New Senator Doubts Clinton’s Line on Taxes Will Play in Texas : Democrat Krueger, barely in office, is up for election May 1. His fate may gauge support for President’s economic plan.

It didn’t take long for the newest, most politically vulnerable Democrat in the U.S. Senate to defy President Clinton and his sweeping economic agenda.

In fact, Sen. Robert Krueger of Texas began criticizing the proposed tax increases hours after Clinton unveiled the package to the nation on Feb. 17. Krueger, who is running in a special election to retain the seat to which he was appointed two months ago, was on the radio the next day, complaining that the President wants too many new taxes at a time when there is still too much waste in the federal bureaucracy.

Krueger stresses that he supports Clinton’s short-term stimulus plan and the Administration’s efforts to cut spending. But he complains that Clinton’s package relies too heavily on new taxes. And his staffers have let it be known that if the White House demanded a yes or no vote on the plan in its current form, Krueger would vote against it.

“I don’t know how much more clearly I can say it: I don’t see any basis for asking taxpayers for more in taxes when the government is not performing well,” Krueger said in a recent interview.

Krueger, a former congressman who was appointed by Gov. Ann Richards to fill the Senate seat that belonged to Treasury Secretary Lloyd Bentsen, is the only senator who will face voters this year. To hold his seat, he must win a May 1 special election against a field of challengers that includes conservative Republicans and a Ross Perot surrogate.

As a result, both Democratic and Republican leaders are watching his Senate race for early signs of trouble for Clinton’s economic agenda.

Republicans already are comparing the special election to the 1991 Pennsylvania Senate race in which Democrat Harris Wofford upset former Bush Administration Atty. Gen. Dick Thornburgh by hammering away on the need for health care reform. Ultimately, that Senate race helped set the agenda for the 1992 presidential campaign.

Even though Krueger, 57, has a reputation as something of a maverick--and he ultimately may be persuaded to support the President’s plan--his critique of it has created an awkward public relations problem for the White House. If he wins the election, the results could be interpreted as a public endorsement of his critical analysis of Clinton’s proposals. If he loses, the outcome could be viewed as an even more decisive rejection of the President’s agenda.

In either case, analysts say, the race could have repercussions for Clinton and his ability to move both his economic and health care agendas through Congress. Democrats in the House and Senate already have voted in committee to impose steeper spending cuts than Clinton proposed to go with his ambitious new spending and tax initiatives.

And with 22 Democratic senators up for reelection in 1994--compared with only 12 Republicans--Clinton may find that a political setback in Texas this year would make it more difficult to hold his party together in Congress on the tough votes that will be required to enact the most politically unpalatable elements of his programs.

Krueger’s quick disavowal of the Clinton tax plan came as a surprise to many observers. In choosing Krueger to fill Bentsen’s seat, Richards, one of Clinton’s closest political allies, had hoped he would offer a safe vote for the President.

But Krueger, a former congressman from San Antonio and recently a member of the powerful Texas Railroad Commission, which regulates oil and gas production in the state, has lost two previous bids to achieve his lifelong ambition of becoming a U.S. senator. Now, he is reluctant to take any chances by demonstrating absolute loyalty to the President.

Yet while Krueger is openly running away from the Clinton taxes, the White House economic agenda and the issues it raises--jobs, economic growth, taxes, health care and the deficit--are clearly going to dominate the debate in the race here. Vice President Al Gore made a recent swing through Texas to campaign for Krueger, and Clinton is likely to stump on his behalf later, despite Krueger’s public opposition to the tax provisions in the Clinton program.

“Everywhere I go, from groups of Perot supporters to Mexican-American organizations, every question I get asked is what I think about the Clinton plan,” said Richard Fisher, a wealthy Dallas businessman and Perot supporter who has entered the Senate race.

If the race here is a referendum on Clinton and his program, the Texas test results so far have been awful for the White House.

First, Clinton’s handling of the gays-in-the-military issue led to plunging approval ratings for him in Texas, which is full of military bases and retired military personnel. Just before his February address to the joint session of Congress, Clinton’s approval rating, still high elsewhere, slid to 27% in Texas, according to the Texas Poll, a voter survey conducted by Texas A&M; University.

While no new statewide polls have measured Clinton’s popularity since his plan emerged, Krueger’s break with the White House tax proposals suggests that the economic agenda is likely to face stiff resistance. After all, Clinton is proposing what has been characterized by many as the largest tax increase in American history, and Texas is one of the few states without a state income tax.

Clinton’s energy tax also will hit the Texas oil patch just as the state is beginning to recover from the deep recession it suffered as a result of plunging oil prices in the mid-1980s.

Now--after an initial burst of good feeling about Clinton’s address and a quick follow-up appearance in Texas by Bentsen to sell the program--all major candidates in the Senate race here have distanced themselves from the plan.

Fisher, the Perot supporter, argues that Clinton took a “small step” toward deficit reduction when “giant strides” are needed.

Kay Bailey Hutchison, the Texas state treasurer and the leading candidate of the mainstream Republican Party, echoed the strong partisan opposition to the plan voiced in the Senate by fellow Texan Phil Gramm, a potential Republican presidential candidate in 1996.

“Her views on these issues are those of Sen. Gramm,” says Hutchison campaign spokesman David Beckwith. “Meanwhile, Krueger has been on both sides of this.”

Still, Krueger remains the front-runner and seems certain at least to win one of two runoff spots in the May 1 balloting. If no candidate wins a majority, the top two vote-getters will square off in late May or early June, and many expect Krueger to defend his seat in a runoff against his likely opponents: Hutchison or Rep. Joe Barton, a conservative Republican from the Dallas-Ft. Worth area.

But Krueger is still going to great lengths to distance himself from Clinton and clearly is worried by Hutchison’s early efforts to paint him as a supporter of Clinton’s program.

To underscore his differences with the White House, Krueger is mounting a high-profile campaign to convince Texans that he is for cutting government, not for raising taxes.

He recently introduced legislation calling for creation of a network of independent government auditors to ferret out waste. If the auditors certify that they have found wasteful programs, his bill would require the Administration to cut spending in those programs.

“It’s going to be hard to tag him as the handmaiden of Bill Clinton, because Bob Krueger is not advocating Bill Clinton’s program,” one Krueger adviser said. “We’re not running away from Clinton. We’re just running our own race.”

Old Texas political hand George Christian, one-time aide to former President Lyndon B. Johnson, has been impressed with the extent of voter skepticism with Clinton’s economic agenda. He shakes his head when asked how the Clinton plan will fare here, and how it will play into the Senate race.

“This,” he said with a sigh, “is going to be a tough sell in Texas.”