A Strange and Inconclusive Campaign

THE 1990 campaign is easily the strangest in memory. In the course of it, a popular president assembled a grand coalition to overturn Iraq's invasion of Kuwait, in an deft display of foreign policy prowess, thus raising his public standing even higher. He then handled the politics, if not the economics, of taxation and the budget as poorly as possible, wounding himself and his party. The campaign saw voter sentiment come together around frustration over tax hikes and a general sense that government is not delivering fair value for the dollars it extracts. But it then saw the Republican party, which stood to benefit most from voter protest, manage to shift the focus from whether taxes really need to be raised, to who should pay the hike; from government's deficiencies in handling everyone's money, to it's fairness in collecting the money. It thus left the public even more confused on where to turn - a condition helpful to incumbents, who in general have an enormous resource advantage over challengers.

The substance of the Bush administration's stance on the budget and deficit reduction, if not to everyone's liking, is surely defensible. The federal deficit, which had fallen each year from 1985 through 1989, from 5.3 percent of GNP to 2.9 percent, rose sharply to 4 percent in fiscal 1990 - and promises to go higher still in 1991. The workings of separation of powers, compounded by each party's controling half the government, left the administration unable to fashion the spending curbs it thought necessary. So it sought to trade tax concessions, to get from Congress more spending control. In part it succeeded. Some Democrats are already grousing hat the imposition of spending caps for the next three years, and the enhanced role of the Office of Management and Budget in administering the caps, has shifted power too much to the executive.

Nonetheless, Bush's handling of the domestic politics of taxes was as dumb as his handling of the international politics of the Middle East crisis was brilliant. After a full decade in which his party had insisted that the US suffered from excessive and ill-conceived government spending, not from insufficient taxation, the president this fall embraced big tax hikes just as voter tax unease crested.

Having decided upon a tax compromise, Bush fashioned it badly and presented it even worse. The rationale for the ``bubble'' in marginal rates under the 1986 ax legislation had never been understood. The idea of taxing at 33 percent the last dollar earned by those with adjusted incomes of $80,000, while taxing at 28 percent the last dollars of persons earning $880,000, seemed unfair. If he was going to back a tax increase the president should have urged bursting the bubble and imposing a marginal rate on the wealthy slightly higher than that on anyone else. Had he done so, the ``fairness'' flap would never have developed.

After a decade of saying tax increases weren't needed, GOP leadership in 1990 suddenly found them necessary to save the republic. The president went on national television Oct. 2 to tell the country that without new taxes ``our economy will falter; markets may tumble; and recession will follow.'' So the Democrats, who had been saying this all along, were right after all?

The political turn-around was sharp in early October. Republicans who before the president's Oct. 2 speech had been making strides and were posed to avoid normal off-year losses, saw their support drop in a number of key races. Confidence in the party dimmed.

This said, recent commentary on the reversal in the president's, and the party's fortunes, has been grossly hyperbolic. The July Gallup poll for Newsweek had Bush approval at 65 percent, while the latest put approval at 48 percent. But such numbers, by themselves, overstate the damage Bush sffered. For example, the KRC Communications Research poll last week found the president with a 70 percent favorable rating. The NBC News/Wall Street Journal survey of October 19-21 showed Bush preferred in a trial heat ith Mario Cuomo by 52 percent to 35 percent. This doesn't mean, of course, that Bush would beat Cuomo; it means the president's effective standing has declined moderately.

What remains to be seen is whether he GOP will lose ground in next Tuesday's balloting. The smart money says it will, but I'm not so sure.

The latest polls indicate that, overall, the GOP's October slide has ended. Some modest recovery is possible, first because the drop in the president's standing was fairly superficial; and secondly, because the underlying structure of voter concerns really hasn't changed very much over the past two months. After all the poltical stumbling and voter frustration, the most likely result Nov. 6 is a partisan stand-off.

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