THE current malaise among our nation's political leadership - an oxymoron perhaps - is due to a belated discovery that economic growth isn't a gift of nature but a result of savings and investment.Ronald Reagan, surely the champion wishful thinker of this century, thought he had discovered a new economic law: That deficits can always be repaid painlessly out of the "growth dividend" achieved by the politically attractive expedient of cutting taxes. Being Republicans, Reagan and now President Bush cut taxes for their own constituencies, the upper income groups. Now the results of this reckless experiment are obvious: The national debt has quadrupled. Debt service accounts for 20 percent of the federal budget. Meanwhile, only the richest Americans have enjoyed increased incomes during the last decade. For the nation as a whole, there is no growth. For middle-income Americans, income growth, in real terms, has stagnated since the late 1960s. Family incomes have risen only to the extent that women have entered the workforce. The Republicans' blarney about "family values" rings hollow for working mothers barely making it. Now Mr. Bush puts his hopes of economic recovery on improved consumer confidence, cuts in interest rates, and another tax cut - on capital gains. It is time for some plain talk. First, consumer confidence won't increase by presidential jawboning. Herbert Hoover tried it. It didn't work then. It won't work now. Confidence is down because the economy is sick, and people are sensing the president doesn't know what to do about it. Part of the Bush's problem is that the pseudo prosperity of the last decade wasn't the result of investment but of excessive consumption. It has become axiomatic that "consumer spending drives the economy." The recent series of interest rate cuts by the Federal Reserve Bank have, as their primary political objective, rekindling consumer borrowing and spending on housing and cars. It hasn't worked because people already have more debt than they can handle. Meanwhile, the economy skids because of lower spending, and unemployment increases, and so on. Banks, faced with a blizzard of "non-performing" loans, are necessarily more careful about lending. Lower interest rates, if they continue, will have some long-term benefits by cutting the government's cost of debt service. But the decade-long spending binge of the 1980s may take the rest of the 1990s to get over. What are the chances of an investment-led recovery? To be sure, our national infrastructure is in bad shape and we need to repair things like deteriorating bridges. Declining interest rates for long-term bonds will, eventually, make such investments more feasible for cities and states. But not for the next few years. Cities and states are facing large deficits this year. Taxes will have to rise, or services will have to be cut. The pain is only beginning. What about investment by the private sector? This is the only hope. But let's be realistic. The old established industries such as steel, autos, and appliances are not candidates for future growth. They are still losing ground to Japanese and East Asian competition (if not the Europeans) and they employ fewer people every year. Even IBM and AT&T, dominant companies in still-growing sectors of the economy, employ fewer people every year. The same is true of semiconductor manufacturers in Silicon Valley. So where is the growth to come from? Biotech, perhaps, but this sector can hardly absorb millions of new workers. The only possible source of future economic growth is from thousands of innovative entrepreneurs creating new products and services. This is where Bush's capital gains cut could potentially help. Small businesses need help, and investors will spend more readily on risky ventures if their winnings are taxed at a lower rate. Unfortunately, Bush's proposal would, once again, give most of the relief to the people who make their gains by trading, not by investing, in new enterprises. These people don't create new jobs, and don't deserve any special tax treatment. A capital-gains tax would be justified only if it targeted gains on investments in new ventures and equities. Capital gains on trading income contribute nothing to economic growth. A final word on tax cuts for the middle class: There is no free lunch. The federal deficit is increasing at an accelerated pace. The compromise Band-Aids of the past years have failed. A more fundamental approach is needed. All but the top 20 percent of income earners are stretched to the limit. The well-to-do are going to have to pay for the past decade - now, or later. But there is one change in fiscal policy that would make a lot of sense, if the politicians could find some courage. What I have in mind is to exchange the regressive and onerous Social Security tax, dollar for dollar, for a progressive energy tax, levied primarily on automobiles. The tax exchange would take some time, probably a decade or more, and the details of implementation would require some study. But it would finally put us on the right road, by reducing taxes on labor - which we want to encourage - and increasing taxes on energy use, which must be cut in any case, sooner or later.