BACK TO THE BENCH

By Michael Duffy/Washington

NEWT GINGRICH RETURNED FROM HIS Thanksgiving break not refreshed but chastened. Over the holiday, he had worried aloud with his wife and grown children about what he had done to himself and the Republicans. His plan to balance the budget was a month behind schedule. He had thrown a childish fit about his treatment aboard Air Force One, then connected a grisly triple murder in suburban Chicago to "the welfare state." His popularity had been dropping, taking his party's down with it. On Monday he announced he would not run for President.

But Gingrich soon realized that his symbolic retreat wasn't going to be enough. The party faithful had complained to his aides over the holiday break that the Speaker's erratic behavior was jeopardizing the revolution. By Tuesday Gingrich's top lieutenants had delivered the news: unless he lowered his profile, the balanced budget would be defeated, and more voters would grow disenchanted. "All the members [had gone] home," says a House Republican leader, "and heard the same thing: 'Keep it up, don't back down and tell Newt to shut up.'" So, on Wednesday, Gingrich went before a closed session of the House Republicans and said he had "thrown one too many interceptions" and that he intended to "sit on the bench for a while."

Yet Gingrich had no sooner agreed to a lower profile than he was yanked back onto the playing field. In a federal-court filing in Washington, the Federal Election Commission said the Speaker had received $250,000 in support from his political-action committee at a time when that organization was barred from participating in federal elections. The FEC charged that Gingrich's self-styled GOPAC had paid the salaries and expenses of consultants who helped Gingrich defeat a Democratic challenger in 1990 by a margin of 974 votes. The evidence amounted to what the FEC called "the appearance of corruption" on the part of GOPAC. Gingrich, who was general chairman of the committee from 1986 until earlier this year, dismissed the allegations as "phony." Nonetheless, documents produced by the FEC are likely to increase pressure on the House Ethics Committee to name a special counsel to independently review the complaints against the Speaker.

At what should have been Gingrich's finest moment, the Speaker faces the prospect of seeing many of his legislative dreams collapse. Term limits, legal reform and a tougher crime bill are dead; tax cuts and welfare reform are in danger. Now many Republicans worry that the Contract with America's crown jewel, a balanced budget by the year 2002, could be put off until after the election.

The GOPAC disclosures put Gingrich under a cloud just as his party enters the final weeks of budget negotiations with the White House. To allay the image problem, Gingrich transferred responsibility for day-to-day budget bargaining to majority leader Dick Armey and Budget Committee chairman John Kasich. To some extent, Gingrich will try to rely on others, including such unlikely spokesmen as freshman J.C. Watts of Oklahoma, to make the sales pitches on talk shows and press conferences. Gingrich has even vowed to get more sleep. The self-benching has some Gingrich aides worried about the "message vacuum" that will be left in his wake, but that's a problem some rank-and-file Republicans are happy to endure. Says Representative Christopher Shays of Connecticut: "We want him to pay more attention to his personal conduct...and don't give Democrats ammunition."

However, the Democrats found ammo in the documents filed by the FEC last week, some of them extraneous to the original dispute but nonetheless problematic for Gingrich. The FEC's suit, filed last year, has alleged that GOPAC, a political-action committee that took in donations from wealthy conservatives, violated federal election laws by actively participating in congressional campaigns in 1989 and '90. GOPAC officials always denied the charge, claiming the committee was dedicated to supporting candidates for only state and local races, which would be outside the realm of federal financial-disclosure rules. The agency probed the matter following a Democratic complaint in 1990, and Gingrich has said the FEC offered to settle it for $150,000. But when GOPAC refused, the FEC filed a civil lawsuit last year. Last week the agency submitted several thousand pages of documents to support its case.

The tape transcripts, internal memos and other records show GOPAC quite openly declaring its stake in federal races. "Action alerts," "phonegrams" and other solicitations repeatedly ask contributors for money to help win control of the House. In a letter to textile magnate Roger Milliken, GOPAC chairman Howard ("Bo") Callaway invited the Republican financier to a Washington meeting and vowed, "We will be looking at plans to recruit and support candidates in 210 congressional districts across the country."

It was more than just a verbal commitment, the FEC charges, especially when it came to Gingrich. In its most damaging new allegation, the FEC claims that GOPAC helped Gingrich win his narrow 1990 victory by paying the salaries of consultants like committee staff director Jeffrey Eisenach, who spent as much as two-thirds of his time on "Newt support" projects. The FEC's filing also raises questions about whether Gingrich went to bat for GOPAC benefactors--potentially explosive suggestions of quid pro quos that Democrats have vowed to make the basis of a new complaint against the Speaker before the House Ethics panel. In any case, the judge in the FEC's suit must now decide whether the agency had sufficiently proved its case without a trial. If so, he could fine GOPAC an amount up to whatever he decides the group poured into federal races, sure to be a complicated calculation.

For Gingrich, the potentially more damaging process would be a wide-ranging probe by an independent counsel, which Democrats have urged the Ethics Committee to appoint. The Democrats turned up the pressure last week, citing the fact that four of the five Republicans on the Ethics Committee have ties to GOPAC. Last week the committee's chairman, Nancy Johnson of Connecticut, acknowledged that she had participated in at least two GOPAC events, and had talked with individual GOPAC-recruited candidates on at least two other occasions. But Johnson insisted that her past involvement should not disqualify her from heading the committee's probe.

Privately, Clinton Administration officials were ecstatic about Gingrich's comeuppance. The heart of the White House objection to the Republican budget plan is that it favors the rich, as well as "checkbook lobbying," all of which the FEC's charges against Gingrich seemed to buttress. Last week, after three days of negotiation, neither side was making any concessions to reach agreement on a seven-year budget deal. Said Armey: "We have not gotten the President to talk to us in any substantive way. They are still pursuing a strategy of failure." Responded Leon Panetta, White House chief of staff: "I've got to see some give on their part."

Nor was any movement expected until next week. The White House, for one, is still debating how best to exploit the Administration's growing advantage in the budget talks. The liberal camp, led by adviser George Stephanopoulos, feels that ending the year without a budget deal is the best way to highlight the President's stalwart positions in defense of Medicare, education and the environment. The opposite camp, led by moderate adviser Dick Morris, does not want to see Clinton campaign for re-election having blocked a congressional majority from passing a balanced budget. For Gingrich and his Republicans, however, entering the same campaign without that long-promised achievement could be a worse fate.

--Reported by Nina Burleigh, James Carney, Viveca Novak and Michael Riley/Washington

With reporting by NINA BURLEIGH, JAMES CARNEY, VIVECA NOVAK AND MICHAEL RILEY/WASHINGTON