NEWS ANALYSIS : Tax Cut Appears Stalled for Remainder of Campaign : Economy: Bush and Democratic Congress both seem intent on keeping the subject in play as a political issue.

President Bush’s politically charged veto of the Democratic tax-cut bill, which he had been promising for weeks, means Americans are unlikely to get a broad-scale tax cut in 1992, despite the election-year temptation for politicians.

Although some lawmakers hinted earlier that they might try to push through a second tax bill later this year--possibly a compromise that Bush could support--that no longer seems likely in view of the partisan tone the President took in carrying out his veto pledge.

Instead, both sides seem intent on using tax cuts as a political issue for the remainder of the campaign, with Democrats blaming Bush for “killing” their middle-class tax cut and Bush blaming them for trying to enact a tax increase as well.

“The President doesn’t want a (tax-cut) bill, he wants an issue,” Senate Majority Leader George J. Mitchell (D-Me.) grumbled at a press conference following the President’s speech. Bush, in effect, offered the same assessment of the Democrats’ motives.

Political convenience is not the only reason tax reduction is unlikely this year. There is a deeper one: Congress itself is lukewarm about the idea.

Although Democratic congressional leaders took political risks to promote the tax-cut plan, support among rank-and-file Democrats was embarrassingly thin. Many feared the plan would increase the deficit and hurt the economy.

On several key votes over the past few weeks, Democrats were barely able to muster a plurality to pass the measure in the House, despite heavy arm-twisting by the leadership. Support in the Senate was little better.

Rep. Anthony C. Beilenson (D-Los Angeles), a House Democrat who opposed the tax-cut bill from the start, contends that voters would prefer that Congress take the money a tax cut would cost and instead “invest in job growth” in the economy.

“The people out there are not stupid,” Beilenson said. “What people want these days is not the kind of tax package that either party is offering. . . . We are being forced by politics to do something that is not good for the country or the economy.”

Economists, generally speaking, agreed. Most contended in hearings on the legislation earlier this year that the tax cut being contemplated was too small to pull the economy out of its slump and could send interest rates rising again. That, in turn, could threaten the anemic economic recovery, they said.

Even if the Democrats wanted to try again to push through a tax-cut bill, there would still be the question of how they would pay for it--particularly now that Bush has made clear that he will veto any tax increases.

That’s because under the 1990 budget accord the lawmakers cannot cut taxes or increase spending without making offsetting changes elsewhere in the budget so that the deficit does not widen further.

“This bill is not going to pass without financing,” Rep. Dan Rostenkowski (D-Ill.), told anyone who asked about new legislation after Bush’s veto message Friday. Rostenkowski had been cool to the tax-cut plan from the start.

Of course, nothing in politics is certain, and prospects for a tax cut could change dramatically between now and November--particularly if a recovery turns out to be elusive and pressure mounts for more action to stimulate the economy.

Both sides will get another chance to consider tax legislation in July, when Congress must decide whether to renew several existing (and politically popular) tax breaks that are due to expire, but unless the economy weakens further, it is unlikely that lawmakers will seize on this excuse to propose a broad-scale tax-cut bill.

With rank-and-file support for a broader tax cut lukewarm and the economy appearing to be on the mend, Democratic congressional leaders are unlikely to want to risk another close vote--and possibly a humiliating defeat--in the House or Senate just to push through their tax-cut plan. It would be easier to keep hammering at Bush for having vetoed the one they just passed.

For now, it is not clear which side will win in the rhetorical battle over the tax-cut issue--Bush or congressional Democrats.

One problem for Democrats is that polls show most voters are skeptical about a tax cut and likely to be receptive to Bush’s complaints. The anti-incumbent sentiment in the face of the scandal over the House bank also gives the President an edge.

Meanwhile, the two sides have spent hours and hours of time and lots of money proposing and enacting legislation that both have known for weeks would end up only as a campaign issue.

“This is a freight train that is headed for nowhere,” Rep. Bill Archer (R-Tex.), ranking Republican on the House Ways and Means Committee, told his colleagues on Friday.