THE REBELS WITH COLD FEET

By MICHAEL DUFFY WASHINGTON

FRANK LUNTZ, THE BABY-FACED POLLSTER who helped Newt Gingrich draft the "Contract with America" last year, looked a little frazzled as he rushed around the Capitol last Thursday night. And no wonder: all week normally loyal Republicans in both the Senate and the House had balked at key Contract with America provisions ranging from term limits for lawmakers to cuts in welfare for unwed mothers. More than 100 House Republicans declared independence from a once sacred $500-per-child tax credit, claiming the give-away was too generous to upper-income taxpayers. Stories detailing Republican "disarray" were beginning to appear in newspapers, and as Luntz dashed to yet another strategy session with his G.O.P. employers, he admitted that there was talk among the G.O.P. rank and file about "caving" on tax cuts. "Republicans are spooked," Luntz said later, though he argued that it was only temporary. "It's strange for a pollster to say, but there's too much focus on the polls."

Live by the polls, die by the polls. The same surveys Luntz and Gingrich employed to stitch the contract together last summer are now compelling some Republicans to think about unraveling it. Nearly five months after the midterm election, Americans are worried more about reducing the deficit than reducing taxes, jeopardizing what Gingrich calls the "crowning jewels" in the contract. The popularity of spending cuts in general remains high, but the prospect of cutting school lunches and welfare benefits for indigent parents is distinctly less so--a harbinger of trouble when deeper and more specific cuts in middle-class programs come in April. And while support for some contract provisions, such as term limits, remains strong, many Americans are concerned that Republicans may go "too far" in rolling back government. Increasingly, so are some Republicans. "No one said we were all going to vote for the entirety of the contract," said Representative Bill Goodling of Pennsylvania. "We said we would bring all the issues to the floor."

Nowhere is the public's doubt about the contract so visible as on tax cuts. The contract includes $188 billion in new reductions, deductions and credits for corporations, small businesses and families. But in a TIME/CNN survey of 800 adults last week, 62% said reducing the federal budget deficit was "more important" than cutting taxes--a larger number than recorded in 1992. That sentiment helped explain why 102 House Republicans--including 10 of 20 committee chairmen and 35 of 73 freshmen-asked the leadership to revise the contract's proposed $500 per child tax credit and limit it to taxpayers making less than $95,000 a year. Otherwise, they argued, the credit would go to anyone making up to $200,000--hardly just the middle class. Perhaps worse, it would also amount to a backdoor raise for members of Congress, who make $133,600 a year. That could spell political demise in 1996.

Gingrich and his fellow leaders balked at the request late last week, calculating that it is riskier to rewrite the contract than simply to lose a vote on it. Besides, Gingrich knows that the prospects for tax cuts of any kind appear to be fading in the Senate. Senator Bob Packwood of Oregon returned from a weekend retreat with his Senate Finance Committee and pronounced tax cuts all but dead. "What all of us have discovered when we go home," he said, "is that the public, over and over, is saying to us, As between the two, we'd rather have deficit reduction." That drew an angry response from Gingrich: "Some of the Senate's comments have backfired. The choice is Reagan or Clinton."

For Republicans, tax cuts are becoming a kind of deadly virus, threatening to cripple any G.O.P. measure that they infect. Welfare reform--the passion of angry white males--should have been a slam-dunk issue for Republicans. But last week they somehow allowed tax cuts--the passion of their campaign contributors--to get in the way. The Personal Responsibility bill of 1995, approved by the House last week, would save at least $66 billion by the year 2001 by limiting eligibility for welfare to five years in a lifetime and requiring recipients to go back to work after two years on the dole. It was probably foolish for Republicans to think they could save money by "reforming" welfare; but party leaders blundered badly when they offered a "technical correction" to their welfare bill last week, diverting nearly $70 billion in savings to pay for cuts in taxes on businesses, corporations and the controversial child credit. In an instant, what should have been a political winner had been reduced to a question of fairness: Should Congress take from the poor and give to the rich? "They took what we thought was a very popular issue," chortled Representative Barney Frank of Massachusetts, "and turned it into a controversial one."

The amendment was approved, but not before Democrats found their voice. Hour after hour they railed as programs they had erected over decades were demolished overnight. They also found in their wardrobe the accessory of choice: brightly colored Save the Children ties and scarves, which turned up around the weathered necks of such old Democratic bulls as Sam Gibbons and John Dingell. When the debate grew particularly rowdy, the normally soft-spoken Gibbons shouted at the Republicans, "You all sit down and shut up." Later, facing a chorus of boos, Gibbons added, "Boo if you want to. Make asses of yourselves." In an astonishing display of party unity, not a single Democrat defected from the party's very moderate substitute bill.

