WASHINGTON -- By reviving the possibility of a middle class tax cut, President Clinton is looking at a gambit to win back mainstream voters. He is also running the risk of destabilizing the bond market with higher interest rates.

White House spokeswoman Dee Dee Myers, responding to a report in the Wall Street Journal, confirmed last week that Clinton would like to propose a middle class tax cut "when the time is right."

Clinton promised a tax cut during the campaign but shelved the idea when he fashioned his budget plan and made deficit reduction his top priority. It was a move that sat well with the bond market.

In private, Clinton has expressed flustration over the need to keep kowtowing to Wall Street demands for fiscal restraint. As he approaches the midterm elections, he is coping with the additional constraints of low ratings in the polls and a restless Congress.

There is no evidence that Clinton is getting ready to announce anything soon, but there are hints out of the White House that something is coming next year.

Asking Congress to approve a middle class tax cut holds the promise of reversing Clinton's political fortunes in one bold stroke as the campaigning gets underway in 1995. It would cast the incumbent Democrats as the party of centrists willing to help everyday families, at least symbolically.

The idea is apparently coming from White House political operatives -- and not from the president's economic advisers. "We have made some very positive strides toward deficit reduction," said a senior Treasury official who did not wish to be identified. A middle-class tax of, say, $200 per family, "really isn't going to do anything major, especially if you spread it out over a year," but would have a big impact on the budget, the official said.

Still, there are ways Clinton could try to dress up a tax cut as responsible policy.

He can claim that his economic programs have already brought success by shrinking the budget deficit for three years in a row and restoring healthy growth. If he wants, he could try to pay for a tax cut with proposals to plug loopholes in the tax code.

Any talk of tax cuts carries big risks in the bond market, where investors still worry that the deficit is a growing threat. The latest estimate from the Congressional Budget Office says the deficit will swell to $400 billion by the year 2004.

For financial markets, the worry is that in backing a middle class tax cut, Clinton will be abandoning his allegiance to tight budgets. Unhappy bond investors could send interest rates higher, undermining stocks.

Clinton's economic advisers are no doubt urging caution, but there is plenty of precedent for modest tax proposals getting out of hand once a president and Congress start tossing in bids. Congress expanded on Ronald Reagan's early tax cut proposals that are widely blamed for swelling the deficits of the 1980s.

Republicans are already putting on the pressure. House COP members led by Rep. Newt Gingrich of Georgia and Rep. Richard Armey of Texas plan to unveil a national platform on Sept. 27 that reportedly contains a $500 tax credit for families, individual retirement accounts, and a capital gains tax cut.

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