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 built up regimes of Hussein in Iraq and Noriega in Panama.

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

Independent Ross Perot declared that the economic plans of both major party candidates would not work. And, in an unexpected assault on Bush’s management of foreign policy, he accused Bush of building up the regimes of Iraq’s Saddam Hussein and former Panamanian strongman Manuel A. Noriega through ill-advised aid programs.

The last of the three presidential debates, occurring only 15 days before voters go to the polls, was widely seen as a final, critical opportunity for Bush to begin to overcome Clinton’s double-digit leads in virtually every recent national poll. And the President seized the occasion to spell out what even some Democratic strategists conceded was his most clearly focused and coherent attack on Clinton since the campaign began.

Savagely hammering the Democratic standard-bearer’s 12-year record in Arkansas, which remains one of the poorest states in the nation, Bush derided Clinton’s assertion that his performance as governor is proof of his ability to deliver on his promises for the nation as a whole. “We don’t want to be the lowest of the low,” the President declared.

Bush warned “Mr. and Mrs. America” to “watch your wallet” as Clinton promises new government programs for health care, education and economic growth without raising taxes on any but the rich. “ . . . he’s coming right after you, like Jimmy Carter did,” Bush said. It was one of several times Bush sought to tie Clinton directly to the last Democratic President, who was soundly rejected by voters in 1980 after serving one term.

Bush also presented a new approach to the character issue. He set aside the bitterly personal attacks on Clinton’s draft record and anti-Vietnam War activities, but argued that the Arkansas governor cannot be trusted to make tough decisions or lead the nation in times of crisis because of what the President suggested is a lifelong “pattern” of untruths and trying to have it both ways on controversial issues.

Bush used the word pattern nine times in Monday’s 90-minute encounter. Aides said he planned to repeat this and similar debate lines in the 14 days that remain before the election. Democratic strategists conceded Bush was sharper than he had been in the two previous debates, but they argued that the negative strategy would continue to turn voters off.

Clinton, who consolidated and even lengthened his lead in the polls through the first two debates, 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 to the Democrats’ traditional tax-and-spend liberalism.

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

Still, while responding forcefully to Bush’s attacks, Clinton exhibited the cool demeanor of a candidate buoyed by signs that his own strategy is succeeding. Going into Monday’s debate, Bush predicted that he would be reelected, but poll numbers indicate that he faces defeat unless he stages an unprecedented comeback. In three different polls, Bush had the support of only about one-third of the voters. A poll for ABC had him behind by 19 percentage points, a survey for CNN/USA Today by 18 points and one for CBS by 17 points.

Moreover, as Monday’s debate progressed, Clinton was able to adopt a less combative and more forbearing tone because Perot repeatedly assailed the President and his record with barbed new charges.

The Texas businessman, who most analysts thought stole the show in the first debate but faded in the second, hit Bush especially hard on his record of aiding Iraq before its invasion of Kuwait. He also accused the Republicans of raising political dirty tricks and character assassination to “a sick art form.”

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

Bush, defending his own record, repeatedly used the the term trickle down and said what he opposed was “trickle-down government” that would burden the economy.

The President, stressing the Carter presidency as a foil more forcefully than at any previous time in the campaign, 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.”

Iraq Policy

By far the debate’s sharpest exchange came over the Bush Administration’s policy of support for Iraq before that nation invaded Kuwait in 1990. Perot bluntly accused Bush of using billions of dollars in U.S. aid to build up Hussein and giving him a green light to seize oil fields in Kuwait.

“If you create Saddam Hussein over a 10-year period using billions of dollars of U.S. taxpayer money, step up to the plate and say it was a mistake,” Perot said.

Clinton quickly grabbed the theme, noting that Bush was authorizing economic aid despite Hussein’s use of chemical weapons against Iraq’s Kurdish population and threats to destroy Israel.

He was “coddling Saddam Hussein when there was no reason to do it and when people at high levels in our government knew (Hussein) was trying to do things that were outrageous,” Clinton said.

