Reagan strategists looking to put him back on the offense. Broad domestic goals, nuclear arms reduction head agenda

What does Ronald Reagan do next? The White House is mulling over that question.

In the wake of the Democratic takeover of Congress, White House strategists are weighing what the President's agenda will be in his final two years in office and how he can recapture the legislative offensive.

At the moment, there are only broad goals on the domestic front:

Reform of the budget, including a line-item veto and a balanced-budget amendment - and perhaps a proposal to split the budget, breaking out capital expenditures.

A continuing drive on crime and drug abuse.

Welfare reform.

Comprehensive health insurance.

Making the US more competitive abroad, in part by curbing domestic protectionism.

Ticking off the President's agenda items yesterday, White House political director Mitchell E. Daniels Jr. also cited hopes for a nuclear arms reduction accord. He indicated that this could be the most important issue of the two-year Reagan finale.

While the deficit is the toughest domestic problem, Reagan remains firm in opposing any tax increase. He clearly hopes the economy will behave in the next two years, growing enough to meet the Gramm-Rudman deficit-reduction targets.

As for the budget reforms, these would not alter the deficit picture appreciably, economists say. The line-item veto, which a Democratic Congress is certain to oppose, would permit the President to trim domestic discretionary spending. But that would amount to perhaps only $2 billion out of a budget totaling some $300 billion.

Stung by Tuesday's election results, the White House is putting the best face possible on the outcome. In a breakfast meeting, Mr. Daniels stressed that it was the personalities of candidates and local issues - not a repudiation of Reagan policies - that gave Democrats control of the Senate.

Daniels pointed out that Republicans won in hard-pressed farm and oil states. At the same time they lost seats in some prosperous states.

Voters responded to a ``person for person'' preference for Democrats in many cases, Daniels said. Moreover, he said, the Democrats conducted a skillful campaign of not dissociating themselves from the tenets of the Reagan presidency - no tax increase, no big government spending, no slashing of the defense budget, no re-regulation of government.

This was not a ``partisan'' election, Daniels said, given the fact that Republicans took over eight governorships, including in the South.

``I don't know how any Republican can feel very bad about the South when we established with a certainty the reality of a two-party South for the first time,'' said Daniels. ``We now have genuine two-party politics virtually everywhere.''

While putting a positive spin on the election results, the White House acknowledges that it will be harder working with Congress in the next two years. Compromise and conciliation will be required, Daniels said, as well as trying to bring the Democrats into ``mutual projects.'' But, he added, there are differences of opinion about strategy among White House planners.

While some observers question whether the White House adopted the right strategy in having Reagan campaign so vigorously in congressional races - only to be rebuffed - Daniels said he was ``at peace'' about the GOP game plan, aimed at turning out voters, raising money, and highlighting individual candidates.

Daniels said he was surprised at the overall outcome, but offered no clear explanation of what happened. ```Lady Luck' caught up on the close races,'' he said.

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