Democrats See Economy as Unmaking of Bush in N.H. : Politics: State with first primary has seen prosperity vanish and jobless, welfare rates soar since 1988 election.

MANCHESTER, N.H. —  In 1988, when New Hampshire’s economy was a model of GOP prosperity, its primary set George Bush on a course for the White House. Now, New Hampshire’s economy is among the worst in the country, and Democrats say its 1992 primary will begin the unmaking of the Bush presidency.

“The issue in 1992 has to be to bring George Bush back to America to face the economy,” said Russell Verney, executive director of the New Hampshire Democratic Party. “And there is no better place to hit the economy than New Hampshire.”

As its first-in-the-nation primary assumes a major role in the campaign, some New Hampshire voters--including Republicans--are putting the blame for the state’s economic woes on Bush.

“What’s happened,” said Bill Verge, a franchise restaurant operator whose business is off 30% in the last year, “is that the Republican Party has lost touch with America. George Bush has more contact with the emir of Kuwait than the mayor of Manchester.”

Verge, a longtime Republican activist, said he is switching his allegiance to the Democrats.

Even the state’s Republican governor acknowledges that times are hard.

“We’re no longer in a recession,” said Gov. Judd Gregg, who is grimly cutting government services across the board to deal with a $200-million deficit over the next two years. “We’re somewhere between a recession and a depression, so I call it a repression.”

Statistics testify to the steepness of New Hampshire’s decline, which is part of a regional boom-and-bust syndrome afflicting all of New England:

* The jobless rate, a mere 2.4% in 1988, the year Bush was elected, has soared to 6.9% as of September. It is the highest September rate ever recorded for the state, even higher than during the 1982 recession.

* The labor force, which increased nationally by about half a percent between September, 1990, and September, 1991, dropped in New Hampshire by more than 1% during the same period, to 624,000 from 632,000, as some workers gave up looking for jobs and others moved out of the state.

* The number of families on food stamps increased in September by 50% over the previous year, the highest rate of increase in the nation in that category. And the Aid to Families with Dependent Children caseload in April of this year--the latest month for which comparable nationwide figures are available--climbed by 71% over April, 1990, also the highest rate of increase in the nation.

* Bankruptcies during the first quarter of this year increased by 94% over the first quarter of 1990. Total filings in 1990 were 92% higher than 1989, and failures for that year were 58% above 1988.

Further evidence of the hard times comes from a private poll by the Becker Institute of Sudbury, Mass., which in a September survey found that 43% of state residents believed they were worse off than a year ago. Fully one-half of those interviewed said they were finding it difficult to make ends meet.

“Things are tough,” said Jerry Little, president of the New Hampshire Bankers Assn. “The main engines of our economy were high-tech and defense industries. High-tech has literally gone south, to states with lower costs. And, as for defense, well, peace broke out all over, and that’s left us with a very challenged economy.”

And the harsh times are far from over, he warned. “For at least the next year, we’re looking at a slow business environment.”

True to their Yankee tradition of flinty self-reliance, most New Hampshire residents are trying to make the best of a bad situation.

“We’re holding our own,” said Butch Lavigne, manager of Blake’s restaurant here in the state’s largest city. But he points out that, in its perverse way, the slump has benefited Blake’s--where the top item on the menu is the $4.60 Virginia ham steak with grilled pineapple ring--by helping lure family business from more expensive restaurants.

Another boost has come from the increasing number of jobless who line up for benefits at the state unemployment office across the street and then stop by for a cup of coffee.

“Most people who come in here are disappointed,” Lavigne said. “They’re not bitter--not so far, anyway.”

But many of the unemployed seem bewildered. “I don’t understand how this happened to me,” said Linda Welsh, who was laid off last June when the insurance company where she had worked for nine years closed its local offices.

To save on rent, she now lives with a woman friend and struggles to keep up the $200-a-month payment on her 1991 Chevrolet Cavalier with the $272 unemployment benefit check she gets every two weeks.