Meanwhile, the welfare debate seemed to be giving the Grand Old Party an old-fashioned anxiety attack. Pro-life Republicans fretted that the punishing cuts to families with dependent children would force more women to undergo abortions. Representative Connie Morella of Maryland complained that the party leaders would not even allow her to debate a provision that seemed particularly harsh on unwed mothers who make a good-faith effort to establish paternity: it would cut their benefits for months and possibly years, until the state could prove the identity of the father. Nine Republican women felt compelled to call a press conference on Wednesday and assert their credentials as mothers and grandmothers, lest they seem heartless and cruel. "Look at us," wailed New York's Sue Kelly. "Do we look mean-spirited?" Added Ohio's Deborah Pryce: "Here you see us. Do we look like ogres?"

In a sign of disputes to come, many of the fretful said they nonetheless voted for the welfare bill on final passage to send a strong signal to the Senate, where passions for the contract are distinctly cooler. The Senate is in no hurry to take up welfare reform anytime soon, and as a top Democratic aide put it acidly, "It is on the same curve as Clinton's health-care plan."

In many respects, so is the rest of the contract. Last week the Senate approved a watered-down version of the line-item veto already adopted by the House. Though Clinton did little to halt the measure's progress, Republicans were forced to agree to changes that limit the veto to a five-year trial period and allow a President to veto tax loopholes as well as congressional spending items. It is also more cumbersome, requiring Senate clerks to break down large pieces of legislation into individual pieces before sending them down Pennsylvania Avenue. "That's fine with us," joked White House press secretary Mike McCurry. "It just means there will be more pens to hand out." Reconciling the two will take time, unless the House accepts the Senate version intact. And this deficit-reduction panacea is likely to wind up being much less than the magic bullet the politicians imagine it to be.

After months of uncertainty, Clinton has tried to make the most of the Republican unease, tagging Gingrich's party in nearly every speech as unfair to kids and working families. Top aides hold daily message meetings to coordinate lines of attack with Hill Democrats; Democratic Party officials are finally beginning to tap into talk-radio stations around the country. Still, Clinton has told aides that the "fairness" issue will only take him so far; he needs to keep his eye on what he calls "my core message," which can increasingly be reduced to deficit reduction, expanded trade overseas and what Clinton calls "shared values."

As it happens, House Republicans will face a likely defeat this week when they take up term limits, a provision of the contract that seemed far more sensible to many last fall (when their party was out of power) than it does now. The most popular version, sponsored by Representative Bill McCollum of Florida, would limit House and Senate members to 12 years in office once the measure is ratified by the states. But even its proponents admit that they have only about 185 solid Republican votes and 35 Democratic votes for the measure--70 short of the 290 needed to amend the Constitution. According to the Term Limits Legal Institute, approximately 35 of the G.O.P. holdouts--including nine committee chairmen--have spent an average of 14 years in Congress already. Of those, 13 voted for a 1989 pay raise, bounced an average of 43 checks each in the House banking scandal, and will receive an average pension of $1.7 million. (The records of the veteran Democrats who oppose McCollum's measure are, if anything, worse.) Said Cleta Mitchell, the institute's director: "This is their entitlement."

Late last week, Gingrich postponed the term-limit votes until midweek, in part to give backers time to gather votes. But his biggest test will come in early April, when his overall package of spending and tax cuts is on the table. Already, a small group of moderate Republicans has met several times with conservative Democrats to discuss how to link any future tax cuts to deficit reduction. Even if G.O.P. moderates succeed in reducing the scope of the $500-per-child tax credit, an enormous tax break for the wealthy would still loom. Democrats charge that more than 50% of the remaining $85 billion in tax benefits in the contract would still go to the 10% of families whose incomes exceed $100,000. The Joint Committee on Taxation estimates the $19 billion cut in capital-gains tax would average only $26.05 for taxpayers earning less than $100,000 but would mean an average reduction of $1,223.23 to those earning more. "It is just plain wrong," said House minority leader Richard Gephardt, "to give tax breaks to the wealthy at a time when working people are struggling just to pay the bills."

Gingrich will have an even harder time finding Republican votes for the cuts in Medicaid, student loans and farm programs, which hit middle-class voters directly. That's one reason why the plan he'll offer next month will be far more specific on tax cuts than spending reductions. "We gave our word to cut taxes," he said at a Chamber of Commerce town meeting being sent via satellite to 3,700 sites around the U.S. "We need your help in calling your member of Congress to let them know we ought to keep our word on the contract." So far as the House goes, Gingrich needn't worry. Even Henry Hyde, one of the 102 Republicans who signed the child-credit letter, said last week that he would "vote for a two-headed turtle" if it had tax cuts on it. What happens to the contract in the Senate, however, is another matter.

--With reporting by Nina Burleigh and Karen Tumulty/Washington

With reporting by NINA BURLEIGH AND KAREN TUMULTY/WASHINGTON