Taking Aim at Reagan

By GEORGE J. CHURCH

The race is on, and the President is hard to hit

The campaigns for the Senate, for governorships, for seats in Congress and state legislatures are only starting to get into high gear. The results, when the votes are counted on Nov. 2, will be distorted by thousands of considerations of personality and local concerns. But a central theme is emerging: Who is to blame for the prolonged and severe U.S. recession?

It was an issue that both parties joined enthusiastically last week. President Ronald Reagan, in a televised news conference and a partisan tub-thumping blast in Virginia, at which high school bands blared and pom-pom girls paraded, sought to seize the high ground. The slump, Reagan declared, was the result of generations of misguided Democratic tax-and-spend politics. His Administration, he claimed, has already reduced inflation rates sharply and interest rates somewhat, and eventually will bring down joblessness too--if only the voters elect a friendly Congress that gives its policies time to work. The electorate, said Reagan, should "cut through all the demagoguery and rhetoric they are going to hear."

Democrats readily accepted the challenge. The party's national chairman, Charles Manatt, charged that Reagan had changed from the Great Communicator to "the Great Prevaricator." Manatt protested that Reagan had made a whole string of misstatements, overstatements and highly misleading assertions. Democratic candidates everywhere bewailed the highest unemployment rate in more than 40 years and the highest bankruptcy figures in half a century. They charged that these factors constituted an unacceptable price for the drop in inflation (from 13.5% in 1980, the last pre-Reagan year, to an annual rate of 5.1% so far in 1982).

The debate acquired special pungency because the week's news indicated that the economy is still bumping along the bottom of the painful slump that began in July 1981. The Government's index of leading indicators, the statistics thought to foreshadow most accurately future business trends, dropped .9% in August, after four months of upticks. Reagan dismissed this in advance as "a glitch" in a pattern of generally hopeful signs; Democrats saw much more than a glitch.

More ominous, first-time claims by newly laid-off workers for unemployment compensation rose to 703,000 in the week ending Sept. 17, the highest figure since these statistics were first compiled in 1967. That strengthened indications that the September unemployment rate might have hit 10% for the first time since 1940. Already, politicians in both parties are referring to Friday, when the September rate will be announced, as Double-D (for double-digit) Day.

In itself, a 10% rate would not be significantly higher than the 9.8% jobless rate for July and August. But double-digit unemployment could have important psychological consequences, since it would focus attention on the Democrats' most promising issue. In California, for example, 42% of the people responding to a recent poll named unemployment as the top concern in this fall's election; crime was a distant second at 22%. The Democratic state committee is distributing a newsletter labeled the "Reagan Recession Watch" to every Democrat running for any kind of office in California and to 60,000 party activists. It is crammed with doleful statistics on unemployment, falling business investment and sluggish consumer spending.

Democrats are regaling voters with distress stories, sometimes their own. Virginia Lieutenant Governor Richard J. Davis, who is running for the Senate, announced at a press conference last week that as a mortgage banker he has had to lay off 40% of his employees. Said Davis: "I know what the economy is doing. I see it firsthand." In Montana, Congressional Candidate Howard Lyman is emphasizing rather than downplaying the fact that he had to sign over his ranch to creditors right in the middle of his campaign to unseat Ron Marlenee. "I'm a victim of Reaganomics," Lyman tells sympathetic audiences. "I'm a living example of what it can do to the small guy."

Republicans are trying various strategies to blunt the economic issue. "Quite frankly, we are just avoiding it altogether," says Bob Heller, a strategist for the re-election campaign of Texas Congressman Jack Fields. Instead, Fields' ads picture him as a hard-working legislator who stays in close touch with his constituents. In hard-hit New England, some Republicans are trying to put distance between themselves and Reagan's policies. Rhode Island Congresswoman Claudine Schneider stresses the independence she showed in voting against many of the President's measures during her first term.

Neither course is open to the White House, which has its prestige, not to mention clout with Congress, at risk in the elections. So the Republicans are unleashing their most potent weapon: the President himself. As a top White House aide puts it: "We welcome a referendum on Ronald Reagan; he remains enormously popular personally." The President will give all Republican candidates for the Senate and House a pep talk at a reception in the White House this week, and is taping radio spots on behalf of his party's candidates; he is also considering a nationwide TV address close to the election.

Relishing his return to combat, Reagan last week laid down an aggressive line for G.O.P. campaigners, which he will repeat in the next ten days at rallies in New Mexico, Nevada, Texas and Ohio. Its essence is to slide over the unhappy present and dwell on a future of sound, noninflationary growth in contrast to the blunder-filled Democratic past.

The President opened his news conference with a statement asserting that "the overwhelming majority of Americans, especially those 99 million who are working, are beginning to see some real hope. Inflation has been cut more than in half; interest rates are heading down, and there are other signs that we're heading toward a good recovery." The damaging recession, he said, was the fault of the Democrats, whose policies had created "the worst economic mess since the days of Franklin Roosevelt" by the time his Administration took office. The President smiled wryly when asked if he would accept any blame at all for the recession. Said Reagan: "Yes, because for many years I was a Democrat."

