Republicans smell blood as Clinton sinks deeper

PRESIDENT CLINTON'S sinking popularity, and an array of problems ranging from health reform and foreign policy to Whitewater, are kindling Republican hopes that the party can regain control of the Senate this autumn and, just conceivably, of the House of Representatives as well.

Mid-term electoral setbacks for the party that holds the White House are normal. But this time Democrats are braced for much worse. In the Senate the question is not whether they will lose, but how badly. A Republican gain of seven seats among the 34 contested this November would give them the majority.

In the 435-member House, the numbers are more daunting: the Republicans need a net swing of 40 seats for a majority. Normally an incumbent party loses up to 15, and even with the help of the 'Clinton factor' Republican strategists doubt the party can gain more than 30 in 1994. But with a perennial bloc of conservative, mostly southern, Democrats who are Republican in all but name, even 30 may be enough for de facto control. 'This is the best environment for Republicans I have ever seen,' Haley Barbour, the party chairman, told a Republican National Committee meeting in Los Angeles this weekend.

The next two weeks are unlikely to dent his exuberance. Tomorrow Congress begins its public hearings into the Whitewater affair, live on national television. With Robert Fiske, the special prosecutor, still probing the Arkansas end of the allegations against Mr Clinton, the permitted topics of the hearings are limited, and the president predicted yesterday they would amount to just a rehash of old news. In fact, leaks of documents supposedly held under lock and key on Capitol Hill threaten new embarrassment, if not for the White House then for the top echelons of the Treasury Department.

These reports suggest Roger Altman, the Deputy Treasury Secretary in charge of the rescue of savings and loan banks, may have known about a criminal inquiry into Madison, the S & L at the heart of the Whitewater controversy, far earlier than he has so far admitted to Congress. Doubt has also been cast on assertions by Lloyd Bentsen, the Treasury Secretary, that he had nothing to do with Whitewater contacts between the White House and Treasury.

Anywhere but in Washington such arcane issues would scarcely raise a ripple. Here though they are front page news, enough to fan speculation that Mr Altman, a friend of Mr Clinton from their Georgetown University days, may have to resign. Lloyd Cutler, the White House counsel, who will be the first witness before the House Banking Committee tomorrow, pointedly declined to defend Mr Altman. It was up to Mr Altman to 'win back the confidence of the committee', Mr Cutler told the CBS 'Face the Nation' programme yesterday.

Unlike Whitewater, health reform is not yet an unmitigated disaster for Mr Clinton. Last week saw the formal burial of the original, long-moribund Clinton plan. It will be replaced by more modest proposals from the Democratic leadership in Congress, which ideally the Senate and House will approve before next month's summer recess.

Al Gore, the Vice-President, called the event a symbolic watershed and insisted the new bill would remain faithful to the key Clinton goal of universal coverage. At the very least, however, that date will be pushed back into the next century. Grave doubts surround its financing, now that Mr Clinton's plan for employers to shoulder 80 per cent of the cost has, in effect, been abandoned.

Quite possibly, whatever bill is passed will confine itself to changes in the insurance sector. But even that may not happen. George Mitchell, the Senate majority leader, vowed yesterday that there would be no recess until the Senate passed its bill. But Bob Dole, leader of the Senate Republican minority, said his party would not be pressurised into instant approval of legislation. Mr Clinton's gamble is that Republicans will not dare filibuster to death the basically popular cause of health reform - allowing him to claim the credit if and when a final bill is sent for him to sign, in September.