THE POPULIST BLOWUP

By Richard Lacayo

WHEN THEY HEAR TALK about heartless employers and greedy corporations, Republicans generally grumble about Democrats waging class war. At least most Republicans do. And then there's Pat Buchanan, warmonger. "Executioners" is what he calls employers like AT&T that lay off thousands of workers. "These companies are like creatures in Jurassic Park," he told TIME last week. And what will his campaign do? "Stand up for the working men and women whose jobs are threatened by unfair trade deals done for the benefit of huge corporations," he told a cheering crowd in Manchester, New Hampshire.

Close your eyes and you might imagine you were hearing Jesse Jackson. Just ask Jackson. He can't stomach Buchanan on any number of grounds, but even he gives him credit for "going to the heart of people's economic fears." To the immense discomfort of his party, Buchanan is bringing the class war home to the heart of the G.O.P. With great success, Republicans have been playing for decades on one enduring strand of populism, a resentment of Big Government. Buchanan has revived another that his party cannot so easily accommodate: hostility to Big Business.

He adds that to a moral conservatism that brought him a good many of the Christian conservative voters in Iowa, despite the support for Bob Dole of the state's Christian Coalition leader. One day after Buchanan took second place there, it was plain he had the front runner spooked. In a speech to the New Hampshire legislature, Dole, as steadfast an example of Republican orthodoxy as the party has ever produced, was suddenly Woody Guthrie. "Corporate profits are setting records and so are corporate layoffs,'' he said. "The real average hourly wage is 5% lower than it was a decade ago."

Toto, I don't think we're in Kansas anymore. When Republicans talk this way, it means they have a problem on their hands. Buchanan has pinpointed and energized a constituency that the G.O.P. can ill afford to lose, the Downwardly Mobile Middle Class. But he's done it with a message that the party of freewheeling capitalism can't embrace. It doesn't matter whether he becomes the nominee, an outcome the party professionals still cross their fingers and say is unthinkable. He's tossed a bomb in their midst. The same righteous belligerence he turns against affirmative action, abortion and other targets of his culture war, he's now pointing at the Fortune 500.

For years the Republican solution for the grievances of the middle class have been lower taxes, less government. And the G.O.P. primary front runners are on message. With his plaid shirts and his footwork across the early primary states, Lamar Alexander has been straining for the common touch. But for the most part his populism identifies the standard G.O.P. villain, Washington. Steve Forbes? Enough said. As for Dole, his parents were so poor that during the Depression they moved the family to the basement of their house so they could rent the main floor to an oil company manager. But his solutions for the castoffs of the new economy are pretty much straight from the G.O.P. playbook: a balanced budget, less government.

What Buchanan has discovered is the enduring power of the full populist litany: moral conservatism, rejection of political elites, fear of foreigners and--the one leg that Republicans have largely avoided--suspicion of concentrated economic power. In the late 19th century, populism arose out of economic upheaval, the rapid growth of large industry and powerful railroads that crushed small farmers and craftsmen. Their enemy was the "money power" of the Eastern establishment, the power of banks and big corporations. That and immigrants and the corruption of the political establishment. Sound familiar?

The Populist Party that arose from that ferment was short-lived, but the common-man sentiments that it crystallized lived on. Separately or together they ran through the presidential campaigns of William Jennings Bryan and Prohibition, through Teddy Roosevelt's Progressives, the left-wing labor movement and the right-wing radio priesthood of Father Coughlin. And the Republican Revolution of 1994. "But the Republican populism of the past generation or so has been all antigovernment," says historian Alan Brinkley. "Buchanan is putting back the anticorporate elements."

He's putting them back under the pressure of hard times that persist for some workers even in the good times for the stock market. Blue-collar voters, most of them white and male, have been crucial to the G.O.P. coalition since the late 1960s, when they started to abandon the Democrats because of everything called liberalism--meaning, roughly, racial integration plus sex, drugs and rock 'n' roll. So long as the economic grievances of those voters were secondary to their distaste for the '60s and its aftermath, the G.O.P. could court them without compromising its pro-business orthodoxies.

Now it's not so easy. Not when even a healthy economy produces a surplus of losers among factory workers and middle managers alike. Investment is rising, and every week the stock market strains its own altimeter. Yet since 1991 some 2.5 million workers have lost jobs in corporate restructurings. Most have found new ones, but with thinner paychecks. Last week the Labor Department reported that wages and benefits in 1995 rose just 2.8%, the slowest pace in at least 15 years and scarcely enough to keep pace with inflation. One big reason: layoffs and other cost-cutting moves kept workers in line and their paycheck demands low. Meanwhile, corporate profits climbed 22% last year. In the face of numbers like those, the G.O.P. mantra--that growth alone will solve the problems of the Anxious Middle Class--can start to sound like "Let them eat the Dow Jones industrial average."

