Economic Picture Splits Bush Advisers : Politics: Skinner urges a rosier outlook in order to build voters’ confidence, but others warn that the plan could backfire.

Amid heightened concern about the link between politics and the economy, the White House is riven by a sharp debate over whether President Bush should portray recent signs of growth as a full-fledged recovery.

The internal struggle between top White House aides has flared as a deeply frustrated Bush and his reelection campaign cast about for ways to regain the faith of disillusioned voters, according to senior Administration officials.

Chief of Staff Samuel K. Skinner has urged Bush to adopt a rosier outlook that might begin to boost public confidence. But Bush’s chief economic adviser, Michael J. Boskin, has counseled against overstatement and warned that the economy remains fragile.

Their disagreement was vented in what meeting participants called a White House “shouting match” last week in which Skinner was said to have told a dissenting Boskin: “Let’s get it straight here. The recovery is under way.”

That Skinner’s influence may for now be dominant has become evident in recent days as Bush has begun to trumpet indicators of economic progress to build a case that public pessimism--and critical news reporting--is unjustified.

“We’re in a recovery now,” Bush proclaimed Wednesday morning during an 82-minute question-and-answer session on CBS television. He was careful, however, to acknowledge that California remains in “kind of a recession mode.”

In contrast, Boskin--the chairman of the Council of Economic Advisers--has warned in private strategy sessions that the second-quarter growth rate could drop to as low as 1.5% and that there remains “much more to be done.” He is said to have advised Skinner that the White House ought to adopt “a much more cautious view.”

Most private economists agree that a recovery is under way, but proceeding at a slower pace than is typical following a recession. The 2.7% rate of growth recorded during 1992’s first quarter is less than half the rate after past recessions, and the unemployment rate remains stubbornly high.

Administration officials said the struggle has been charged with tension rooted in bitter White House memories of its mistaken optimism of a year ago. Recalling that the rosy economic pronouncements of that time gave way to a deep slump, some Bush advisers are concerned that the course Skinner has adopted could lead to a politically catastrophic repeat.

Other officials have warned that any display of premature White House optimism carries the political danger of making Bush appear remote from the problems of ordinary Americans.

But Skinner and his chief ally in the debate, Treasury Secretary Nicholas F. Brady, are said to regard public dismay over the economy as such a fundamental political obstacle that the White House has no option but to call attention to signs of progress.

“Skinner wants to put a stronger spin on the fact that the economy is bouncing back,” one senior Bush adviser said. And a senior Treasury official said that Brady was equally determined that the Administration should adopt a “more positive stance.”

But a senior Administration official conceded that Skinner and others still regard the slow pace of the recovery as a “political problem.” In fact, Bush on Wednesday suggested anew that the Federal Reserve Board ought to cut interest rates further--a move that could give the economy an election-year boost.

With opinion polls showing a continuing lack of public confidence in the economy despite the signs of recovery, the White House quest to sway voters’ perceptions on that and other issues has carried a tone of deep-seated hurt and frustration.

Bush complained once again during Wednesday’s CBS forum about the disparity between the economy’s 2.7% first-quarter growth rate and the persistent national gloom. And a reminder of that disparity caused him to lose his temper earlier in the week as he spoke at a political rally in Michigan.

“Ninety-two percent negative!” he snapped, offering his own estimate of the cast of recent news coverage. “What kind of reporting is that?”

The debate among his top aides about how best to portray the state of the economy marks a new phase in a struggle that has long pitted Bush’s economic advisers against officials motivated by more purely political instincts.

Boskin, a former Stanford University economist, has told associates of waging a similar battle last autumn against efforts by former Chief of Staff John H. Sununu to cast the economic situation in a too-favorable light. Boskin threatened to resign over the issue.

At that time, other White House officials said Boskin shared the blame for the overly upbeat tone of Bush’s comments on the economy when what was being hailed as recovery already had begun to slide into a new recession.

Officials who attended a White House senior staff meeting June 22 said the clash between Skinner and Boskin began after the economic adviser praised the toned-down language used by Bush in discussing the economy during a weekend visit to California.

In a blunt challenge, Skinner was said to have scolded Boskin by reminding him that “everybody in this room knows that the economy is doing well.” Boskin reportedly shot back: “Well, I’m the only expert on the economy in this room, and I don’t think the economy is doing well.”

In a telephone interview, Skinner described the exchange as “not a disagreement, but just different interpretations of the facts and what they mean.”

He added: “The people in this country do not know what’s going on with the economy. It’s important that the American people understand that the economy is getting better.”

Boskin declined to discuss the matter.