Bush Message Seeks to Raise His Popularity

It may reveal more spending on Head Start, cuts in Medicaid, defense, capital-gains tax. STATE OF THE UNION SPEECH

THE speech George Bush gives Tuesday night "has become the defining event of the Bush presidency and, therefore, a key to successful re-election efforts."

So reads a Bush-Quayle campaign memo circulated to some high-level supporters last week.

This assessment of the State of the Union may be exaggerated, but not a lot, by most accounts. With a successful speech, a president who has nose-dived to the lowest popularity of his term could finally seize the campaign initiative.

"It has been done," says Republican pollster and consultant Vince Breglio. "Will it be done in the State of the Union? I don't know."

The last time President Bush faced this much pressure, had this much to prove, in a single speech was his 1988 convention speech. It succeeded. It helped lift him from 17 points behind his Democratic rival. It helped dissolve the "wimp" label that dogged him. It stamped his campaign with its most memorable line: "Read my lips: No new taxes."

"He must convey the same sense that he conveyed in 1988," says Mr. Breglio, "that he's in charge and that he knows where he wants to go."

Expectations are high. Since at least the middle of last fall, President Bush and his aides have been shoving all demands for action and direction on the economy ahead of them, piling them onto the State of the Union speech.

They may have hoped that the measures of economic stagnation would begin to rise, that pressure would lift. That hasn't happened, and surveys show that confidence in Mr. Bush's handling of the economy has continued to erode. And the economy has crowded other public concerns into the background.

The Bush campaign sees the speech as the president's big opportunity to put forth his program. "Going back a couple of months," said Charles Black, a senior adviser to the campaign, at a Monitor breakfast last week, "there was a perception" that the president was not aware of how serious the problems of the economy were and was not engaged in solving them.

In recent weeks, Bush has worked to show voters that he cares and is engaged, said Mr. Black. In campaign stops and television commercials in New Hampshire, the Bush tactic has been to take responsibility by apologizing for the economy.

Now, in the speech, he will offer his road map. Black does not expect a "dramatic and exciting" set of proposals. Most of what Bush puts forward has already been announced or leaked to the press, he noted.

Some of these proposals may be dropped or altered by the time the President makes his speech, but the major ones have been widely discussed:

* Raising the personal income tax exemption for children to $1,000 each to ease the immediate cash crunch on families.

* Giving first-time home buyers a $5,000 tax credit to bolster the real-estate industry.

* Using tax credits for health care to ensure access to low-income families, capping the amount of employee health benefits that businesses can deduct from taxes, and offering incentives for people to find low-cost health-care programs.

* Cutting the capital-gains tax rate. Bush may propose a top rate on long-term gains as low as 15 percent, compared with 28 percent now.

* Banning new federal regulations, except those required by law, for three months. The point is to withhold adding any new burdens to businesses before they can begin growing again.

* Cutting the defense budget, possibly by 5 percent or more next year. The MX missile arsenal could be phased out entirely.

* Expanding the Head Start program, which prepares low-income children for school, by $600 million.

* Spending more on environmental cleanup, especially around federal nuclear weaponsmaking sites.

* Raising the space station budget by 11 percent, and increasing other space project budgets as well.

* Capping how much the federal government will increase its Medicaid payments each year. Medicaid pays the medical expenses of the poor.

The president has a tough sell with the public. Peter Hart, a Democratic pollster who teamed with Republican Vince Breglio on a national survey this week, notes that voters preferred tax proposals similar to what Democrats have proposed than to Bush's. Chiefly, they preferred to increase taxes on the rich to cutting the capital-gains tax.

Blaming Congress will not work for Bush, both Mr. Hart and Breglio say. Voters blame Congress, but they also blame the president. "George Bush has become estranged from the middle class," says Hart. Even when Ronald Reagan was down in the polls and off-balance, he never lost sight of his guiding values, he says. "George Bush has no political gyroscope."

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