Congress’ Centrists Get Tax Anxiety : Presidency: Moderates who helped elect Clinton no longer see him as ‘new kind of Democrat.’ What happened to bold attacks on spending, they ask?

Two months ago, when Bob Dole and his Senate Republicans were calling him a tax-and-spend liberal, Bill Clinton could shrug it off as partisan politics. But now a growing contingent of centrist Democrats is beginning to say the same thing, spelling serious trouble for Clinton as he tries to sell his economic agenda both in Congress and to the nation.

So far, Clinton has no easy answers for them.

Moderate Democrats who helped Clinton craft a presidential campaign in which he sold himself as a “new kind of Democrat” are now complaining that his domestic agenda, with its tax-heavy economic plan and pending health care initiative, has lurched hard to the left.

And Democrats are looking for cover because they see a growing perception among voters that Clinton is tax happy--especially now that his Administration seems sure to propose a second round of broad new taxes to finance health care for the poor.

The voters “had a vision of a new type of Democrat they found to their liking,” said Rep. Bob Carr (D-Mich.), chairman of the House Appropriations subcommittee on transportation, who represents a district laden with Reagan Democrats and who supported Clinton during the campaign. “They don’t know who he is anymore. . . . He isn’t coming across as the person they were giving a chance to.”

What most bothers Carr’s blue-collar constituents? “Taxes, no question,” says Carr. “They hear all these trial balloons about new taxes and they figure where there is smoke there’s fire.”

Clinton may be able to assuage such concerns by scaling back the tax increases he has proposed, endorsing additional spending cuts or accepting some type of cap on Medicare and other big-ticket entitlement programs. But with a showdown vote on his $340-billion budget bill expected Thursday and obstacles looming in the Senate, he will have to move quickly. While a narrow victory in the House seems increasingly likely, the Senate will be a far more dicey matter.

Clearly, the polls are going in the wrong direction for the President--thanks largely to sliding support for his economic plan.

What’s worse, Ross Perot is on the move again, blasting Clinton and warning that his tax, health and trade policies offer a recipe for economic disaster.

Perot has re-emerged as a force largely by tapping into mounting worries among centrist voters. “Clinton has been all over the place, looking like he can’t decide what he is, an old Democrat, a new Democrat . . . “ notes political analyst and author Kevin Phillips.

So Perot now warns that Clinton’s array of new taxes and other domestic proposals all will add up to costly new burdens on American businesses--just as the Administration is pushing hard for the North American Free Trade Agreement (NAFTA), which would open U.S. firms up to new competition from low-wage competitors in Mexico.

“We got family leave, we’ve got health care, we’ve got (legislation to prohibit replacing strikers) coming in,” Perot said. “Every time you turn around we have new burdens being placed on business. And at the same time we are lunging to sign NAFTA and open up every manufacturing job in the United States to a 58-cents-an-hour minimum wage.”

Democratic anxieties about Clinton’s willingness to consider new taxes burst to the surface last week, sparking a rebellion among both freshmen and senior Democrats in the House and Senate. Key Democrats began to complain openly that Clinton’s budget relied too heavily on new taxes and was short on spending cuts--ominously echoing Republican charges made during the bitter fight over Clinton’s stimulus plan.

“My Louisiana people say cut to the bone before they start taxing,” says Sen. J. Bennett Johnston, (D-La.), chairman of the Senate Energy and Natural Resources Committee.

An effort by Sen. David L. Boren (D-Okla.), a key member of the tax-writing Senate Finance Committee, to offer an alternative budget that substitutes deep spending cuts in place of Clinton’s energy tax was fundamentally a bid to throw a wrench into the legislative works to give moderates a chance to halt the legislative momentum for Clinton’s tax package.

Indeed, many moderates seem to support Boren’s bid largely because they are having second thoughts about their quick, early votes of approval for Clinton’s budget resolution in March.

That resolution, which sailed through at a time when Clinton was riding high, established the broad outlines for the budget, and established broad tax and spending targets for Congress to meet. But now that the tough votes on specific taxes and spending changes are coming, the implications of the earlier votes are hitting home, and moderates are scrambling for a way out.

How did Clinton get into this fix?

Behind the growing skepticism about Clinton’s budget is a new fear among moderate Democrats in Congress that the Clinton program will turn into a replay of the disastrous 1990 budget agreement, which contributed to George Bush’s political downfall. Like the 1990 agreement, Democrats are now worried that it will force them to cast politically dangerous votes to raise taxes, but that the economic plan won’t control spending and so won’t really lead to significant deficit reduction.

“Too heavy an emphasis on tax increases will stunt economic growth and will not produce the anticipated revenues that the tax increases were designed to produce,” warned Boren.

Clinton’s budget also failed to follow through on his election mandate to reform government by attacking subsidies for favored special interests, complained Will Marshall, president of the Progressive Policy Institute, a moderate Democratic think tank that influenced the Clinton campaign’s agenda but which has been largely shut out of the Administration this year.

Without bold attacks on such spending, Clinton’s program inevitably became tax heavy. In addition, Marshall notes, the partisan battle in the Senate over Clinton’s economic stimulus package “shattered the aura of goodwill and excitement about something new that had buoyed the President right after the election. And it prompted a second look at the economic package, and the extent to which this package is tax heavy.”

Now that moderates are rebelling, Clinton finds himself allied with liberals who were only lukewarm about his candidacy last year--and fighting the centrist elements of his party that helped him win the election.

The President is in the odd position of “muscling Bill Clinton’s best friends to accept his budget,” complained Marshall “rather than following through on the logic of the campaign, which was to force the left to realize it had to change.”

What Critics Don’t Like About President’s Plan

Estimates show that President Clinton’s economic plan would reduce the deficit by $336.8 billion over five years. Conservative and moderate Democrats say the plan relies too much on taxes and not enough on spending cuts. Taxes make up 81% of the $336.8-billion package.

The Breakdown Spending cuts: $61.4 billion Tax increases: $275.5 billion *

The Mandatory Benefit Programs

Critics also have complained that the measure does too little to restrain spending on mandatory federal benefit programs. Clinton said Tuesday that he’ll be more receptive to reining in such spending. Almost half of all federal government spending flows through “entitlement” programs that are not subject to the annual congressional appropriation process.

Major Entitlements / Estimated ’94 outlays (in billions) Social Security: $318.1 Medicare: $147.0 Medicaid: $92.2 Government pensions: $67.5 Supplemental Security Income: $24.7 Food stamps: $24.5 Unemployment: $24.4 Veterans benefits: $20.6 Family support pay: $16.0 Farm supports: $12.2 Earned income credit: $9.5 Deposit insurance: $7.7 Child nutrition: $7.4 Student loans: $3.9 *

Nation’s Total Spending Direct benefit payments for individuals: 46% Defense: 18% Net interest: 14% State, local grants: 15% Other: 6% Deposit insurance: 1% *

NEXT STEP: A showdown will come Thursday when Clinton’s plan is expected to go to the House. House leaders predict a victory for the package in a very close vote.