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Supply-side supporters are bending Dole's ear

Back when President Ronald Reagan's tax cuts were all the rage, Bob Dole used to joke that he had some good news and some bad news about what were called supply-side economics.

The good news, Dole would say, was that a whole bus load of supply-siders went over a cliff. The bad news was there were some empty seats.

Well, the fellows who weren't aboard the doomed bus are back. And Dole, the reluctant tax cutter, may well join them.

Nudged along by the likes of Florida Republican Sen. Connie Mack, House Speaker Newt Gingrich and former Housing Secretary Jack Kemp, Dole has told colleagues he's ready to include a broad tax cut in the economic plan he would push if elected president.

While he hasn't unveiled the details _ that may come around the time of the GOP convention next month _ his supply-side allies met Tuesday to tout tax cuts as a means to answer voters' anxieties.

Mack and Kemp want Dole to seize on what they see as the chief weakness in Clinton's economy: slow growth. That's one fundamental flaw in what most experts say is a solid economy: 10-million new jobs, low inflation and five straight years of expansion.

Sure, these Republican critics say, the economy is growing, but sluggishly. Under Clinton, the broadest gauge of the economy's output _ the gross domestic product _ works out to a growth rate of roughly 2.5 percent a year. That's less than the 3.1 percent under Reagan, but better than President George Bush's 1.6 percent.

Put into human terms, the Republicans argue that slow growth has meant fewer jobs, stagnant wages and a generalized feeling of fear among even those who hold a job.

"President Clinton's economic policies are robbing America of its economic potential," Mack said at a news conference. "There is no reason for us as a nation, as a society, as people, to accept the basic notion that we should not grow at any rate greater than 2.5 percent."

The idea behind a tax cut, the Republicans said Tuesday, is to spur the economy. For example, Mack says he would like to see tax policy encourage the movement of investment capital from old technologies into new technologies.

If Dole is elected, Gingrich said he would like the new president and the GOP Congress to pass an across-the-board tax cut by April 15. Then, he said, he would like Congress to roll back the increase in income taxes on wealthy Americans that was part of Clinton's 1993 deficit reduction package.

Other advisers have been urging Dole to endorse a tax cut, but until the last few months Dole has been ambivalent. As recently as last winter, Dole said GOP rival Steve Forbes' flat tax proposal was "snake oil."

Over his long Senate career, Dole has sided with those who believe that keeping federal spending and the budget deficit down is the clearest path to economic health. But increasingly the GOP is dominated by Reagan's economic believers, who say that sweeping tax cuts will stimulate the economy and ultimately bring in enough new tax revenue to keep the government running.

It remains unclear how Dole will reconcile those two approaches if he goes ahead and endorses a far-reaching tax cut, which could drain upward of $100-billion from the treasury. Donald Rumsfeld, a Dole campaign adviser, attended the meeting Tuesday but shed little light on where Dole was headed.

However, one of Dole's friends in the deficit reduction camp, Sen. Pete Domenici of New Mexico, said Tuesday that he, for one, could support a tax cut as part of a larger economic package that did not lose sight of cutting the deficit.

In any event, the news that Dole is considering a broad-based tax cut opened him up to charges from Clinton's campaign that the all-but-certain Republican nominee was letting Gingrich, the unpopular speaker, guide his policies.

"He's a reluctant passenger," Clinton deputy campaign manager Ann Lewis said. "But Gingrich is the driver."

Further, Clinton's people would like Dole to open a debate about economic policy, because they feel it gives the president another chance to boast about the economy and contrast it with the huge budget deficits under Reagan.

Lewis said it's not an argument about lowering taxes _ Clinton proposes a host of tax cuts aimed at middle-income families _ but whether they are paid with offsetting spending cuts and whether they are aimed at people who truly need a break.

Last year, Clinton gained great political mileage by hammering Republicans for proposing a $350-billion tax cut that Democrats said would go to the rich. To guard against that charge this time around, Dole reportedly is considering a cut in the payroll tax paid by all workers, including those further down on the income scale.

Dole's shifting stance on taxes prompted the Democratic National Committee to mock him with a toll-free "Dole economic help line" designed to assist the GOP candidate in formulating a position.

A sample: "If you agree with Jack Kemp and Steve Forbes that Bob Dole should propose a broad across-the-board tax or flat tax with no specific cuts to show how it will not blow a hole in the deficit, press 1."