Democratic Group Unveils Alternative to GOP ‘Contract’ : Politics: Centrist leadership council’s plan seeks to retool government programs. Party is urged to call for more sweeping changes.

In a bid to provide direction to a Democratic Party and White House still dazed by their historic losses in the midterm congressional elections, the centrist Democratic Leadership Council on Monday released a 10-point “progressive alternative” to the Republican “contract with America.”

The plan, which focuses heavily on retooling such government programs as welfare, job training and public housing, implicitly acknowledges that the GOP has seized the mantle of reform from a Clinton Administration that came into office promising to reinvent government.

To regain the initiative, the group argued, the Clinton Administration must propose more sweeping--and politically risky--changes in existing federal programs than it has been willing to embrace so far.

“Some of these elements are things we should have done in the first two years but the rest are what we should do in the next two years,” said Will Marshall, president of the Progressive Policy Institute, the DLC’s think tank in Washington.

Though the DLC has close ties to the Administration--President Clinton chaired the organization before launching his presidential bid--it is uncertain how far the group can push these ideas as a Democratic alternative to Republican plans in the coming Congress.

One problem is that the election decimated the ranks of the moderate Southern and border state Democratic congressmen most sympathetic to the DLC message. Another potential obstacle is uncertainty from the White House about whether to push the kind of ambitious alternatives to the GOP contract included in the DLC document.

For instance, some high-ranking officials said that the Administration is still considering an attack on corporate subsidies as the DLC proposes, but when Labor Secretary Robert B. Reich recently floated the idea, other senior officials, including White House Chief of Staff Leon E. Panetta, quickly shot it down.

At a news conference, Marshall and DLC President Al From contended that a bipartisan centrist coalition could pass some of these ideas over the next two years, particularly welfare reform. But they acknowledged they face a long-term grass-roots organizing process to build support for new approaches in the Democratic Party.

“Our constituency is not in Congress or in Washington,” From said. “If we depend on members of Congress to reform the Democratic Party, we’ll sit here at a funeral.”

Over the last two years, the DLC--which was founded after Ronald Reagan’s landslide reelection in 1984 to push the Democratic Party toward a more centrist course--has seen several of its top priorities enacted into law, including a national service plan, a reinventing government initiative and an expansion of the earned income tax credit for the working poor.

But it has also piled up its share of grievances with the Administration, loudly dissenting from the Clinton health care plan and protesting the decision to delay welfare reform.

The alternative contract repackages ideas that the DLC has pushed over the last two years but also adds proposals. It echoes several themes prominent in the GOP plan, particularly deficit reduction and the shift of power away from Washington toward local government.

But the alternative departs from the GOP plan in supporting substantial new public spending on education, training, welfare reform and other social needs, and opposing tax cuts that could disproportionately benefit the affluent.

The main components of the DLC plan include:

Budget reform: In an approach it terms “cut and invest” economics, the DLC proposes eliminating $225 billion in spending and tax subsidies to private industry over the next five years and using the funds to expand public investments in national service, Head Start and infrastructure improvements. The group urged reducing the deficit and providing a middle-class tax cut by doubling the current children’s exemption for families earning $50,000 or less annually. In addition, the group called for further deficit reduction by means-testing federal entitlement programs like Medicare and Social Security--for instance by providing smaller cost-of-living adjustments for affluent retirees--and gradually raising to 70 the retirement age for Social Security recipients.

Reforming social programs: The DLC plan attempts to find a path between the Republican calls for retrenchment--which the group labels “punitive”--and the traditional Democratic preference for large central bureaucracies, like the complex structure built around Clinton’s doomed health care initiative.

In welfare reform, the group generally endorses the Administration’s blueprint, but calls for greater reliance on private contractors to place recipients in full-time jobs. It proposes a national campaign against teen-age pregnancy centered on a shift from “federal to community-based solutions,” including group homes where teen-age mothers could be required to live with their children as a condition of government aid.

Foreign affairs: Subtly dissenting from Clinton’s push to establish free-trade zones across Asia and South America, the group instead calls for expanding the North American Free Trade Agreement through negotiations with individual nations willing to meet its standards for investment, open markets, labor standards and environmental protection.