Clinton Vows to Rebuild U.S.; Bush Warns of ‘Misery Index’ : Debate: Perot says neither of his rivals’ economic plans would work. He charges Bush foreign policy helped create Hussein in Iraq and Noriega in Panama.

President Bush and Arkansas Gov. Bill Clinton clashed repeatedly on economic issues in the final debate Monday night, with Clinton vowing to rebuild the country without punishing the middle class and Bush warning that the Democrats would return the nation to the “misery index” days of Jimmy Carter.

But independent Ross Perot declared that the economic plans of both major party candidates would not work, and he accused Bush of mismanaging foreign policy so badly that he helped create Iraq’s Saddam Hussein and former Panamanian strongman Manuel A. Noriega.

Bush, trailing so badly in the polls that only a major breakthrough can close the gap with Clinton, spelled out what is expected to be the central thrust of his campaign in the final two weeks: that the Arkansas governor is really an old-fashioned tax-and-spend Democrat with a record of failure in his home state and a lifelong “pattern” of trying to stand on all sides of controversial issues.

“Mr. and Mrs. America,” Bush said, when Clinton promises new government programs for health care, education and economic growth while raising taxes only on the rich, “watch your wallet. His figures don’t add up . . . he’s coming right after you, like Jimmy Carter did.”

Suggesting that the nation should not choose as its leader a man who has headed one of the nation’s poorest states for 12 years, Bush said, “We don’t want to be the lowest of the low.”

But Clinton, who appears to have consolidated and even strengthened his lead in the polls as the series of three presidential debates has progressed, struck back hard, citing evidence of economic progress in Arkansas during his tenure and promising a fresh alternative to the trickle-down economics of the Republicans and the Democrats’ traditional tax-and-spend liberalism.

Declaring that Bush had once branded the trickle-down economic policies of Ronald Reagan as “voodoo economics,” Clinton said the President is now its “leading practitioner.” Clinton, going on the attack in the first question of the debate, declared that “unemployment is up and most people are working harder for less money than they were making 10 years ago.”

If Bush laid down what even some Democratic strategists saw as the most clearly focused line of attack since the campaign began, he had to spend much of his time Monday night defending his own record against attacks by Perot as well as Clinton.

Perot, who stole the show in the first debate but faded in the second, came on strong in the second half of the final debate and once again probably helped Clinton. The Texas businessman hammered Bush especially hard on his record of aiding Iraq before its invasion of Kuwait.

And he insisted that neither Bush nor Clinton was proposing an adequate cure for the mushrooming federal deficit, which he said is sapping the nation’s economic lifeblood. His own prescription for balancing the budget in six years is tough, he acknowledged, but in calling for fairly shared sacrifice, he said that “it’s not as tough as World War II. It’s not as tough as the Revolution.”

“Our challenge is to stop the financial bleeding,” Perot declared. “If you take a patient into the hospital who’s bleeding arterially, step one is to stop the bleeding. And we are bleeding arterially. There’s only one way out of this and that is to stop the deterioration of our job base, to have a growing, expanding job base to give us the tax base.”

Although the President’s aides said he was primed to aggressively attack Clinton on the character issue, Bush avoided the kinds of savage personal attacks on Clinton’s draft record and other matters that apparently alienated some voters earlier in the campaign. A new CBS poll showed that unfavorable views of Bush had increased from 38% to 57% since the presidential debates began.

Going into Monday’s debate Bush predicted that he would still be reelected, but poll numbers indicated that he faces defeat in the election two weeks from now unless he stages an unprecedented comeback. In three different polls he had the support of only about one-third of the voters. ABC had him behind by 19 points, CNN and USA Today by 18 points and CBS by 17 points.

Bush, defending his own record, repeatedly used the the term trickle down , but said what he opposed was “trickle-down government.”

He said that 15 million jobs had been created during the Reagan-Bush years and that “the rich are paying a bigger percent of the total tax burden.”

“And what I don’t like,” Bush said, “is trickle-down government. And therein, I think, Gov. Clinton keeps talking about trickle down, trickle down and he’s still talking about spending more and taxing more.”

Clinton, saying he disagreed with both his opponents on the economic issue, said that Perot’s plan for a 50-cent increase in the gasoline tax over five years would put a greater burden on the poor and middle class than on the wealthy and that Perot’s own analysis says unemployment would be slightly higher in 1995 under his plan than it is today.

Bush, he said, raised taxes after saying he would not and vetoed a tax increase on the wealthy that gave the middle class a tax break.

