WASHINGTON INSIGHT

OUTSIDE JOB? President Bush most likely will go outside the Administration to pick a new attorney general if Dick Thornburgh resigns to run for the Senate seat vacated by the death of John Heinz (R-Pa.).

Although official Washington has been betting Bush will pick U.S. Trade Representative Carla Anderson Hills or Transportation Secretary Samuel K. Skinner, White House strategists say that both now seem to be long shots. They say Bush doesn’t consider Skinner good attorney general material and, although he likes Hills, he may want her available in case of a Supreme Court vacancy.

Aides to Bush say that one potential nominee from the outside is former Illinois Gov. James R. Thompson, but that Bush most likely will pick a close lawyer-friend or a judge he has known for years. “He has a big circle of acquaintances in law,” one strategist said.

DESERT GUST: Congressional Democrats’ efforts to blunt Bush’s political momentum in the wake of the recent victory in the Persian Gulf emerge so far as mostly bluster.

Democratic leaders in both houses sent separate delegations to the Middle East, ostensibly to oversee U.S. efforts to aid the Kurds, but they failed to lay a glove on Bush politically. House members returned only to urge that the Administration do more to help the refugees. The Senate delegation, which left over the weekend, isn’t expected to go much beyond that.

The Democratic effort to take on Bush over domestic programs isn’t getting very far, either. After the President unveiled his education program the Democrats tried to one-up him by announcing that they will restore $400 million previously cut from education funds. But the White House still has the upper hand. “Bush dominated the headlines,” one Hill watcher said.

SURPRISE POSSIBLE: Prospects are brightening for congressional approval of the President’s controversial proposal to negotiate a new free-trade agreement with Mexico--despite continued heated protest from environmentalists, organized labor and some consumer groups.

Democratic lawmakers say their decision most likely will hinge on Bush’s response--expected later this week--to a letter from top congressional leaders asking him to take more account of their concerns about job security and environmental issues in the talks with Mexico. One possible surprise: House Majority Leader--and longtime trade hawk--Richard A. Gephardt (D-Mo.) might end up endorsing the negotiations if Bush’s response seems sincere.

CHINA CARD: President Bush also may face a backlash over a decision he must make in May--whether to request an extension of China’s special “most-favored-nation” trade status.

Although the White House would rather continue the benefits intact, opposition is mounting in Congress and among some China experts. China supported the United States in pushing through U.N. authorization of Operation Desert Storm, but the Beijing government has not eased its position in the wake of the Tian An Men Square massacre. If anything, trials of the students involved in the 1989 protest have yielded unusually harsh sentences.

Congressional ire has been stirred by reports that China is now using prison labor to operate its export industries, and by the fact that the U.S. trade deficit with China mushroomed to a startling $10.4 billion last year--from $3.5 billion in 1989.