Political Parties Draw at Least Five Battle Lines for Election '98

When Congress resumes at month's end, money matters will likely sharpen the partisan divide.

Already, Republicans and Democrats are busy honing their agendas for the coming session of Congress, which resumes at the end of the month.

Each party's goal is similar: Find issues that distinguish it from the other - and that the public will rally behind - and ride them to victory in November's elections.

Both sides have staked out sharp differences on several key issues: how to improve education, how to reform the tax code and cut taxes, what to do with any budget surplus, what to do about affirmative action, and how to amend campaign-finance laws. While Congress faces many issues, these are the most likely to break along partisan lines.

Education. Republicans say competition would force public schools to improve; they call for "parental choice" of public or private schools. They would create "education savings accounts," allowing parents to deposit up to $2,000 a year and spend the gain tax-free on K-to-12 expenses for public, private, or home schooling. The GOP also pushes scholarships to inner-city children for use at any school.

Democrats view the GOP proposals as an attack on public schools. They propose spending more on early-childhood development, teacher training, rebuilding decrepit schools, and choice "within the public-school system." "Some 90 percent of American children attend public schools, and that's why it's so important we invest in them," says House minority whip David Bonior (D) of Michigan.

Tax reform. Both parties will propose cutting taxes further, but in different ways. House Speaker Newt Gingrich (R) of Georgia wants to phase out the "marriage penalty" (in which some married couples pay more income tax than they would as individuals) and reduce income-tax rates. President Clinton prefers cuts or credits targeted to certain groups rather than across-the-board reductions.

In the longer term, Republicans and Democrats alike advocate simplifying and reducing income taxes. But all agree a public consensus is required. "We need a national dialogue" on tax reform, Speaker Gingrich says.

Republicans lean toward single-rate taxes under the slogan, "fairer, flatter, simpler." House majority leader Dick Armey (R) of Texas is stumping for a flat tax of 17 percent on income of more than $33,800 for a family of four. Another GOP proposal touts a 15 percent retail-sales tax on goods and services to replace the income tax.

Democrats counter that their proposals are "fairer." House minority leader Richard Gephardt (D) of Missouri calls for five tax brackets, ranging from 10 to 34 percent, and the elimination of all deductions except mortgage interest.

Budget surplus. The entire federal-spending debate this year and perhaps for years to come will revolve around a possible federal budget surplus.

Republicans are split: Some want to return the money to taxpayers, others want to use it to pay down the $5.4 trillion federal debt. Still others, joined by Democrats, want to spend more on repairing highways and bridges. Most oppose additional social spending.

Many Democrats, however, would boost spending on social programs, while others want to hold the line. Among the latter is Mr. Clinton, who said Jan. 5 that he would propose a balanced budget for the next fiscal year.

Some observers note that any "surplus" really consists of Social Security trust funds, which ought not to be spent at all. "President Clinton and Congress should not commit to use any projected surpluses before we actually have the money in the bank," says the nonpartisan Concord Coalition.

Affirmative action. Many Republicans favor eliminating all quotas and hiring preferences based on race or gender. But Democrats argue that affirmative action is still needed to help minorities enter the mainstream.

Gingrich concedes that the GOP needs to come up with alternative programs. "We do have an obligation to help people," he says. Specific proposals may be needed to bring along all Republicans - some of whom see the issue as political dynamite if not handled sensitively.

Campaign-finance reform. Most Democrats support a bill that would ban "soft money" (donations to political parties not subject to federal limits). But most Republicans oppose that bill, known as McCain-Feingold, possibly preferring to raise limits on "hard money" (thus decreasing the need to raise soft donations). The issue, however, may well stalemate again in the Senate.