The President hit his blame-the-Democrats theme even harder the next day in a Richmond speech supporting the Senate candidacy of Virginia Congressman Paul Trible. The election, he said, posed a choice of "whether we will continue our sure and steady course to put America back on track or whether we will slide backward into another economic binge like the one which left us with today's pounding national hangover."

Reagan marred his case, however, by inexcusable mishandling of economic statistics. In his news conference, he made at least two flat misstatements: that "for four quarters we have seen a growth in the gross national product" (this measure of national production has dropped sharply in two of the last four quarters) and that unemployment had already been rising sharply in the past six months of 1980, at the end of the Carter Administration (actually, it dropped from 7.8% to 7.4% during that period). Additionally, Reagan claimed that the percentage of Americans aged 16 and over who have jobs is "higher today than has been true even in the past in times of full employment." That is correct only if the comparison is made with periods before 1977. As Democratic Chairman Manatt acidly pointed out, the figure peaked at 59.4% in 1979 and by August had fallen to 57.1%, a five-year low.

White House aides dismiss these and several other questionable assertions as gaffes that voters are unlikely to notice, and point out instead that Reagan's general themes are well received. A partisan audience in Richmond interrupted him for applause 26 times in 23 minutes. Even in the recession-ravaged Midwest, it is risky to attack Reagan headon. Says Eric Kozenman, a press aide for Democratic Congressman Bob Shamansky in his reelection race in Ohio: "We don't even like to use the term Reaganomics. We say 'the Administration's policies' are all wrong. That's softer."

There is bipartisan testimony that Reagan's pleas for time to give his policies a chance are registering with many voters. Says former Vice President Walter Mondale, who has been campaigning for Democratic candidates: "You get the darndest feeling out there that it's supposed to be patriotic to go broke." Republican Pollster Robert Teeter asserts: "People would almost rather wait six months and vote." Indeed, Democratic strategists may be overestimating the impact of double-digit joblessness.

The polls are confusing too. A national sampling of voters taken by the Los Angeles Times in August on who or what might be responsible for the recession chose as the No. 1 villain foreign oil prices, followed by Japanese competition and Congress. More people blamed Jimmy Carter (No. 8 on the blameworthy list) than Reagan (No. 9), and more pointed a finger at the Democratic Party (No. 7) than at the Republican Party (No. 10). On the other hand, White House aides are baffled by polls showing that voters approve Reagan's policies of cutting Government spending, fighting inflation and lowering taxes, but that they still intend to vote for Democratic congressional candidates in impressive numbers--56% to 44% according to the latest Gallup poll.

Both parties are still searching for a way to capitalize decisively on the economic issue and in ways that are shockingly cynical even for Washington. Prize example: last week's House battle over a constitutional amendment to force a balanced budget.

The amendment passed the Republican-controlled Senate 69 to 31 in August, but leaders of the Democrat-controlled House had bottled it up in the Judiciary Committee. The amendment would start a dangerous practice of writing economic policy into the Constitution, would probably not take effect until 1987 even if it were ratified by the states, quite likely could not be enforced if it became effective and would put the economy in a lamentable straitjacket if it could be enforced. For it to be considered at all by a President and Congress that have just finished running up a record deficit that probably totaled $110 billion in fiscal 1982 is an exercise in the politics of the absurd.

Nonetheless, in his news conference Reagan denounced "modern-day Rip Van Winkles"who are blocking legislation that is needed to cure the recession, including the balanced-budget amendment. Republicans then rounded up the last 16 of 218 signatures they needed on a "discharge" petition to force the amendment out of the House Judiciary Committee, and Reagan visited the Capitol to ask for a quick floor vote. "The time to act is now," he said. At the same time, his aides were passing word to Republicans to delay the vote if possible. Meanwhile, the White House made little secret of the President's desire to see the amendment beaten by the votes of Democrats, whom he could then castigate for fiscal irresponsibility.

Democratic leaders crossed up the strategy by scheduling a Friday vote on both a Republican version of the amendment and a hastily drawn Democratic substitute. Reagan assailed this substitute as a "sham," and so it was. Its purpose was to enable some Democrats to claim that they had indeed voted for a balanced budget. Said New York Democrat Thom as Downey: "It's all a charade."

In the end, most Democrats decided they did not even have to bother with the charade, and the substitute was beaten by a resounding 346 to 77. The Republican amendment then got 236 votes in favor to 187 against, less than the two-thirds needed for passage. Reagan stepped before the cameras to assert: "I share the deep burning anger of millions of Americans." It was a sample of the oratory and exaggeration that the voters will be hearing more and more of as the campaign heats up and the recession grinds on. --By George J. Church.

Reported by Douglas Brew and Neil MacNeil/ Washington

With reporting by Douglas Brew and Neil MacNeil/ Washington

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