NEWS ANALYSIS : Senate GOP Moderates Feel Pressure From the Right : Politics: Domenici, Hatfield, Packwood move closer to some House positions. Presidential race also a factor.

While liberals and other critics of the GOP “contract with America” were taking a beating in the House earlier this year, they assumed that they had an ace in the hole: the U.S. Senate.

There, the money committees were run not by conservative zealots but by more moderate, old-school Republicans--Pete V. Domenici of New Mexico and Oregon Sens. Mark O. Hatfield and Bob Packwood. Certainly, the liberals thought, those three would ditch the most extreme conservative measures that careened through the House.

The three are indeed on the front lines of what may be a winning battle to greatly scale back the big tax cut approved by the House. But on other leading issues in the contract, they and other moderates are being buffeted by political forces that apparently are pushing them closer to the House’s position. For example:

* Domenici, chairman of the Senate Budget Committee, on Monday unveiled a budget that would eliminate the deficit by 2002--a marked shift from his position of five months ago, when he was dubious about the possibility of balancing the budget and had suggested less ambitious deficit-reduction targets.

* Hatfield, chairman of the Appropriations Committee, began the year cool to the idea of cutting the budget already approved for this year. Now he is shepherding a bill that would rescind $14 billion or more in appropriations.

* Packwood, chairman of the Finance Committee, has embraced the core of the House welfare reform bill, which converts welfare programs into block grants for states. In some areas, Packwood may favor going even further than the House in freeing states of federal restrictions.

* While Domenici and Packwood had thrown cold water on the idea of reducing taxes as much as the House wanted, they are now under heavy pressure to do so because Majority Leader Bob Dole (R-Kan.) has promised a tax cut. The outcome of that intraparty dispute is likely to be a high-stakes test of the clout of GOP moderates.

Without question, there have been several important issues on which the Senate has moderated or stalled House initiatives. It rejected the balanced-budget amendment and a proposed moratorium on regulations and now seems likely to weaken ambitious House plans to limit liability in lawsuits.

But Senate Republicans are under rightward pressure because of presidential politics, as Dole and Sen. Phil Gramm (R-Tex.) vie for support from the GOP conservative wing, and from the large, more strident freshman class that wants to pass the House “contract with America.”

“I had a very conservative member of the House tell me that he hoped the Senate was going to save the House from some of their excesses--including a number he voted for,” said Sen. Patrick J. Leahy (D-Vt.). “I told him: ‘If you’re relying on the Senate, you’re relying on a very thin reed indeed.’ ”

The outcome of tax, budget and welfare debates may be determined by just how far moderates like Domenici, Hatfield and Packwood go toward bucking their conservative colleagues. They are operating in a far more conservative political environment than at any time in their Senate careers.

The perception of Domenici as a political moderate is a measure of how far right the GOP has moved. Domenici is determined to get rid of the deficit. But he has not always been in sync with the new breed of tax-cutting Republicans.

Domenici drew conservative criticism in 1990, when he helped craft a deficit-reduction plan that was the vehicle for President George Bush to abandon his “no-new-taxes” pledge. Earlier this year, he went head-to-head with younger conservatives over the line-item veto, which he wanted to water down.

The 1980s gave Domenici powerful lessons in the political risks of deficit reduction and fiscal risks of tax cuts. During the Ronald Reagan Administration, Domenici shepherded big spending cuts through the Senate but was no great fan of Reagan’s tax-cutting “supply side” philosophy. He watched in dismay as deficits ballooned through the 1980s.

In 1985, Domenici helped Dole put together an ambitious deficit-reduction plan that, among other things, curbed Social Security increases. After the plan passed the Senate, Reagan pulled the rug out from under Domenici by dropping support in negotiations with the House.

Domenici began this year resisting tax cuts and being cautious in his deficit-reduction goals. In January, he suggested making only a “good down payment” on the deficit, setting an initial deficit-reduction target of $318 billion over five years--far short of the amount needed to balance the budget.

But pressure built after the Senate rejected the balanced-budget amendment and GOP leaders went on to promise that they would eliminate the deficit in seven years anyway. Domenici concluded that there were great political costs to be paid by failing to balance the budget, with none of the political benefit of eliminating the deficit.

“If you’re going to have to go through the pain of big cuts and big changes, why not do the whole thing?” Domenici said in an interview.

