Bush Drops Repeal of Anti-Bias Rules : Legislation: Rights bill is signed after fierce protests halt a plan to scuttle guidelines authorizing affirmative action. Incident is seen as exacerbating racial tensions.

Faced with a barrage of protest, President Bush retreated Thursday from a White House plan to roll back long-standing federal policies that promote the hiring of women and minorities. The reversal came shortly before Bush signed long-delayed civil rights legislation that he said “will fight the evil of discrimination.”

A firestorm of criticism had greeted reports late Wednesday that the White House planned to direct the federal bureaucracy to abandon guidelines authorizing the government and private employers to use affirmative action programs to attack discrimination in the workplace.

The disclosure could not have come at a worse time for the White House. The incident exacerbated racial tensions already inflamed by the David Duke gubernatorial campaign in Louisiana, Clarence Thomas’ nomination to the Supreme Court and the yearlong squabble that preceded Bush’s acceptance of the civil rights legislation.

Some senior Administration officials said that the controversy demonstrated the disarray that has gripped the White House as Bush’s poll ratings have tumbled, and as Chief of Staff John H. Sununu has become distracted by the pressures of the President’s incipient reelection campaign and criticism of his own performance.

In a statement that had been prepared for Bush to read as he signed the civil rights bill into law, he was to have instructed government agencies to abolish the Uniform Guidelines on Employee Selection Procedures, which spell out what private companies must do to comply with federal anti-discrimination-in-employment laws.

Public disclosure of the planned directive and the resulting criticism from civil rights advocates and legal experts prompted a series of hasty meetings among White House officials, late-night telephone calls and conferences with the President.

The plan, advanced by C. Boyden Gray, the President’s counsel, was withdrawn Thursday morning, just hours before it was to have been announced.

Instead, Bush recommitted himself to the principle of affirmative action. He pledged that “nothing in this bill overturns the government’s affirmative action programs”--a statement added to his text shortly before he spoke in an effort to calm the controversy, a senior White House official said.

Twice, the President told an audience of government officials and a smattering of civil rights leaders summoned to the Rose Garden on a humid, cloudy afternoon: “This is a very good bill.”

Nevertheless, both Democrats and Republicans seemed almost shocked by the events, and one senior White House official complained that “it’s obviously a very big screw-up.”

Benjamin L. Hooks, executive director of the NAACP, said that he would have boycotted the ceremony in the Rose Garden had the controversial material remained in Bush’s remarks. “If I were the President, somebody’s head would have to roll,” he said.

One of Bush’s allies, Sen. John C. Danforth (R-Mo.), said that, if the Administration had not retreated, the new approach “would have totally eclipsed the law that was signed” and would have become a “major political issue” in the 1992 presidential campaign.

Among congressional Democrats, the reaction was swift and angry.

Rep. John Lewis (D-Ga.), a former civil rights leader, said at the Capitol in comments directed at Bush: “Is it right for you to tamper with the moral fiber that holds us together? Is it right to pander to the David Dukes? Whether the President goes through with this (directive) or not, to have this mind-set in the White House . . . shows how racism is embedded in our society.”

“The President anoints the political statements of David Duke,” said Rep. Nancy Pelosi (D-San Francisco).

“President Bush starts his reelection campaign by . . . using the race card once again,” said Rep. Bill Richardson (D-N.M.).

The bill that Bush signed Thursday overturns six Supreme Court rulings and makes it easier for workers to win anti-discrimination lawsuits. It also extends to women the right to collect damages of up to $300,000 for sexual harassment and other discrimination in the workplace.

For months, Bush had opposed similar measures, asserting that they would force businesses to use hiring quotas. He vetoed more comprehensive measures earlier this year and in 1990. But four weeks ago, he and congressional leaders found grounds for compromise.

However, that sudden tenor of harmony evaporated literally overnight after a draft of Bush’s proposed statement was circulated Wednesday, according to White House Press Secretary Marlin Fitzwater, to about “50 or 60” people in the late afternoon. He said that Bush was unaware of the material in the statement at that time.

Almost as soon as copies of the proposed statement were sent by facsimile machine to various federal departments and agencies, objections were raised. They were first brought to Bush’s attention by Sununu shortly after the two returned to the White House about 9 p.m. from a Washington hotel, where they had attended a million-dollar fund-raising dinner for the President’s still-unofficial reelection campaign, senior White House officials said.

As portrayed by several senior officials, the opposition expressed by officials outside of the White House was unanimous.

Labor Secretary Lynn Martin “had a strong reaction to the memo as drafted--a very, very, very strong reaction,” said one Administration official. Early Thursday morning, the official said, Martin called Gray at the White House and told him of “her strong feeling that this did not reflect the President’s views, that this was not consistent with what she understands the President to believe,” the official said.

The final decision to drop the statement and substitute a revised version was made by Bush in the Oval Office about 9:30 a.m., Administration officials said--after presidential aides and Cabinet members were consulted in person and by telephone shortly after dawn.

The group directly involved in the debate included Martin, Acting Atty. Gen. William P. Barr, who was confirmed as attorney general Wednesday but has not been sworn in, Transportation Secretary Samuel K. Skinner, Sununu and two other senior White House advisers--domestic policy aide Roger Porter and Frederick McClure, Bush’s congressional liaison chief. They were said to be unanimous in their recommendation that the proposed presidential statement be withdrawn.

Nevertheless, several officials said that the retreat may be only temporary and that they do not think the issue has been dropped for good.

“Maybe the timing was wrong,” said one official who ended up on the losing side of the argument. But, he added that “we are going to have to change some of the rules and the guidelines. There’s no doubt about it.”

Another senior White House official portrayed the effort to undo the guidelines as “an attempt to recover some political ground that was lost,” in the view of a conservative faction led by Gray, when Bush accepted the civil rights bill.

Gray said in a brief interview that he was not trying to dismantle affirmative action, the centerpiece of government anti-discrimination efforts in the workplace for two decades.

Rather, officials said, Gray’s target was the system of “preferences” adopted by many employers. Under such policies, if two equally qualified candidates apply for a job, and one is black and the other is white, preference would be given to hiring the black candidate.

Bush, meanwhile, was said to have spoken with Gray several times Thursday morning about the controversy and to have expressed disappointment that the dispute “tarnished what should have been a good day,” a senior White House official said.

Another senior official said that Bush thought he had been “blindsided.” But the President gave no hint in public of dismay.

In celebrating “a law that will fight the evil of discrimination, while also building bridges of harmony between Americans of all races, sexes, creeds and backgrounds,” Bush said in the ceremony: “For the past few years, the issue of civil rights legislation has divided Americans. No more.

“Discrimination, whether on the basis of race, national origin, sex, religion or disability, is worse than wrong. It’s an evil that strikes at the very heart of the American ideal. This bill, building on current law, will help ensure that no American will discriminate against another,” he said.

Although civil rights advocates were pleased that the White House backed down, one section in Bush’s formal, but undelivered, statement, which was issued by the White House after the ceremony, drew their objections. It states that the new law “codifies” a series of “safeguards against quotas and preferential treatment” that were set out in two Supreme Court opinions written by the court’s conservative majority.

That language “seeks to undo a key part of the Administration’s compromise with Congress,” Sen. Edward M. Kennedy (D-Mass.) said in a statement issued by his office. The White House position “distorts the fundamental meaning of this historic statute,” Kennedy said.

Staff writers Ronald J. Ostrow, David Lauter and William J. Eaton contributed to this story.