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It's Not Too Late For Bush To Get `The Vision Thing'


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IT'S NOT TOO LATE FOR BUSH TO GET `THE VISION THING'

In 1988, George Bush dismissed the importance of offering Americans a clear picture of where he aimed to take the nation. He lacked "the vision thing," he shrugged. Big mistake. The Bush Administration's general aimlessness is a big reason why voters' have lost faith in his Presidency. Now, as worried Republican delegates prepare to rendezvous in Houston, Bush finds himself under intense pressure to show the nation a newly focused agenda for a post-cold-war future.

Even as the White House frantically sifts policy options for Bush's Aug. 20 acceptance speech, the President, lapsing into a bit of vintage Bushspeak, still derides the need for bold action. It's "all part of the change thing," he says. Yet if there is to be a second term, he'll have to bring to domestic issues the sort of sustained leadership he displayed in organizing Operation Desert Storm. "The electorate is just waiting for someone to say, `I can transform the system if you want me to,' " says Bush campaign issues adviser James P. Pinkerton.

But will Bush rise to the challenge?

HYPERCAUTIOUS. Transforming the system is a tall order for a man whose watchwords have always been: "Don't mess things up." Just the same, there are ways that even the hypercautious Bush could help cure the nation's ills. He could take real steps toward slashing the deficit, boost growth through tax incentives, and get a grip on soaring health costs. He could restructure the crazily askew relationship between the federal government and the states and push Congress toward the internal reform it so desperately needs. With just a little imagination, Bush could still end up a successful two-term President.

He won't accomplish much without first tackling the deficit that has paralyzed his Administration for four years. Bush has spent his term trying to balance Ronald Reagan's view that the deficit doesn't matter with his own gut feeling that it's a major drag on the economy. This is the time for him to stop trying to pretend he's The Gipper's ideological heir. And that means no more "Read my lips--no new taxes" vows. No more avoiding tough spending choices with clever changes in the budget process. Balancing the budget means cutting spending and raising taxes--period.

Bush could put together a credible plan to cut the deficit in half by 1996. He ought to make certain that all Americans share the burden fairly. And unlike his earlier, halfhearted efforts, the plan must show results. The payoff: With the deficit on a downward track, Bush could lean on Federal Reserve Chairman Alan Greenspan to keep interest rates low.

BITTER BATTLE. How to do it? For starters, Bush might adopt part of Ross Perot's game plan and tax Social Security benefits the same way private pensions are taxed. Then, he should tackle one of the biggest spending programs--medicare--by requiring middle-income retirees to pay a bit more. Together, those two programs soak up $400 billion of the $1.4 trillion annual federal budget. Bush also needs to dump such quaint relics as the Rural Electrification Administration and Radio Free Europe.

But Bush's second term needn't be all pain and misery. The purpose of any fiscal policy is to encourage economic expansion. And Bush needs to renew his focus on growth.

For four years, the President has been fighting a frustrating battle with Congress over capital-gains taxes. And he has majority support for a plan that would cut taxes on investment. But he sabotages his own initiative every time he insists the cut will add revenues to the budget. Instead, he should propose the tax cut along with the means of paying for it. That would satisfy the 1990 budget agreement's demand that tax cuts be offset by revenue increases. He should also include new incentives for business investment in capital equipment, perhaps with a temporary tax credit. And as a long-term project, Bush can plow the ground for proposals to end the double taxation of corporate dividends.

No bid to cut the deficit can be sustained without fixing the nation's health care system. But the President's own plan, built around health care vouchers and tax credits for low-income families is too, well, Bushian. It tinkers with the edges of the problem, won't expand coverage as much as he claims, and would do little to contain costs.

There is an alternative. Bush could embrace a proposal backed by conservative Democrats and many Republicans. The plan allows employers to deduct health-benefit expenses only if they buy coverage from lower-cost, managed-care networks. The deductions would be limited to basic coverage--employers would get no tax breaks for more extravagant benefits. The plan would also protect the poor and help those workers who otherwise couldn't afford insurance.

Bush would have to take on employers who worry about loss of their tax deductions and small insurers that couldn't compete in a managed-care world. But standing up and fighting is what second terms are supposed to be for.

The President also could back his "new federalism" rhetoric by giving the states real freedom to innovate. Bush talks of experimentation, but when Oregon came up with a radical new approach to medicaid built around medical rationing, he rejected it. "The confused relations between state and federal governments have only added to the sense of gridlock," says economist John F. Cogan of the conservative Hoover Institution. "Bush could rationally sort out government responsibility." That would require Washington to bear the full burden of some programs while turning over others completely to the states. For example, the feds could take charge of medicaid and let states assume control of aid to families with dependent children.

MILITARY SAVINGS. To complete his budget plan, Bush must come down hard on the Pentagon by setting national security objectives and figuring out what it will cost to achieve them. He should dump unnecessary weapons systems and end the duplication of roles among the services. To cushion the blow, Bush could spend at least some of the savings on programs aimed at retraining workers.

Overseas, Bush needs to refocus his attention. First and foremost, "we need a Japan policy," says Ellen L. Frost, senior fellow at the Institute for International Economics. Bush doesn't have a single Japan expert among his top cadre of foreign policy aides. A national security adviser with an economics background would be a good start. And on the trade front, instead of reacting to whichever domestic industry makes the most noise, the Administration should decide which industries and technologies will be key to U.S. competitiveness and focus its market-opening pressure in those areas. Picking winners and losers? No, that's setting priorities.

Bush could do the same with Congress. Although they usually resent outsiders' advice on how to run their affairs, lawmakers could use a hand in cleaning their Augean stables. Bush should embrace a bipartisan effort to streamline the complex web of committees and cut the Hill's $3 billion-a-year budget.

In New York last month, Democrat Bill Clinton compared Bush to ill-fated Civil War General George B. McClellan, who built a great army but refused to use it. Privately, a lot of Republicans now are making the same point. The Presidency is the most powerful office in the world. But in his first four years, the self-proclaimed "foreign policy" President was never willing to lead the charge on the domestic front. Unless he has a better battle plan for the next four years, even the glow of a stunning come-from-behind victory in November will fade in the cold light of a visionless second term.NOTE ON A SECOND-TERM AGENDA

George Bush may have trouble spelling out a bold vision. But tackling a few

real-world projects could make the President's second term a success:

CUT THE DEFICIT--Bush could cut the $330 billion annual federal budget deficit

in half by leading a war on entitlement growth. And real action to narrow the

gap would spur the anemic recovery

HEALTH INSURANCE REFORM--Think bigger, Mr. President. Conservative Democrats

have a plan to spur competition among health care providers and cover the

uninsured. Best of all, Republicans like it

A JAPAN POLICY--Trade talks alone won't make the U.S. more competitive with

Japan. One big part of an updated policy: a National Security Council with

fewer Kremlin-watchers and more advisers on Japan

TRANSFORM CONGRESS--Instead of just bashing lawmakers, use the momentum

generated by wholesale congressional turnover to break the bureaucratic

stranglehold on the legislative process

DATA: BW

Douglas Harbrecht and Howard Gleckman


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