The President, stressing the Carter presidency as a foil, said, “We remember what it was like when we had a spending President and a spending Congress, and interest rates . . . were 21 1/2% under Jimmy Carter. And inflation was 15. We don’t want to go back to that.”

Bush said that, although Clinton talks about creating jobs in Arkansas, “over the last 10 years since he’s been governor, they’re 30% behind . . . the national average, on pay for teachers, on all these categories, Arkansas is right near the very bottom.

He said he had admitted making a mistake by approving the budget program of 1990 that violated his no-new-taxes pledge and called on Clinton to “admit it, that Arkansas is doing very, very badly against any standard, environment, support for police officers, whatever it is.”

Clinton replied that “Mr. Bush’s Bureau of Labor Statistics” reported that Arkansas ranks first in the country in the growth of new jobs, and fourth in manufacturing jobs, income increase and reduction of poverty.

Reeling off a series of favorable statistics, he said Arkansas’ income has grown more rapidly than the national average and the state is second in tax burden and has the lowest per-capita state and local spending in the country.

Perot, who frequently bashed Bush and occasionally defended Clinton from Bush’s attacks in the three presidential debates, drew laughter from the audience when he finally hit Clinton on the Arkansas issue.

“Let’s put it in perspective,” Perot said, and went on to say Arkansas’ population is less than that of Los Angeles or Chicago, “about the size of Dallas and Ft. Worth combined,” and that “we’re making a mistake night after night after night to cast the nation’s future on a unit that small . . . it’s irrelevant.”

“I can say . . . that I ran a small grocery store on the corner, therefore I extrapolate that into the fact that I could run Wal-Mart. That’s not true.”

Monday’s session provided a sharper exchange on the critical issue of the economy and the candidates’ competing plans for fixing it than either of the earlier presidential debates.

Bush hammered home his central argument that Clinton cannot be trusted to handle the economy, characterizing the Democrat as a traditional tax-and-spend liberal whose presidency would bring back the sky-high interest rates and inflation experienced under Carter.

Bush charged that Clinton’s economic program promises far more than it can deliver and that it will inevitably force Washington to raise taxes on the middle class rather than just on the rich as Clinton has promised.

Bush’s attack prompted Clinton to make a more specific tax policy pledge than he has previously offered: He said he will not raise taxes on the middle class, even if that requires him to scale back his proposals for increasing government spending on infrastructure and other projects.

Clinton’s economic program calls for higher income taxes on households that earn more than $200,000 a year and tightened tax collection from foreign corporations that do business in this country. He has promised to reduce income taxes on middle-class taxpayers earning less than $50,000.

Although he said he would rather reduce the scope of his spending proposals than raise middle-class taxes, Clinton refused to make an unconditional no-new-taxes pledge like the “read-my-lips” promise that has hurt Bush’s credibility.

By far the debate’s sharpest exchange came over the Bush Administration’s policy of support for Iraq before that nation invaded Kuwait. Perot bluntly accused Bush of using billions of dollars in American aid to build up Iraqi leader Saddam Hussein and giving him a green light to invade Kuwait.

“You create Saddam Hussein with taxpayer dollars,” Perot said. “Step up to the plate and say it was a mistake.”

Clinton quickly grabbed the theme, criticizing Bush for providing assistance despite Hussein’s threats to destroy Israel and his use of chemical weapons against Iraq’s Kurdish population.

“I think what was wrong--I give credit where credit is due--but the responsibility was in coddling Saddam Hussein when there was no reason to do it and when people at high levels in our government knew he was trying to do things that were outrageous,” Clinton said.

But it was Perot who evoked the strong reaction from Bush when he later accused the President of giving Hussein the go-ahead to seize part of Kuwait and responding only when he went too far.

Flaring with anger, Bush broke the rules of the debate and interrupted Perot.

“That gets to the national honor,” he said loudly. “We did not say he could take the northern part of Kuwait. That’s absurd.”

Bush adamantly denied that U.S. aid played any role in creating Iraq’s military arsenal and he invoked a familiar defense of his overall policy.

“It’s awful easy when you are dealing with 90-90 hindsight,” Bush said. “We did try to bring him into the family of nations . . . . Our Arab allies thought we ought to do exactly that.”

Bush declared flatly that there was no evidence that American technology was involved in Iraq’s nuclear weapons program. “The nuclear capability has been searched by the United Nations and there hasn’t been one single scintilla of evidence that there’s any U.S. technology involved in it,” he declared.

