CAMPAIGN ’96 : Clinton Aides Split Over Theme: Wages or Values?

President Clinton, barnstorming the caucus state of Iowa on Saturday as an unopposed candidate for the Democratic presidential nomination, is road-testing a new pitch to voters anxious about the economy: If you’re feeling good, he’d like some credit--but if you’re not, he still feels your pain.

“If you ask yourself, ‘How are we doing?’ you have to answer, ‘We’re doing better than we were--but not nearly good enough,’ ” Clinton told 12,000 cheering Democrats in a basketball arena at the University of Iowa. “That is the short answer.”

It may be short, but it took several long months for the president and his campaign strategists to settle on it. For behind Clinton’s carefully calibrated new theme lies a continuing debate among the president’s own advisors over the basic direction of his campaign, and his second term, should he win one.

“Paycheck Democrats,” including liberals like Sen. Edward M. Kennedy (D-Mass.) and Labor Secretary Robert B. Reich, want Clinton to do more for workers who worry about shrinking real wages and ballooning corporate layoffs. “Values Democrats,” such as Clinton’s new campaign guru, Dick Morris, want the president to stick to the political center and emphasize his prowess as a budget-cutter.

*

Aides say Clinton decided that this dilemma is what he likes to call “a false choice” and is trying to run on both themes at the same time.

At his rally here--complete with a brass band, a gauzy campaign video depicting the high points of his tenure and chants of “four more years”--the president reeled off his favorite economic statistics: “Nearly 8 million new jobs . . . the lowest combined rates of unemployment and inflation in 27 years . . . a record number of new self-made millionaires.

“That is the good news, but what is the whole truth? Half the American people still haven’t gotten a raise in terms of what their incomes will buy in the last 10 or 15 years,” he added.

Clinton said he is trying to respond with the modest measures he outlined in his State of the Union address last month: a higher minimum wage, continued federal support for student loans and better protection for health insurance consumers.

“It’s a good message,” said Clinton’s deputy campaign director, Ann Lewis. But despite its seemingly straightforward content, the president’s new pitch is the product of a long and still-roiling debate among his aides and advisors over what theme he should stress this year: economics or values.

When Clinton ran for president four years ago, the question was simpler: The economy was struggling out of a recession and many voters felt George Bush had done too little to address the problem. “It’s the economy, stupid,” was a guiding phrase of the Clinton campaign.

Now the economy is in better shape, but polls show that voters give Clinton little credit for the upswing. Moreover, the benefits of growth have been uneven, and record-high corporate layoffs have made many voters anxious about their economic future.

The dilemma for Clinton, advisors say, is this: How can he persuade voters to give him some credit for economic good news without alienating voters, including low- and middle-income Democrats, who are angry about economic bad news?

“This is not an issue limited to one party or another,” said Reich, who has urged the president to pay more attention to voters’ economic worries.

“[Patrick J.] Buchanan appeals clearly to the anxieties of working people in this country,” he said of the GOP presidential candidate.

Last year, Clinton tried to persuade audiences around the country that the economy was in better shape than they thought, but advisors told him the argument was a loser.

“That’s the path Bush took, to his great regret,” said California Lt. Gov. Gray Davis. “I told him . . . it could lose you your job.”

“He took that advice very much to heart,” White House spokesman Mike McCurry said. “The president’s optimism is not the rosy scenario kind of optimism. It’s a slight shade of blush, like a good blush zinfandel.”

Behind the argument over campaign tactics lies a more important debate over the direction and focus of a second Clinton term. Those larger stakes, one advisor said, turned the debate over Clinton’s message into “a holy war” between ideological camps.

During much of last year, Clinton, reacting to the Republican victory in the 1994 congressional elections, worked deliberately to erase the impression that he is a liberal Democrat by embracing the goal of a balanced federal budget and campaigning for a return to traditional moral values.

But that shift to the right made more traditional Democrats, such as Kennedy and House Minority Leader Richard A. Gephardt (D-Mo.), fearful that Clinton was abandoning too many of their party’s goals--and, in the process, losing voters.

The divide between Values Democrats and Paycheck Democrats surfaced among the president’s own advisors as he worked on his State of the Union address. Paycheck Democrat advisors, such as James Carville, the 1992 campaign guru, urged Clinton to address the economic anxieties of middle-class voters; Morris, the president’s new in-house strategist, insisted that the priority should be cementing Clinton’s image as a budget-balancer.

In the end, Clinton’s speech did both: It centered on his budget-cutting declaration that “the era of big government is over,” coupled with a pledge that government should still protect those who don’t benefit from economic growth.

But the debate among advisors has continued, with each side offering conflicting results from private polls and interviews with “focus groups” of potential voters to bolster its case.

*

Reich and Kennedy have pushed the issue one step further by proposing new laws to favor companies that avoid layoffs and treat employees well, including favorable tax treatment for “good corporate citizens.”

Those ideas were greeted with a cool silence from the White House. Treasury Secretary Robert E. Rubin has reportedly warned that they would cause alarm and opposition on Wall Street. Instead, Clinton is considering ways to encourage corporate responsibility without imposing new regulations, aides said.

In any case, pollsters say Clinton appears to hold the advantage over Republicans on the economic issue, at least so far.

“Voters don’t give Clinton much credit for the health of the economy, but they also don’t blame him for their economic problems, and the absence of that negative [factor] is significant,” said Democratic pollster Geoff Garin.

Moreover, the Republicans have failed to convince many voters that their economic priority, balancing the federal budget, will improve the economic picture for the middle class, said Andrew Kohut of the Pew Research Center. In a January poll, he said, only 40% of respondents said they believed that they would benefit economically from a balanced budget.

“The Republicans haven’t succeeded in convincing most people that if we balance the budget, it will improve your life,” Kohut said.

Times staff writer Robert A. Rosenblatt in Washington contributed to this story.