Washington - President Clinton is getting ready to unveil his new strategy for regaining public confidence after the beating the Democrats took in the midterm elections.

Clinton is looking for ways to recapture support from mainstream voters by abandoning the tilt to the left that characterized his first two years in office - a drift highlighted by his controversial policy of supporting gays in the military. That position alone cost the Democrats dearly in the South.

Soon after the election, Clinton sent word through Congress that he did not want the Post Office to discontinue a popular Christmas season stamp featuring die Madonna and Child. He said he might accept voluntary prayer in public schools and announced plans for an additional $25 billion in defense spending.

These steps are only the beginning.

Clinton, whose reputation for changing his political stripes dates back to his days in Little Rock, will soon unveil the centerpiece of his come-back strategy - a middle-class tax cut. He is already on record favoring one, and the only question is how he will finesse paying for it.

The broader point is that the Clinton White House and the Republican Congress are about to embark on a tax-cut frenzy, risking a bidding war that outgoing Treasury Secretary Lloyd Bentsen cautioned could prove dangerous. The risk is that stock and bond markets will take a tumble if investor believe policymakers are giving up on the budget deficit.

Labor Secretary Robert Reich laid down some markers for the Democrat in an emotional speech to the Democratic Leadership Council attacking "corporate welfare." He suggested curbs on a for die oil industry, builders, agriculture, and insurance companies.

The Reich proposals were only a trial balloon that sent a lot of lobbyists scampering to find out whether they represented administration thinking - which they did not - but it is clear Clinton is groping for a way to pass out a middle class tax break and position himself for 1996.

Meanwhile, the Republicans can barely contain their enthusiasm for a major revamping of the tax code. Rep. Bill Archer of Texas, the incoming chairman of the House Ways and Means Committee, spent his first press conference after the election outlining his support for a capital gains tax cut and other goodies.

House Republicans in general are committed to fulfilling their Contract With America, with its call for a $500 per child tax credit, expanded Individual Retirement Accounts, and a reversal of the Social Security tax increases for high-income taxpayers under last year's tax bill.

For the record, Democrats and Republicans are committed to finding ways to pay for any tax cuts. In fact, current law requires it, and that leads many Wall Street analysts to feel comfortable believing that Congress will not run amok again on the budget. Besides, it is hard for the high rollers who voted Republican to believe that their party will not carry through on its longstanding pledge to cut spending.

Still, it will be interesting to see how steely-eyed the new Congress turns out to be with tax-cut fever sweeping the ranks.

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