Buchanan's solution is Fortress America: pull the U.S. out of NAFTA and GATT, impose a 20% tariff on Chinese goods, 10% on imports from Japan and some kind of levy on goods from Mexico. Combine that with his hard line on immigration, his culture war, his unyielding opposition to abortion and the sweet-and-sour delivery he perfected on Crossfire. Papa's got a brand-new populism.

He calls it "conservatism of the heart," an ideological recoil from the wreckage left by an unfettered free market. "What is conservatism all about?" he asks. "Reagan used to talk about family, faith, work, neighborhood, community. Communities are being torn apart. Families are under tremendous economic pressure. Conservatives are going to have to ask themselves, What is it we want to conserve?"

Buchanan insists he's not an economic isolationist. He just wants to identify essential industries and protect them selectively, on the model of the import quotas that Ronald Reagan imposed on Japanese cars. But among economists, an otherwise squabbling breed, there's something like a consensus that for the great majority of American workers, free trade is a long-term boon that delivers better bargains on consumer goods and boosts demand for the products of America's fast-growing, high-wage export industries. More important factors in holding down wages are automation, sluggish growth in productivity and consumer demand for lower-priced goods, whether foreign or domestic. Tariffs against shirts made in China might help workers in America's shrinking garment industry; they won't do much to protect secretaries replaced by voicemail or assembly-line workers shoved aside by robots. And retaliatory tariffs against U.S. goods could mean a loss of jobs for big American exporters like aerospace and agriculture. "The reason why we're not the kind of manufacturing economy Pat Buchanan remembers when he was young is not because of imports," says economist Paul Krugman at Stanford. "It is not because foreigners are taking away the good jobs. It's overwhelmingly domestic forces that have caused that."

While Buchanan has specifics on how he would restrict trade, he doesn't say how he would end layoffs by companies that aren't exporting many jobs. He shakes his head over the 40,000 cut last month by AT&T. "You could tell how painful this chop was to [AT&T chief Robert] Allen; he makes $5 million a year and his stock option went up, like, $5 million that day." O.K., says Kevin Phillips, the Republican strategist who predicted the shift of blue-collar ethnics to the Republicans in the '60s. So what would Buchanan do? "I'm not aware that he has proposed anything that would tie the hands of corporate managers," says Phillips. "Or require a new obligation to 'stakeholders' [for instance, employees] as well as shareholders." The Populist movement at the turn of the 20th century arrayed government power to counter corporate clout. How can the party of less government do that now?

Party professionals count on Buchanan's support to peak at 30%. But what unnerves them is the possibility that his attacks on Wall Street and free trade may catch on even if his candidacy doesn't, haunting the eventual G.O.P. presidential nominee all the way to November. Buchanan has made it clear that he will support the party's nominee in November, whoever it is. But after he's done accusing Dole of "hauling water'' for Big Business, can he get his troops to do the same? It's hard to put the populist genie back in the bottle. With their attention turned from Washington to Wall Street, will the disenchanted blue-collar voters drift back to the Democrats, who support free trade but will promise to do a better job of protecting them from its sharp edges? And there's a natural home for them in Ross Perot's anti-NAFTA Reform Party, if it decides to run its own candidate for President.

Then there's the specter of Houston II. Republicans have to worry about a Buchanan who gets a prime-time address at their convention and uses it, as he did in 1992, to breathe fire--this time toward Corporate America. Or worse, a Buchanan who tries to extract at least some platform concessions on free trade, like a promise to roll back NAFTA and GATT. Too much of that kind of thing, and the corporate PACs will go running for the Democrats.

Playing the populism game could be tricky for them too. Though he did it with Republican support, Bill Clinton is the President who pushed through NAFTA, GATT and the Mexican bailout. And it's hard for a sitting President to tell even a minority of voters that they aren't doing as well as they were four years ago. But Democrats have the advantage of being able to taunt Republicans for their opposition to raising the minimum wage, for wanting to cut the earned-income tax credit and for their free-floating hostility to labor unions. Says Labor Secretary Robert Reich: "Foreign competition is a sideshow relative to these other factors."

In the meantime, Buchanan is forcing the rest of the G.O.P. field to concentrate on the pocketbook issues of the unwell-to-do. Last week he was bragging to anyone who would listen: "The Republican Party is becoming the Buchanan Party." The G.O.P. Establishment didn't believe it. But they were listening hard.

--Reported by Nina Burleigh with Buchanan, and Tom Curry/New York

With reporting by NINA BURLEIGH WITH BUCHANAN, AND TOM CURRY/NEW YORK