President Begins To Focus on Domestic Agenda

PRESIDENT Bush and his very low-key domestic program - visibly on the defensive recently - appears to be budging.Prods to action are coming from many quarters. The end-of-recession optimism that had buoyed the stock market for months was flushed out in a day. Friday's 120-point drop in the Dow Jones industrial average, the deepest in more than two years, was only the latest signal that stagnation continues. Mr. Bush says he is accelerating work on two initiatives of critical concern to middle-class Americans - health-care reform and an economic growth package, perhaps even with tax cuts beyond his standing offer to lower the capital-gains tax rate. But the White House also staved off any rush to action by casting these initiatives ahead to the president's State of the Union address. The two months until then give the economy a chance to begin picking up momentum on its own. In addition, the president has tried to push the stalled economy by attempting to prompt easier credit. He has called on banks to loosen up their lending requirements, asked credit card companies to lower interest rates on consumer credit, and successfully sought lower interest rates from the Federal Reserve Board. At heart, Bush is as cautious and wary of action on the home front as was President Eisenhower more than three decades ago, says Bert Rockman, a presidential scholar at the Brookings Institution. "He doesn't really want to do anything," says Dr. Rockman, "because anything that is done is likely to be a rash choice." David Rehr, a lobbyist for the National Federation of Independent Businesses, puts it another way: "This administration really doesn't want to make a big mistake." Voters are sending strong signals of economic frustration in off-year elections and conservatives are restless inside and outside the administration. The tenor of the times was set by the Pennsylvania Senate race. The defeat of Dick Thornburgh, who campaigned as a prominent Bush Cabinet member, came very close to a slap directly at the Bush administration. It gave instant gravity to the campaign rhetoric from Democrats that the president lacks interest and direction on domestic matters. Few conservatives dispute that charge. In fact, hard-line commentator Patrick Buchanan of CNN's combative "Crossfire" is now considering a run for the Republican nomination for president, the first notable challenge to Bush in the primaries. Mr. Buchanan does not present a serious threat to Mr. Bush, but his run is emblematic of the dissatisfaction among conservatives with Bush's weak domestic compass. The same dissatisfaction has become more publicly visible within the administration. Housing and Urban Development Secretary Jack Kemp has led a contingent in White House councils seeking a more radical and activist agenda. Mr. Kemp has reportedly grown increasingly outspoken in recent months in meetings of the White House Economic Policy Council. A week ago he suggested on national television that the White House should work a tax-cut compromise with Congress by the end of the year. Kemp is by no means alone in administration ranks. Vice President Dan Quayle and Commerce Secretary Robert Mosbacher tend to side with him, and many White House staffers are sympathetic. But he meets heavy resistance from other quarters. One leading opponent is budget director Richard Darman, the architect of last year's budget agreement and one of its leading advocates today. Mr. Darman does not want to risk undoing that agreement - and losing all control of the deficit. Darman has become a primary target of conservative criticism, a status he secured when he coordinated Bush's retreat on his no-new-tax pledge. But he has strong support from Treasury Secretary Nicholas Brady. He and Darman are chairman and vice chairman of the Economic Policy Council, which develops policy options for the president. Most important, the president himself appears to be firmly in the Brady-Darman camp. The divide represents an almost cultural split in the GOP between Wall Street Republicans and Main Street Republicans, big business interests and those of small entrepreneurial companies. Bert Rockman of Brookings calls Bush a "genuinely conservative president. I think we saw him before and his name was Eisenhower." Even in the days just after the Gulf war, when Bush approval ratings were stratospheric and public confidence in American prowess was high, the White House remained extremely wary of taking domestic action, according to staffers at the time. One reason was fear than any White House initiative would be inflated by Congress into a budget-buster. But doing as little as possible can be politically difficult in times like these. Even Eisenhower had the building of the interstate highway system, which he used to partially offset the cycles in the economy, says Eisenhower biographer and University of New Orleans professor Stephen Ambrose. "Bush doesn't have anything like that."