Although there is no evidence that the Bush Administration ever offered to allow Iraq to annex northern Kuwait, the President’s assertion that no U.S. technology was used in Baghdad’s weapons programs conflicts with findings of recent U.N. inspections at Iraqi weapons facilities and with the Administration’s own records.

For instance, American technology was discovered by U.N. inspectors at the plant where Iraq was developing bomb-grade uranium and at numerous sites manufacturing chemical weapons. A carbide plant using American technology was located at Iraq’s primary nuclear-weapons facility and destroyed by the United Nations.

In addition, declassified State Department documents from July of 1990 confirmed that Iraq had obtained U.S. technology for use in its programs to develop nuclear, chemical and biological weapons.

On previous occasions, Bush also has denied that U.S. technology and aid played a role in Iraq’s military buildup. A senior Administration official last week tried to explain the apparent discrepancy between the President’s position and other evidence by saying that Bush meant the aid had not provided “meaningful, significant help.”

Bush’s ill-fated courtship of Hussein before the Persian Gulf War has emerged as a major campaign issue in the last weeks of the race. Democrats in Congress and Clinton running mate Sen. Al Gore of Tennessee have accused Bush of coddling the Iraqi leader and engaging in a wide-scale cover-up.

But Monday night was the first time that Bush has confronted the issue in the debates. And rather than Clinton--who passed up a chance to raise the issue at last Thursday’s session--it was Perot who brought up the issue.

Along with accusing Bush of creating Hussein, he said the President’s weak messages to the Iraqi leader in the days before the invasion of Kuwait constituted a green light for the attack. He challenged Bush to make public the State Department’s written instructions to April Glaspie, who was the U.S. ambassador to Iraq before the invasion and had a critical meeting with Hussein the week before the invasion.

“This is simple,” Perot said. “What were her written instructions?”

As they have been in each of the three previous debates and in the last weeks of the campaign, the issues of character, leadership and trustworthiness were raised once more.

Bush, speaking softly and evenly, tried to paint Clinton with what he called “this pattern of trying to have it both ways on all issues.” He accused the Democratic candidate of trying to take both sides on the issues of the environment, the free trade agreement with Mexico and the Persian Gulf War.

“When you’re President of the United States,” Bush said, “you cannot have this pattern of saying I’m for it, but I am for the other side of it . . . This is my point tonight.”

The President repeated that, whereas he favored and Perot opposed the trade agreement unequivocally, Clinton stood somewhere in between.

That brought a swift counterattack from Clinton. “That’s what’s wrong with Mr. Bush,” he said. “He says you have to be for it or against it. I think the American people are sick and tired of that.”

Clinton then threw the accusation back at the President. “He said trickle-down economics was voodoo economics, and now he’s its biggest practitioner,” the Democratic candidate said. Clinton was referring to Bush’s criticism of the economic policies espoused by Ronald Reagan when the two were battling for the 1980 Republican nomination. During the New Hampshire primary, Bush described Reagan’s proposals for tax cuts and increased defense spending as “voodoo economics.”

At one point, Clinton was asked point-blank about the “character” issue that has caused him the most trouble during the campaign: Had he changed his story about his efforts to avoid being drafted during the Vietnam War? If he had the chance to make the decision over, would he serve? And could he order troops into battle despite his failure to serve in the armed forces?

The Arkansas governor responded calmly, as if he had expected the question.

“If I had it to do over again, I might answer the questions better,” he said. “I was asked a lot of questions about things that happened 23 years ago.”

But he indicated that he did not regret avoiding military service.

“I was opposed to the war,” he said. “It’s easy to say, in retrospect, ‘I would have done something differently.’ But President (Abraham) Lincoln opposed the (1847 Mexican) war, and some people said he shouldn’t be President.”

He cited Woodrow Wilson and Franklin Roosevelt as presidents who led the nation in war despite a lack of military experience.

As to the question of ordering troops into battle, Clinton said: “The answer is, I could do that. I wouldn’t relish doing it, but I wouldn’t shrink from it . . . That is a part of being President. Could i do it? Yes, I could.”

Bush said he did not object to Clinton’s actions on the draft--but renewed his charge that, by changing his story on the issue, the Democrat had revealed a serious character flaw.

“It’s this pattern that troubles me more than the draft. A lot of decent, honorable people felt the same way he did about the draft,” said Bush, who excoriated a group of hecklers in New Jersey last week as “draft dodgers.”

“You can’t have this pattern of saying, ‘Well I did this or I didn’t,’ and the facts come out and you change it,” Bush said, repeating his main theme of the evening.

