In Republican New Hampshire, Recession Makes Close Senate Race

WELL-known Republican political candidates don't usually have much trouble getting elected in conservative New Hampshire, but the Granite State's sagging economy has taken its toll on incumbent Gov. Judd Gregg's (R) campaign for a United States Senate seat.

Just as a surprising 37 percent of New Hampshire voters in the February presidential primary favored conservative commentator Patrick Buchanan over President Bush, so too may many voters are abandoning their state's incumbent Republican candidate in the November Senate election. In this race to replace retiring Sen. Warren Rudman (R), Governor Gregg faces a strong challenge from Democrat John Rauh, a wealthy Sunapee, N.H., businessman. Economy top priority

Voters are especially concerned about jobs, health care, and taxes, as is true nationwide. The economic situation here is acute. Over the past seven years, New Hampshire residents have experienced somewhat of an economic roller-coaster ride starting with a rise to unprecedented prosperity followed by a sharp drop into recession.

State Democratic leaders are using the sour economy as an important campaign tool. They point out that over the past three years of the regional recession, New Hampshire banks have failed, welfare caseloads have risen dramatically, and increasing numbers of homeowners cannot pay the state's high property taxes. From a 1988 unemployment rate of 2.3 percent, the jobless rate has risen to 7.5 percent, reports Christopher Spirou, chairman of the New Hampshire Democratic Party.

"The state of New Hampshire has been the biggest victim of the Reagan/Bush/Judd Gregg economic demolition derby," says Mr. Spirou. "There isn't an area of the state that hasn't been affected."

Despite the weak economy, Gregg's political experience will work to his advantage. Before his two terms as governor, he served four terms in the US House of Representatives. His roots in New Hampshire politics are deep, since his father served as a state governor before him.

Gregg is campaigning as a fiscal conservative who favors low taxes, limited government, and a strong defense. As governor, he has consistently fought against a sales and income tax, both of which are very unpopular here. The Granite State, as a result, has the highest residential property taxes in the country.

"Our economy is bad, but it is turning around. Yes, we are losing homes. But it is happening all over [the region]," says Rhona Charbonneau, chairman of the New Hampshire State Republican Committee. "Governor Gregg ... has done many things to try to encourage business in the state."

As a former corporate executive for an Ohio plastics manufacturing company, Mr. Rauh says he has the business experience to help get New Hampshire back on its feet economically. The country also needs to think more seriously about competition, he says.

"I am a business person. I know how to compete internationally," he said in an interview here. "The George Bushes and the Judd Greggs have failed to deal with the [economic] crisis. We want to make a change in leadership." Aggressive campaigns

Both candidates are running aggressive campaigns. Gregg is trying to portray Rauh as a liberal Democratic spender who would deviate greatly from the popular conservative Senator Rudman. Rauh, on the other hand, is painting Gregg as an "absentee-landlord governor who sort of let the state go into economic disrepair," says Thomas Rath, a state Republican political strategist.

Rauh, who moved to New Hampshire six years ago from Cincinnati, favors a 50 percent cut in the military over the next five years. He also favors a balanced-budget amendment with a line-item veto and a universal-health-care system with strict cost controls. He is pro-choice while Gregg is anti-abortion. Bush could hurt Gregg

Polls indicate a tight race while analysts say voter opinion is shifting. Mr. Rath says Mr. Bush's low favorability ratings will have a negative impact on Gregg.

"Clearly, if there is weakness at the top of the ticket, it will hurt throughout the ticket.... I do think that Judd Gregg will run ahead of the president in terms of the vote," Rath says.

But Gregg's tough campaign may help him overcome these troubles, says Richard Winters, a government professor at Dartmouth College in Hanover, N.H.

"Gregg has run a very sophisticated and negative campaign against John Rauh," Professor Winters says.

In the end, voters may not pin the state's economic troubles on Gregg, he says. "Oddly enough, there isn't a whole lot of voter retribution heaped on governors by voters in state elections. [Voters] tend to blame national candidates because voters reasonably assume that economic [conditions], even at the local level, are largely driven by forces outside the government."

Although Rauh poses the most dangerous challenge to Gregg, four other candidates may also have an impact on Gregg's chances.

Two key candidates of this group are Lawrence Brady, an independent, and Libertarian candidate Kate Alexander. Conservative voters may be inclined to shift their vote away from the favored Republican, Winters says.

"If it were just a two-person race, they would probably hold their noses and vote for Judd Gregg," Winters says.

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