Bush, Buchanan Both Promise Aid for Automobile Industry : Republicans: In Michigan, the President scraps an EPA new-car rule. His rival calls for a tax credit on the purchase of American vehicles.

Campaigning within a mile of each other at one point, President Bush and challenger Patrick J. Buchanan wooed Michigan voters Friday with promises to aid the ailing automobile industry.

Bush, in a speech to a business group meeting in this suburban headquarters of Ford Motor Co., announced he was scrapping an Environmental Protection Agency regulation that new cars be equipped with canisters to capture gasoline fumes that escape when fuel is pumped into gas tanks.

He also said he would resist congressional efforts to beef up car-fleet fuel efficiency standards, now 26.5 miles per gallon. “I will not sign . . . legislation that will destroy the auto industry and cost American jobs,” Bush said.

Buchanan, at a news conference in Dearborn, said that if he succeeds in wresting the Republican presidential nomination from Bush and winning the White House, he will assist the auto industry by offering a 15% tax credit--up to $2,000--on the purchase of American cars. He pledged to “make the reignition of the great U.S. auto industry a top priority of my Administration.”

Buchanan is hoping to reignite his faltering campaign with a strong showing in Michigan’s primary on Tuesday, but a new poll indicates that he has significant ground to make up. A Detroit News survey of 510 likely voters in Michigan’s Republican primary found 71% supporting Bush and 21% backing Buchanan.

The Bush campaign moved Thursday night to put its challenger on the defensive in the state by noting in a TV ad that while Buchanan touts an “America first” trade policy, he has a German-made Mercedes-Benz and once referred to Cadillacs he owned as “lemons.”

Buchanan acknowledged the ad was “factually accurate.” But he said Friday: “The biggest lemon the American people bought in 1988, I think, was the Bush-Quayle Administration, if they thought they were getting a conservative government.”

Buchanan’s campaign has responded to the Bush ad by airing what the candidate termed “a full retaliatory spot” that charged three of the President’s campaign advisers--political strategist Charles Black, communications director James Lake and GOP national Chairman Richard N. Bond--with putting their ties to Japanese and other foreign business interests ahead of the concerns of Americans.

“I do think that Mr. Bush’s campaign is a wholly owned subsidiary of Japan Inc.,” Buchanan said Friday.

The President’s campaign Friday unveiled two more ads showing Bush in the Oval Office and stressing his leadership abilities.

The tax credit that Buchanan proposed as a financial incentive for the purchase of American-built cars would cost taxpayers about $10 billion in lost revenues, he said.

“If we have to lay off 74,000 bureaucrats and regulators in Washington to save the jobs of 74,000 workers at General Motors, while giving tens of thousands of middle-class American families the economic freedom to purchase new American cars, we will do it,” Buchanan said.

Bush, in his speech to the Economic Club of Detroit, said he recognized that Michigan--where the unemployment rate stands at 9%--”has been through some extraordinarily tough times. There’s no sense pretending things are better than they are.”

But he added: “We are poised--not there yet--but poised for a national recovery.” And he continued his drumbeat of criticism of Congress for not approving his economic recovery program.

He said his Administration had decided to block the EPA regulation requiring installation of “on-board refueling vapor-recovery systems” because of concerns that the devices posed a risk of explosion. Bush said: “We simply cannot impose (such a risk) on American drivers.”

The issue has prompted debate between representatives of gasoline station owners, to whom the burden will shift for reducing fuel vapors as required by the 1990 Clean Air Act, and the auto industry. The government now is expected to require service station owners in high-pollution areas to install special equipment on gas nozzles, officials said.

Bush’s decision will have little effect on California gas station owners because the state--unlike many others--already requires gasoline pumps to be equipped with nozzles that help keep fumes from escaping into the air.

In a question-and-answer session after his speech, Bush’s anger flared when he was asked about General Motors’ decision last month to close its Willow Run plant outside of Detroit while keeping open a plant in Arlington, Tex.

The question, written by a sixth-grade student, suggested that Bush had played a role in the decision, asking: “Why did you choose a Texas plant over Willow Run?”

Bush said: “I made no such intervention.” And referring to comments by Sen. Donald W. Riegle Jr. (D-Mich.) that Bush’s “preference for Texas” may have influenced the decision, Bush added: “I take it as a direct attack on my character to have a United States senator say that. It is a bald-faced lie.” The President claims Texas as his home state for voting and tax purposes.

The President on Friday also toured the Stryker Corp., a manufacturer of medical implements and hospital supplies in Kalamazoo, Mich. A carefully arranged display of shipping cartons, with stenciled destinations of Japan and Canada, formed a telegenic backdrop on the warehouse floor, where the President spoke to several hundred workers.