Reagan's gains give GOP rosy 1988 outlook. Republicans - especially Vice-President Bush - have visions of electoral sugarplums dancing in their heads this Christmas season.

'Twas the night before Christmas, and all through the White House, Republicans were already looking ahead to a Happy New Year in 1988. The GOP's prospects in next year's voting for the presidency are shining ever brighter, especially for the Republican front-runner, Vice-President George Bush. Early forebodings, caused by the Iran-contra scandal, are fading.

Republicans have a stocking full of pre-Christmas political presents: President Reagan's popularity is on the rise again. The Soviets have signed an arms deal. The Gallup poll reports public confidence in the economy is nearly back up to the levels prior to the October crash. Unemployment is the lowest since 1979. Inflation remains in check.

Put them all together, and the vice-president, Mr. Reagan's heir-apparent, has a ready-made campaign platform for the primaries as well as the general election next fall.

Meanwhile, there's little holiday joy at Democratic Party headquarters.

The main reason, of course, is Gary Hart. On the eve of the holidays, the former senator marched through the front door like an unrepentant Scrooge, dampening holiday spirits for his six Democratic presidential rivals and the party's leadership.

Some experts predicted that Mr. Hart's new campaign wouldn't last a week. They were wrong. As the first week went by, Hart was busy putting together a new staff, raising money ($6,000 came in the mail during the first few days), and applying for about $1.1 million in federal campaign matching funds.

Hart's reentry touched off an an explosion of cynicism and anger in Washington. The anger grew as Hart, unbowed, adamantly refused to discuss the problem that drove him from the race last May - his relationship with Miami model Donna Rice.

But his refusal couldn't staunch a fresh stream of biting humor across the country - even from Louis Rukeyser of public television's Wall Street Week. He suggested that Hart was the kind of person who, when asked at Christmas whether he had been a good boy, would respond: ``It's none of your business.''

Democrats aren't laughing. All this comes at a terribly important moment for the party. This is when most American voters begin to focus seriously on the presidential campaign. It's the moment when little-known Democratic contenders like Bruce Babbitt and Richard Gephardt can make their mark, as Jimmy Carter did in 1976.

Instead, the late-night TV comedians, the page one headlines, the magazine covers all dwell on Hart. Democrats fear he may monopolize the spotlight for the next six weeks until the Iowa caucus vote on Feb. 8. Meanwhile, the polling numbers for other Democrats, like Mr. Gephardt, have taken a nose dive.

David Chagall, a political strategist in Los Angeles, says Hart's entry has made it ``almost impossible for [Massachusetts Gov. Michael] Dukakis or Gephardt to emerge. Hart's going to take a lot of their votes away.''

``All the rest of the candidates are stuck in the same car pool together,'' laments Rep. Sam Gibbons (D) of Florida.

Mr. Chagall also says of Hart's decision: ``It has made it almost obligatory for [New York Gov. Mario] Cuomo to come into the race.''

Chagall suggests Hart may try to run a ``Mr. Smith Goes to Washington'' type of race: the little guy against the establishment, with the establishment being the party leaders, the press, and the other candidates.

``Republicans are obviously rubbing their hands in glee,'' Chagall says.

The glee on the Republican side, however, is restrained, especially among the second tier of presidential candidates.

There is growing concensus in Washington that the contest now has come down to Bush and Dole, the two front-runners. Senator Dole leads in Iowa, with Bush second, according to the polls, which are only moderately reliable at this point in the race.

Nationwide, Bush continues to lead, but by a reduced amount. A Washington Post-ABC survey taken Dec. 15-17 found Bush with 44 percent of the Republican vote, Dole with 35 percent. All the others were in single digits (Jack Kemp, 6; Pat Robertson, 4; Alexander Haig, 4; Pierre S. (Pete) du Pont IV, 3).

Most encouraging for the GOP were the polls comparing their front-runner, Bush, with the strongest Democrats. A Roper survey, taken for US News & World Report, found Bush trampling all the leading Democrats. He beat Dukakis (48-30), Jackson (56-27), Hart (52-32), and Cuomo (47-34).

Those trial races found Bush running very strongly among independents, beating the Democratic candidates by about 2-to-1 with that key group.

Where should the Democrats turn? Brookings scholar Stephen Hess, author of a newly reissued and updated book, ``The Presidential Campaign,'' informally surveyed 13 political journalists this week in Washington for their views of the two parties' candidates. The survey showed that these insiders rate the candidates differently than the public.

Mr. Hess asked the journalists which candidates had best demonstrated 12 important leadership qualities. Among Democrats, the journalists chose Bruce Babbitt as best on honesty, intelligence, courage, and in setting important goals. Babbitt is last in the public polls.

The journalists said the Rev. Jesse Jackson was most noted for openness, communication skills, political intuition, and stamina.

Governor Dukakis was singled out for his executive talents. Sen. Albert Gore was chosen for his expert knowledge, especially of arms control issues. Sen. Paul Simon was tops for sensitivity and a ``sense of history.''

Hart, first in the public opinion polls among Democrats, failed to win a single category among the journalists.

On the Republican side, the survey gave the most kudos to Sen. Robert Dole, placing him first in expert knowledge, intelligence, honesty, courage, political intuition, and stamina.

Kemp was strongest in openness, sensitivity, a sense of history, and in having important goals.

Pat Robertson was first as a communicator. Bush was first in his executive talent.

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