Solid but Staid, Lugar Launches Presidential Bid In Blow-Dry Era

RICHARD LUGAR recently stood in a hotel meeting room overlooking Boston Harbor, site of America's first tax revolt, and called for replacing the income tax with a national retail sales tax.

With his crowd-pleasing pitch, Indiana's senior senator was firing another shot across the bow of the frontrunners in the race for the Republican presidential nomination next year.

''He has to do something like that to capture Republican voters' imagination,'' says political analyst William Schneider. ''He's got to say and do some things that aren't entirely predictable.''

To win the hotly contested Republican nomination for president, Senator Lugar, who officially announces his candidacy today, has his work cut out for him. Although the New Hampshire primary is 10 months away, Senate majority leader Bob Dole has a commanding lead in both national and New Hampshire polls.

A recent CNN/USA Today poll gave Senator Dole (R) of Kansas 46 percent among Republican voters surveyed, compared with 13 percent for Texas Sen. Phil Gramm, 8 percent for commentator Pat Buchanan, and 6 percent for California Gov. Pete Wilson. Lugar scored 5 percent.

In the fund-raising race, Senators Dole and Gramm are also far in front of the other candidates.

''The difficulty for Dick Lugar is that he has to be able to distinguish himself from the field and be able to get himself out of the pack,'' says Democratic pollster Peter Hart.

Lugar has strong selling points, especially his reputation for integrity, thoughtfulness, and intelligence. Asked to sum him up in one word, Shirley Baker, vice chairman of the Indiana Republican State Committee replies: ''Statesman.''

The acclaim is not limited to party officials. Hoosiers in general ''perceive him as intelligent, fiscally conservative, and somebody who is respected on the national level,'' says Brian Vargus, director of the public-opinion laboratory at Indiana University at Indianapolis.

At home, voters have overwhelmingly elected Lugar four times, an Indiana record.

The same character traits earn Lugar high praise on the national level as well. ''The thing that drives him and makes him deserved to be looked at is that everyone in the know says Dick Lugar would be a good president,'' says Ronald Kaufman, who was former President Bush's political director.

''It's hard to find anyone who would disagree with that statement.''

Joe Andrew, chairman of the Indiana Democratic Party, doesn't dispute the senator's integrity. But ''the secret of his success is that [Lugar] has been able to cloak politics in the costume of principle,'' he says. ''Many things he is famous for as matters of principle are really political maneuvering.''

Foreign policy strengths

Much of Lugar's focus has been in foreign affairs -- an area that usually doesn't capture voters' imaginations. In 1985 to '86, the last time the GOP controlled the Senate, he was Foreign Relations Committee chairman.

In this role, he traveled to Manila to observe the Philippine presidential elections and blew the whistle on President Ferdinand Marcos's theft of the election from Corazon Aquino. He then persuaded the Reagan administration to back Mrs. Aquino, which helped persuade Marcos to resign.

In 1988, as a minority member of the committee, Lugar helped gain ratification of the Intermediate Nuclear Forces Treaty with the Soviet Union, and has stayed involved in disarmament issues.

Recently he drew Clinton's ire for suggesting the US consider using military force to release two Americans held prisoners in Iraq. Lugar complains that the Clinton administration has no ''game plan for using the American advantage'' in world affairs, and he is especially concerned about the spread of nuclear weapons.

But domestic concerns are in the forefront of Americans' thinking now. ''A foreign-policy president is at a disadvantage in such a time,'' Mr. Hart says.

The tax plan

So Lugar is pushing hard to garner more attention in the domestic arena. His tax-reform plan calls for getting rid of most of the Internal Revenue Service and replacing the income tax with a 17 percent national sales tax. Federal tax withholding from paychecks would end. Instead, people would pay taxes only when they spend their money -- something critics say would unfairly hit the poor.

''You may save it or spend it, but the paycheck is bigger without the automatic withholding deduction,'' Lugar says. ''You need not account for it, report it, or hide it.''

Lugar proposes that states collect the tax and turn it over to the federal government. To temper the regressive impact on the poor of such a tax, he proposes exempting food, clothing, shelter, and medicine from the levy. He estimates that the US savings rate would leap from the current 2.5 percent to 7.5 percent under his plan.

A single proposal, however, is not enough to move Lugar into the front row of candidates, Hart says. ''If you're going to break out, it's with a cluster of issues in which the campaign comes together.''

Mr. Schneider says Lugar must find an issue that affects the national agenda, as Governor Wilson has done with affirmative action. ''His call to abolish the income tax is a shrewd move in that direction. But it hasn't had that impact yet.''

Lugar began as a school-board member in Indianapolis and was elected mayor in 1967. Mr. Vargus says Hoosiers still remember him for Unigov, the consolidation of the city and county government that became a national model.

''He's seen as one of sparks of rejuvenation that has led to the rebirth of downtown Indianapolis,'' says Jon Schwantes, who is now city editor of the Indianapolis News after reporting on state politics for many years.

Mr. Andrew, however, says Unigov only united the city and county governments and the voter pool, but not the school systems or tax bases. While Indianapolis had a history of Democratic mayors going back 30 years, no Democratic candidate has cleared the 40 percent mark since Unigov.

''Unigov has essentially sunk the Indianapolis public school system,'' Andrew says. And since suburban tax dollars don't go the the city, he says, many of the improvements in downtown have been paid for by tax property-rebates, which ''raise taxes for the urban poor, the least able to pay.''

In 1974 Lugar ran against popular Democratic Sen. Birch Bayh and lost. But he came back two years later to trounce Sen. Vance Hartke.

Since then, he's carved out a reputation as an independent thinker who sticks to his principles. In 1978 he helped defeat a labor-law reform bill favored by the unions, even though Indiana has a lot of auto workers. In 1992 he campaigned to close some Agriculture Department field offices, another big home state concern.

Principles or politics?

Democrats, though, see more politics than principle in many of his moves. ''His only hope is to portray himself as completely different from the others, as less of a politician,'' says Andrew, the Indiana Democratic leader.

''That's ironic, since we see him as a master politician, constantly putting politics before principle,'' he says.

Lugar is not considered charismatic nor a particularly strong campaigner. In the all-important New Hampshire primary, meeting voters face to face is the norm -- not a plus for the Indianan. ''Lugar is not and never has been a good one-on-one campaigner,'' Mr. Vargus says.

The senator must turn his negatives into positives to win, Mr. Kaufman says. ''If he can get the focus on the presidency rather than the campaign for president, he'll be in it.''

Lugar appears to understand the challenge. ''I must do better in making certain complex ideas understandable,'' he says.