into proposing a series of controversial conservative domestic programs as part of his January State of the Union address.

The effort stems from a new recognition by both sides that the Administration--long praised for its foreign policy skills--is dangerously vulnerable on the domestic front. Although Bush has expressed interest in domestic issues, he has proposed virtually no major new programs and has yet to come up with any overarching theme to gain the attention of voters.

Republicans concede that the Administration--burned by the budget and tax battle and preoccupied with the Persian Gulf crisis--seems adrift on the home front with no clear direction on domestic policy.

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“The Democrats have come up with the ‘fairness’ issue, and clearly there has to be some response,” one Administration official said.

But the push also may mark Bush’s last big chance to maintain the allegiance of Republican conservatives, who are furious over the President’s decision to abandon his “no new taxes” pledge during the budget fight in October.

Conservatives outside the Administration say that they view Bush’s decision on whether to accept the New Right proposals as a litmus test on how vigorously they should support him in the 1992 presidential election.

“This is one of the markers we will put down to see if Bush wants to be with us as conservatives,” warned Burton Pines, senior vice president of the Heritage Foundation, a conservative think tank here.

The conservative sortie within the Administration is being led by Housing and Urban Development Secretary Jack Kemp, who has long espoused the need for the Republican Party to develop new, pro-growth economic ideas, and by White House policy planner James P. Pinkerton.

Together with other right-leaning Bush aides, they are pushing a package of policies that effectively would allow recipients of federal benefits to use money or tax breaks to buy government services--on the theory that such techniques will help promote economic growth and return a greater measure of power to ordinary citizens.

Moreover, they are borrowing the term “empowerment"--left over from the 1960s, when left-leaning radicals were calling for “power to the people"--as a catch phrase for the effort.

The proposals, many of which were staples of Kemp’s failed presidential campaign of 1988, would bring fundamental changes in the structure of basic social programs. They range from allowing tenants to manage and eventually own the public housing in which they live to providing education vouchers that enable parents to choose which public schools their children attend, to creating “enterprise zones” in inner cities as a means of encouraging minority businesses and to offering private insurance alternatives to Medicaid.

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Kemp and his supporters argue that the proposals would turn poor people--who are now highly dependent on government assistance--into private consumers who would be given more freedom of choice in the kinds of government-related services they receive. That consumer power, in turn, would force improvements in those services by introducing free-market competition into inner city institutions such as public housing and public schools.

But the effort is being opposed by the pragmatists within the Administration. Darman, for one, has publicly dismissed the idea as ridiculous, charging that conservatives are simply reviving rejected ideas in a vain search for a new political theme now that their old standbys--anti-communism and Reaganomics--no longer pack much political punch.

“We now find ourselves encouraged to embrace several programmatic ideas that are returning from a quarter-century hiatus, but which have not yet been seriously tested or evaluated,” Darman charged in a Nov. 16 speech.

But, his attack has brought a quick--and virulent--response from conservatives. Kemp complained in an interview that Darman’s speech was “stupid” and “fundamentally at odds with the goals of the party.” Rep. Newt Gingrich (R-Ga.), the controversial House Republican whip, even called for Darman’s resignation.

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Eventually, White House spokesman Marlin Fitzwater was forced to intervene, gamely insisting last week that the Administration is still “one big happy family here.” Under pressure to make up, Darman and Gingrich talked on the phone for 45 minutes in late November but apparently failed to resolve their differences.

Darman and Kemp have also talked, and Kemp apparently has dropped plans to press the attack further with an anti-Darman speech. But Kemp still acknowledges that he and Darman are locked in a “battle of ideas.”

Yet Darman’s initial barrage apparently has not crippled the momentum of the empowerment notion within the Administration. President Bush has praised empowerment publicly in recent days and a high-level interagency task force, headed by Kemp with Pinkerton as its staff director, is drafting a series of firm policy proposals for Bush to include in his State of the Union speech.

Pinkerton, who was among the first members of the Administration to begin pushing the new theme, has called for what he has labeled “A New Paradigm” for conservative-oriented policy-making--one that would redirect social programs away from central bureaucracies.

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To Kemp--and many outside conservatives--the empowerment theme is more than just a political strategy, it is nothing less than an opportunity to inject capitalism into inner cities, which he contends historically have been in a cycle of dependency on social welfare.

“We have to decide whether our (current social) safety net is going to be a trap,” Kemp said. “How can we tell Eastern Europe that democracy is the social and economic tool for them if we can’t make it work for everyone in our nation?”

Although some may find some irony in the use of the 1960s radical catch phrase, conservatives are unabashed. “If the ‘60s wanted to give power to the people, that’s fine,” said the Heritage Foundation’s Pines, “but what they really ended up doing was to create big government and give power to the bureaucracy. What we want to do is to really give power to the people and take it away from the bureaucrats.”

Yet empowerment has nonetheless brought on a bitter battle within the Administration over whether it would create new bureaucracies rather than do away with them as its supporters suggest.

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The empowerment concept got its first practical boost two weeks ago when Bush signed into law a new housing bill that takes a big step toward providing for tenant management--and eventual ownership--of federally financed public housing.

Although Gingrich and other vocal Republican conservatives fear the worst, Pinkerton for one has insisted that the Administration is taking the new empowerment proposals seriously. “I think the likelihood is pretty good that they will be a significant component in the State of the Union address,” he said.

In the end, Bush may try to follow a middle course in the empowerment debate, adopting some of the new ideas but rebuffing the New Right’s campaign to persuade him to embrace empowerment and the New Paradigm as his overriding domestic theme.

“The question is, how much to feature it and what to make of it,” a senior Administration official said. “You have to ask whether you can get what you want politically without getting a lot of things that you don’t want thrown in” by congressional Democrats.

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GOP: WHAT THE NEW RIGHT WANTS

* Tenant management--and eventual ownership--of public housing

* Educational choice for parents, enabling them to select public schools that their children will attend

* The creation of enterprise zones in inner cities, providing tax breaks and other incentives to encourage businesses to create jobs for the poor

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* Health-care vouchers for the poor, to enable them to obtain medical care without resorting to the Medicaid program.


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