Welsh has little use for politicians in either party. “When you vote, look what happens,” she complained. “You get people promising you one thing and doing something else.”

“We need a Democratic President,” said Jeanne Beckel, a native of New Hampshire who returned here from Ohio in April hoping to have an easier time finding work as a bookkeeper. She is still unemployed.

“A Democrat might raise taxes,” she said. “But that would get more jobs. And something is better than nothing.”

“It sets you back,” said John Belenger, who was laid off earlier this month by the equipment rental firm where he worked as a salesman as much as 60 to 70 hours a week in good times.

“Bush doesn’t think this is a recession,” Belenger, a Republican, said. “But I do.”

Still, he is patient. “I think he (Bush) did very well in the Gulf War, and things will probably be OK with the economy after a while.”

But Republicans worry that even loyal supporters like Belenger will become disenchanted as Democrats strive to exploit the intense public and media attention focused on the Feb. 18 primary to drive home their argument that Bush should be held responsible for the nation’s lingering economic doldrums.

“Because of the condition of the economy, I think this message will resonate in this state and resonate across the country,” GOP leader Tom Rath, former state attorney general, warned.

“They are up here now, aggressively blaming Bush,” Gov. Gregg said of the Democratic candidates. “Five or six voices all singing a chorus of “it’s his fault” and pointing a finger and doing it at every little store in New Hampshire and every little luncheon counter is bound to at least raise some questions.”

Moreover, Bush may have to defend his economic policies in his own party primary from attacks by conservative columnist Patrick J. Buchanan, who is considering a presidential bid. Buchanan said Wednesday that he will make a final decision shortly after Thanksgiving.

According to Buchanan confidant Edward J. Rollins, a former Reagan White House aide, the insurgent candidate would “hit Bush on the economy, taxes and putting America first.” Buchanan would make a particular point, Rollins said, of linking the recession to the tax increase Bush agreed to last fall despite his read-my-lips campaign pledge to the contrary.

For their part, the Democrats tuned up for the attack earlier this month at the state party convention in Manchester. “Since George Bush was elected, 49,000 men and women in New Hampshire no longer have jobs,” Nebraska Sen. Bob Kerrey told 1,500 irate partisans.

“You have the fastest growing food stamp and welfare rolls in America,” Arkansas Gov. Bill Clinton reminded them.

And former Massachusetts Sen. Paul E. Tsongas challenged the President to come to New Hampshire “and look the people in the eye and tell them what you have done to them.”

There has been no letup in the attacks since then.

“This morning I was over in Lebanon (N.H.) and took a 2-by-4 to them (the Republicans) and talked about what they had done to New Hampshire,” Iowa Sen. Tom Harkin, probably the feistiest of the Democratic contenders, boasted at a party fund-raiser here last week.

“And I did it in Lebanon and I did it at Dartmouth and I did in Claremont,” Harkin added. “We need a Democrat who is not afraid to take a 2-by-4 to Bush and his fat cat friends.”

Even though the primary will pit the Democratic contenders against one another, New Hampshire party leaders hope that the sorry state of the economy will help remind the candidates--and the voters--that what ultimately is at stake is not merely the nomination but the White House.

The primary fight “will be the beginning of the general election campaign,” Chris Spirou, New Hampshire Democratic chairman, said. “George Bush has to be replaced. That’s the issue here, not which Democrat is going to be eliminated.”

Staff writers David Lauter and Douglas Jehl contributed to this story.

Troubled New Hampshire

The severity of New Hampshire’s economic downturn is shown by the following statistics: Unemployment Rate September, 1990: 5.7% September, 1991: 6.9% Aid to Families with Dependent Children cases August, 1990: 6,903 August, 1991: 9,500 Bankruptcy Filings 1988: 835 1990: 2,549 1991: 4,325* *Estimate Sources: U.S. bankruptcy court; U.S. Health & Human Services Department; New Hampshire Economic and Labor Market Information bureau.