Bush flared with anger when Perot said Bush was prepared to overlook some Iraqi aggression and only got tough when Hussein went too far. Bush broke the rules of the debate to interrupt loudly: “That gets to the national honor. 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” with economic aid before the war. “Our Arab allies thought we ought to do exactly that.”

Bush declared flatly that there was no evidence that Iraq used American technology to advance its 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.

However, Administration records and other postwar assessments have indicated that Iraq’s military capability did benefit from direct U.S. economic aid and from U.S. technology imported with Administration approval.

In his broadside, Perot said the President’s weak messages to the Iraqi leader in the days before the invasion of Kuwait paved the way for the invasion. He challenged Bush to make public the written instructions given then-U.S. Ambassador April Glaspie for her crucial meeting with Hussein the week before he gave the invasion order.

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

In lesser detail, Perot also attacked Bush for policies that he charged propped up Noriega before the Administration reversed course and sent the U.S. military to Panama to topple him. “If you create Noriega, using taxpayer money, step up to the plate and say it was a mistake,” Perot said.

Arkansas Record

Clinton has cited his 12-year stewardship of Arkansas’ government as evidence that he can deliver for the country as a new kind of Democrat. “We’re going in the right direction,” he said of his small state. “The country is going in the wrong direction.”

But Bush, laying down his line of attack for the campaign’s final days, declared that Clinton’s claims are fraudulent. Although Clinton talks about creating jobs in Arkansas, Bush said, “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.”

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

Perot drew laughter from the audience when he hit Clinton on the Arkansas issue.

“Let’s put it in perspective,” Perot said, noting that Arkansas’ population is less than that of Los Angeles or Chicago. “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.”

The Economy

Monday’s session provided a tougher exchange on the nation’s feeble economy than either of the earlier debates.

Bush charged that Clinton’s economic program promises more than it can deliver and that it would inevitably force him to raise taxes on the middle class. Clinton has called for higher income taxes on households earning more than $200,000 annually but has promised tax cuts for middle-class taxpayers earning less than $50,000.

Bush’s attack prompted Clinton to offer a new pledge on tax policy. He said he would not raise taxes on the middle class, even if that requires him to scale back his proposals to increase government spending on infrastructure and other projects. But he refused to make an unconditional pledge like Bush’s infamous “Read my lips, no new taxes” promise in 1988, which the President broke in 1990.

Clinton accused Bush of neglecting the economy during his first term and poked fun at the pledge made by the President during the first debate to appoint White House Chief of Staff James A. Baker III to preside over economic policy matters in a second term.

“Well . . . I’ll make some news in the third debate,” Clinton said. “The person responsible for domestic economic policy in my Administration will be Bill Clinton. I’m going to make those decisions and I won’t raises taxes on the middle class to pay for my programs.”

Bush shot back: “That’s what worries me, that he’s going to be responsible. He’s going to . . . do for the United States what he’s done for Arkansas.”

Perot accused both candidates of failing to offer credible plans to reduce the deficit. Clinton, in turn, criticized key elements of Perot’s deficit reduction plan, especially his proposal to increase the gasoline tax by 50 cents a gallon over five years.

Character

Bush tried a new approach to the issues of character, leadership and trustworthiness. Aides have long seen them as his best hope of closing the gap with Clinton, but the stridence of past assaults had failed to work for him.

Speaking softly and evenly, he 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 environment, the free trade agreement 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,” rather than accepting that it can be improved. “I think the American people are sick and tired of that.”

The final debate featured a split format. In its first half, Jim Lehrer of PBS served as the lone moderator; in the second half, the candidates faced questions from three journalists--Helen Thomas of United Press International, Gene Gibbons of Reuters and Susan Rook of CNN.

Contributing to this story were Times staff writers Douglas Jehl, David Lauter and James Gerstenzang in Michigan, and Douglas Frantz, Stanley Meisler, Doyle McManus, Marlene Cimons, James Risen and Norman Kempster in Washington.

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