ELECTIONS ’92 : Conservatives Step Up Calls for Bush to Fire Darman and Brady : Economy: Groups, lawmakers say the President is now boxed in because of the 1990 budget accord. They see the need for fresh policy ideas.

In the fall of 1990, Budget Director Richard G. Darman chuckled to reporters about how he had snookered the Democrats in hammering out a five-year budget agreement between the White House and Congress.

For the first time, Darman said, Congress would be unable to pass new initiatives requiring fresh federal spending unless they either made cuts in other areas or found new sources of revenue to cover the cost.

The result, according to Darman and Treasury Secretary Nicholas F. Brady, another principal architect of the budget accord, would be an era of unprecedented fiscal discipline on Capitol Hill.

To be sure, President Bush had to agree to raise taxes to win Democratic support for the budget pact, an abrogation of his “read-my-lips” pledge during the 1988 campaign. But Darman and Brady said it was a small price to pay in return for the agreement’s new restrictions on congressional spending and its promise of smaller deficits.

Nearly two years later, it is clear that Darman, Brady and the rest of the Bush economic policy team made a political miscalculation of historic proportions when they signed onto the budget agreement.

Now, it is Bush who is trapped by budgetary gridlock, even as the deficit continues to soar and the President’s standing in the polls continues to sag. Bush has admitted that the 1990 tax increase was a mistake, and Darman and Brady, along with the President they serve, are paying a heavy political price.

On the eve of the Republican National Convention in Houston, conservatives in the Republican Party are intensifying their demands that Bush fire both men as a badly needed sign that he is committed to a fresh approach to economic policy.

“The President has got to look at what Darman and Brady have been advising him for the last 3 1/2 years, and realize that everything they have told him was wrong,” said Rep. Tom DeLay (R-Tex.). “I’m afraid that the presidency is on the line here.”

Through a spokesman, fellow conservative Rep. Dick Armey (R-Tex.) added: “I believe (Darman and Brady) have been net minuses for the President,” and so should quit or be fired.

The criticism--which has been building slowly for months and has reached a crescendo as Bush’s political fortunes have waned--is beginning to have an impact.

Darman, a longtime Washington insider who has served in Republican administrations since the Richard M. Nixon era, dismissed the mounting calls for his removal at a recent White House press briefing.

“I am now celebrating the 20th anniversary of the first request for my resignation,” he said. “I look forward to many more.”

Still, White House observers believe that Darman, 49, has purposely lowered his public profile to survive and that his influence over Administration economic policy seems to have been diminished.

He declined to comment for this story.

Brady, a 69-year-old former Wall Street executive, appears increasingly sensitive to the attacks, and has just issued a lengthy report detailing the positive side of his record at Treasury.

A Treasury spokeswoman dismissed the conservative criticism as “merely politics.” And at a recent press breakfast, Brady denied that he was bothered by the criticism, saying it was “not something that occupies my mind for 30 seconds a day.”

But still, the Administration has been unable to reverse the widespread impression that Brady is not up to the job.

His penchant for highly unusual economic prognostications hasn’t helped. After telling an audience of professional economists at a speech in Washington last winter that the economy was ready to pick up because lots of car tires were getting bald and would need to be replaced, he later reportedly told Administration officials at a White House meeting that the economy would get a big boost from a gold medal performance by the U.S. Olympic basketball team in Barcelona.

“Conservatives hate Darman, but they don’t feel that way about Brady--they just think he is incompetent,” noted Stephen Moore, director of fiscal policy analysis at the Cato Institute, a conservative Washington think tank.

But what has bothered many conservatives most is that they believe Darman and Brady are technocrats without ideological roots who have offered no real direction to economic policy since the 1990 budget agreement.

“The reason conservatives want them out is that it’s clear that they have no moorings,” said Dan Mitchell, an economic analyst at the Heritage Foundation, a conservative research group. “As long as those two are in control, you will never get any change. They just see their jobs as to cut deals and make the trains run on time.”

Others add that the two--along with Bush himself--seem to have become prisoners of the new budget spending limitations they put in place.

The Administration was unable to offer more than a modest economic growth package last winter, at a critical time for both the economy and Bush’s reelection chances.

And conservatives can hardly restrain themselves when they talk about how the election is almost at hand, the economy still hasn’t recovered and the Administration has not called for scrapping the agreement so it can cut taxes and jump-start the economy.

“I feel like I’m standing on the deck of the Titanic, shouting iceberg, one minute from contact, and the pilot isn’t listening,” said a frustrated Burt Pines, chairman of the National Center for Public Policy Research, a conservative research group.

Many conservatives say they cannot understand why Bush has kept both men around when the tax increase they crafted on his behalf now threatens his political future. And White House sources say they believe that while both Brady and Darman will last through the election, both will leave soon after if Bush is reelected.

In any case, with Secretary of State James A. Baker III’s move to take the helm at both the White House and the troubled Bush campaign, Brady and Darman--once a Baker protege--seem destined to assume subsidiary roles in economic policy for the remainder of the campaign.

But the direction that White House policy will take until November remains uncertain.

In fact, the Bush Administration continued to send mixed signals to conservative Republicans on economic affairs even as Baker was assuming control on the eve of the Houston convention. In his farewell speech at the State Department on Thursday, Baker excited conservatives by appearing to call for tax cuts and a return to a strong conservative vision for a domestic agenda in Bush’s second term.

“We should build on the fundamentals of lower tax rates, limits on government spending, greater competition, less economic regulation and more open trade that can unleash tremendous private initiative and growth,” Baker said.

“He was sending a signal to conservatives that he is supportive,” said one aide to Secretary of Housing and Urban Development Jack Kemp, a leading conservative voice in the Administration.

But earlier in the week, the Republican Party platform committee meeting in Houston first inserted, and then watered down under White House pressure, a plank renouncing the 1990 tax hike.

And, in an even more worrisome sign to conservatives, Bush has still refused to respond publicly to a conservative campaign, led by Kemp and House Minority Whip Newt Gingrich, to win White House approval for their proposals for steep, supply-side tax cuts.