In the budget proposal presented Monday to the Senate Budget Committee, Domenici refused to make room for a tax cut as big as the House has passed. He did offer a compromise that would make about $170 billion available for tax cuts--but only if a sound balanced-budget plan is enacted.

That is not enough for tax-cut true believers like Gramm and the GOP freshmen, but Domenici is confident that he can beat them on the Senate floor. “Are they going to vote to change (my budget) with regard to tax cuts? Yes,” he said. “But I don’t think there’s a majority to do that.”

Hatfield has made a career of facing off against the conservative majority of his party. He was an early opponent of the Vietnam War. He was one of two Senate Republicans to oppose authorizing the Persian Gulf War. He was booed at the Republican National Convention in 1964 when he criticized the John Birch Society.

Fifteen years ago, Hatfield had more company in the moderate wing of the party. But the new conservatives, whose ranks are growing in the Senate, include some who are less forgiving of Hatfield’s independent streak. That sentiment roared to the surface earlier this year when Hatfield was the only Republican to vote against the balanced-budget amendment, which lost by one vote.

A band of junior conservatives threatened to strip him of his appropriations chairmanship, saying that GOP leaders had a special obligation to toe the party line. With most Senate Republicans rallying behind Hatfield’s right to vote his conscience, he was not disciplined.

Hatfield has said that he is utterly unchanged because he believes that his critics numbered no more than eight. Yet some colleagues said the experience inevitably puts pressure on him to downplay differences with his party.

“I’m sure he will try to appear to be a good Republican,” said Leahy. The way Hatfield has handled the first big spending cut bill of the GOP Congress was an illustration of the limits of his moderating influence.

He initially was reluctant to push a recision bill, which would take back money that Congress already had provided. But House Republicans were eager to begin slashing to prove their budget-cutting mettle and pressure mounted for cuts to offset disaster assistance for California.

After the House passed its $17-billion package of spending cuts, Hatfield did take some of the sting out by paring it back to $14 billion.

Yet his role in producing cuts of that magnitude was a measure of how far the budget debate has shifted to the right. Last year, Congress barely managed to produce $13 billion in cuts over five years. Now, $14 billion in cuts in one year is just a prelude to even bigger cuts.

Asked in an interview how he feels as a moderate in a party that has moved steadily to the right, Hatfield lifted up his necktie. Given to him by a Republican who was unhappy with his balanced-budget vote, it was a red tie covered with dozens of white sheep--and one black sheep.

Packwood’s reputation as a moderate comes from his record on social issues. He is one of the GOP’s leading supporters of abortion rights. He is one of only two Republicans who voted against confirming Clarence Thomas, Bush’s nominee to the Supreme Court. He voted to override Bush’s veto of a family leave bill.

But on fiscal matters, he has done much to earn conservative stripes. He championed a big reduction in tax rates in a 1986 overhaul. Later he was a leading proponent of reducing the tax on capital gains.

Still, many thought that the Senate would take a more moderate approach to welfare reform than the House. But soon after the House acted, Packwood defied those expectations.

“We will do almost the same philosophy of block grants that the House did,” Packwood said in an interview. “I think we will take our lead from the governors,” who favor block grants because they come with fewer federal strings attached.

Packwood said that he probably would drop the controversial House proposal to convert the popular school lunch program into a block grant. But he also endorsed the idea of creating a block grant where the House did not--out of the food stamp program.

One other factor is at play with Packwood: the protracted Ethics Committee investigation into allegations that he sexually harassed dozens of former staff members and other women over the last 20 years. Against that backdrop, some senators said that Packwood may be reluctant to cross Dole or the conservative majority of his party, because he may need their support as the ethics inquiry comes to a head.

One senator who has experience before the Ethics Committee said that Packwood’s position is “a bit clouded” by the pending inquiry. Senators under ethics scrutiny are “a little bit restrained,” said John McCain (R-Ariz.), one of five senators whose links to Charles H. Keating, owner of a savings and loan that failed, costing taxpayers $3.4 billion, were investigated by the ethics panel in 1989-91. “You don’t speak with the same authority. He’s a little more reluctant to speak out.”

Packwood said it would be “inappropriate to comment” on such speculation, but insisted that the ethics inquiry is not inhibiting his influence in policy debates. “I will go ahead and do my job and let the process play out,” he said.