NEW YORK OR BUST

By Jordan Bonfante/Los Angeles

Sometimes bravado can mask a crisis. A certain haughtiness surrounded the announcement last week by California Governor Pete Wilson that he would not take part in the Iowa caucuses, scheduled for Feb. 12. One of his cheerleaders, Massachusetts Governor William Weld, described it as a strategic "political decision." An important and deep-pocketed group of Wall Street yuppies--drawn to Wilson's pro-choice stance and fiscal conservatism--applauded his abandonment of a state they feel belongs to the religious right. But bravado can do only so much in the face of turmoil.

Last week the rival camp of front runner Bob Dole was calling Wilson "the first loser of the Iowa caucuses, still five months away." Wilson's campaign was in deep financial trouble. His poll numbers were mired in low digits. Worst of all, his organization was reeling from an internal feud between his top lieutenants. Asked who was in charge of the operation at one point last week, a veteran aide shrugged, "If you think of someone, let me know."

The troubles flew in the face of some of Wilson's fondest boasts. Shuttling from Sacramento, California, to points East late this summer while trying to catch up with the G.O.P. front runners, Wilson repeated that "only three of us can expect to raise the table stakes for the whole primary campaign." This meant that only he, Dole and Phil Gramm--and not Pat Buchanan, Richard Lugar, Lamar Alexander, Arlen Specter or Alan Keyes--could hope to raise the estimated $20 million needed for the nomination marathon. Yet his organization's own estimates put Wilson's total last week just above $6 million, in contrast to $17 million for Dole and more than $12 million for Gramm. TIME has learned not only that Wilson's fund raising has slowed to a dangerous crawl, but also that he recently let spending outrun income by as much as $1 million and that some vendors are not being paid. That deficit alone might be enough to jeopardize the campaign next month when it files its third-quarter Federal Election Commission report. Wilson is now making money-raising phone calls "a mile a minute," as a fund raiser puts it, in an effort to show respectable cash on hand. A senior Wilson operative says if the red ink is not stemmed, the candidate may have to pull out: "We'll have to see where we are at the end of the month."

Another Wilson boast was that he was "the Republican candidate most feared by the White House," in part because he could prevent President Clinton from winning California. That claim was similarly damaged last week when a Los Angeles Times poll showed Wilson sliding 19 points behind Clinton in a hypothetical election match-up in California: 57% to 38%. In a TIME/CNN poll of Republican voters nationwide last week, Dole led with 39%, followed by Gramm with 11%, Buchanan with 8% and Wilson at 5%.

Beyond the shortfall in finances and polls, at the heart of Wilson's problems is a scabrous disunity among his chief lieutenants amounting to a civil war. It pits a former George Bush operative against a tight inner circle of long-standing Wilson loyalists and, more precisely, political manager against political strategist. On one side is Craig Fuller, a former tobacco-company executive and chief of staff to then Vice President Bush. On the other is George Gorton, a longtime Wilson political consultant who has shaped the strategy for all Wilson's campaigns with a talent for crystallizing hot issues, from three-strikes-you're-out to illegal immigration. Gorton, however, is less admired as a manager. As a campaign insider alleges, "he couldn't run a Lionel train."

The two aides have clashed from the outset. When Wilson named Fuller his campaign chairman in June, Gorton, who has a penchant for Far East spirituality, went off to Thailand in a huff. But he returned to do battle. Soon Fuller found himself up against Gorton's vision: to squeeze Wilson's name onto the Dole-controlled ballot in the high-visibility New York primary, even at the price of $750,000 in signature gathering plus legal costs. Gorton won that debate. Then came the one over Iowa. Fuller said, "You can't run a media campaign elsewhere if you're not in Iowa beforehand." Gorton disagreed.

A showdown came on the evening of Sept. 7 at the Newport Beach mansion of billionaire Donald Bren, the Irvine Co. developer and a longtime Wilson backer. In a tense session with Wilson, Bren and Fuller, Gorton recommended bugging out of Iowa for lack of organization, manpower and money. Instead the campaign should concentrate on New York, he said, where TV ads can achieve far more bang for the buck. Fuller argued vehemently against the idea, but Wilson backed Gorton. Fuller then sidelined himself to Washington as fund-raising supervisor and surrogate public campaigner, leaving Gorton supreme in Sacramento--for about 72 hours. On Friday, in a meeting with Wilson, Fuller argued in effect, "Either Gorton goes or I do." This time Wilson sided with Fuller. Sources said Gorton would continue "in a voluntary capacity only."

Fuller insisted on another change. Soon to be phased out as national finance director is Anne LeGassick, who helped Wilson raise boatloads of money in his gubernatorial races. She has been hampered by national inexperience and federal law that limits donations to $1,000 at a time, instead of the giant pledges to which Wilson was accustomed in California. LeGassick's promise to raise $29 million was seen by insiders as unrealistic. Wilson's fund raisers say he will be lucky to get half that. Until now, though, LeGassick was untouchable: she and Gorton are romantically involved.

Even with Gorton in limbo, what remains of the Wilson strategy after the retreat from Iowa is Gorton's go-for-broke concentration on the Northeast and a slice of the West. Wilson hopes to score well on Feb. 20 in pro-choice New Hampshire, where he is already running a $35,000-a-week series of TV ads. After New Hampshire, Wilson would like to rob Gramm of the Feb. 27 primary in Arizona. Wilson then hopes to win at least two, maybe more, of the five states in the March 5 New England primary. Gorton proposed using that as a "slingshot" into the media-mad New York primary just two days later. "If we can score big in New York, we'll look strong going into California [on March 26]--and I know how to win there," said Gorton before his fall.

Those are big and expensive ifs. Says Republican consultant Sal Russo, a specialist in campaign financing: "If you total those new priorities, you run up a tab of $14 million to $15 million, not counting $6 million of overhead. That is a lot of net dollars he needs in his hands." Wilson raised only about $2 million in July and August.

The limited new strategy dashed another Wilson boast: that he would "compete everywhere." In revisionist mode, Wilson strategists turn that claim into an alleged disadvantage for front runner Dole. "Dole has to fight on all fronts--and can't afford to lose anywhere," argues Wilson aide Dan Schnur. "The moment Dole loses just one contest, he's through. And Pete Wilson will be the best positioned candidate to take advantage of that opportunity when it comes." All well and good, if Wilson can come up with the cash to stay in the race.

--With reporting by Michael Duffy/Washington

With reporting by Michael Duffy/Washington