Perot refused to comment on the issue. “I don’t consider this relevant,” he snapped, to scattered applause in the hall.

Instead, moving to a subject more to his liking, Perot renewed his attack on the influence in Washington and in the presidential campaign of lobbyists paid by foreign governments.

To that, Bush replied: “I can never quite understand why Mr. Perot is so upset at this.” He described foreign lobbyists as honest men doing a lawful job and pointed out that Perot himself once had a foreign lobbyist on his payroll.

“And as soon as I found it out, he went out the door,” Perot said.

At the prompting of the panel of journalists, all three candidates offered their prescriptions for reforming the seemingly unwieldy bureaucracy that is the American government.

“In a nutshell, we’ve got to reform our government or we won’t get anything done,” Perot said, vowing to do just that should he become President. “We have a government that doesn’t work, and people have to get their government back. We’ve got to turn this thing around . . . to turn the government back to the people and take it away from the special interests.”

Perot criticized government perquisites, saying: “Who else can give themselves a 23% pay raise except Congress? I don’t have a free reserve parking place at National Airport (in Washington), why should my servants? . . I’m paying for all that for those guys. We’re going to clean that up. I have millions of people shoulder to shoulder with me. We will see it done warp speed.”

Clinton took the opportunity to return to his favorite theme: revving the economy. He said he agreed with Perot that Congress needed to cut spending, but argued that the Bush White House has increased its expenditures “considerably more than Congress has” and that Congress, in fact, “has actually spent $1 billion less than than the President asked them to spend.”

Bush then called for a reduction in the White House staff by one-third and challenged Congress to follow suit. He repeated his calls for term limits for members of the House and Senate, a balanced budget amendment to the Constitution, and a line-item veto.

“Let the President have a shot at this excess spending and cut out some of the pork out of a meaningful bill,” he said. “I’d rather be able to just line it right out of there--pass the good stuff and line out the garbage.

Late in the evening, the discussion turned to leadership, as each candidate was asked to address concerns raised in some quarters about whether they possess the quality.

Perot, as he has in previous debates, said the White House had to be used “as a bully pulpit” to move the country along a successful course.

He said that, contrary to the apparent belief by members of the media that the American public has a short attention span when it comes to details about the economy and other issues, the success of his paid television broadcasts, which have drawn millions of Americans to watch “a guy with a bad accent and flip charts,” showed that the American people are “thirsty” for information.

Clinton suggested that he might continue “town hall meetings” with ordinary citizens--the format that helped him in last Thursday’s debate--if he is elected.

President Bush, wryly citing a bumper sticker saying: “Annoy the media, reelect Bush,” said his conduct in the Persian Gulf War was the best evidence of leadership, and accused Clinton of “waffling” on that issue and others.

In a question seemingly aimed at trying to determine the candidates’ commitment to diversity in their administrations, one panelist asked why their staffs were dominated by white males.

To that Bush retorted: “You don’t see Margaret Tutwiler sitting in there?” he asked, referring to the powerful assistant to his chief of staff. He also cited U.S. Trade Representative Carla A. Hills, Labor Secretary Lynn Martin, and Surgeon General Antonia Coello Novello. “You look all around, and you’ll see first-class, strong women,” Bush said.

Clinton noted that he had a woman as his chief of staff as governor of Arkansas and several top aides who are black, and he promised to appoint “a Cabinet that looks like America.”

Perot said he had hired women in the computer business, and then pointed to “my wife and four beautiful daughters,” who he said outnumbered him and his one son.

Bush and Clinton proceeded cautiously when asked about ominous problems in the nation’s banking system, obviously wary of alarming depositors. Both said that there were a number of “problem banks” but that the industry itself was sound and could not be compared to the teetering savings and loan system several years ago.

Perot, however, gave credence to the spate of recent warnings about possible rash of bank failures on the horizon.

“Right after Election Day this year, they’re going to hit us with a hundred banks (failing); it’s going to be a hundred-billion-dollar problem,” he warned. He charged that the situation was similar to 1984, when the savings and loan crisis loomed but the government did little “because (S&Ls;) were flooding both parties with crooked PAC money.”

Bush and Clinton said reforms were needed to strengthen the industry, and Clinton stressed that losses from failing institutions should be made up by banks rather than the federal Treasury.

The candidates had a sharp exchange on environmental policy. The President said Clinton’s proposal to increase the fuel efficiency of cars was unwise and would cost American jobs. Clinton insisted the better efficiency was only a goal and not meant to be made part of federal law prematurely. “I am a job creator, not a job destroyer,” he said.