(FORTUNE Magazine) – WASHINGTON reverberates these days with the sounds of construction. Some crews are putting the final touches on the restored Willard Hotel. Others are building a pedestrian mall between the White House and the Treasury. And still others, economists mostly, are hammering out ideas for Democrats who want to be President. Halfway between the humiliation of 1984 and the hope of 1988, the Democrats have a new strategy for winning the presidential election. The old strategy, as practiced by Walter Mondale, was to weld together special-interest groups such as organized labor, blacks, and feminists. In 1984 that succeeded in only one state of 50. Says Alvin From, executive director of the Democratic Leadership Council, made up largely of governors, Senators, and Congressmen from Sunbelt states: ''We were a party of grievances. That works when a majority of the population feels aggrieved and the coalitions are large enough, such as big-city ethnics and the South. But it doesn't work with Gay Rights.'' The new strategy, not only for '88 but for this fall's congressional races as well, is to appeal to the well-satisfied mainstream by endorsing a sturdy national defense and a restrained fiscal policy. Democrats now lament low productivity and extol the virtues of economic growth; they talk less than they used to about equity and redistribution of wealth. Dissenters from the new line are still around. House Speaker Tip O'Neill and Senator Edward Kennedy have not changed their pitch. But O'Neill is retiring, and Kennedy has eliminated himself from the '88 race, so their ability to direct Democratic thinking is limited. Other liberal Democrats have adjusted at least to the business school lingo of the new strategy. ''We still want to inoculate children against disease,'' says Ann Lewis, director of Americans for Democratic Action. ''But now we call it an investment in human resources.'' The main problem with the new strategy is that Democrats end up sounding a lot like Republicans. That's a dilemma. Voters give Ronald Reagan credit for an economy that is a great success by many measures, especially those that touch them most directly. Inflation is low, unemployment is manageable, and $ tax reform is on the way. Where the President is vulnerable is on the growing budget and trade deficits. Democrats are not likely to attack the budget deficit by calling for new taxes. The voters, as Mondale learned, do not want to hear it. So the Democrats are going to concentrate on this year's anticipated $160-billion trade deficit. Democratic presidential candidates and their advisers are desperate for new ideas. ''Those without ideas are going to be vulnerable,'' says Pat Choate, director of policy analysis for TRW and one of Washington's most prolific idea men. Choate is an adviser to the Democratic Leadership Council, though he also makes his thoughts available to Republicans. One of his current favorites: that the President appoint a national competitiveness adviser, with standing comparable to the national security adviser, who would evaluate the impact of policy on trade. A group of Democratic scholars, including Lester C. Thurow, an MIT economist, and Robert B. Reich, business professor at the Kennedy School of Government, have formed the Economic Policy Institute to cook up new ideas. Their aim is to create a bold, imaginative alternative to the Brookings Institution, a Democratic think tank they regard as staid. The Economic Policy Institute would like to stir up discontent among ordinary voters by pointing out that they are not as well off as they think. These middle Americans have slid into what Ralph Whitehead, professor of public service at the University of Massachusetts, has dubbed the ''new collar class.'' A worker has lost his well-paying job in the automobile industry, perhaps, and now repairs office machinery at a much lower wage; his wife works as a bookkeeper. Says Geoffrey Faux, the institute's executive director: ''If you ask this guy whether he's better off than his father, he'll look around his living room and see the color TV and the VCR and say yes. But when you point out that he doesn't have as many children as his father did, and what's more, his wife has to work, he isn't so sure.'' MISSING FROM the Democratic program is the Big Idea. Industrial Policy, the Big Idea of the early Eighties, is all but dead. No one has come forward with a plan as radical as that advocated by Felix Rohatyn, the Lazard Freres partner who helped rescue New York City from financial disaster. He suggested that the Reconstruction Finance Corporation, which was created by Herbert Hoover and survived him into the New Deal, be resurrected to help pipe private capital into such basic industries as automobiles and steel. The strongest candidate to replace Industrial Policy as the Big Idea is what political theorists call High Flex. It isn't really new, but neither were supply-side economics or tax reform before they caught on. High Flex envisions an economy based on supremely adaptable educational, manufacturing, and labor systems. The concept is being promoted by, among others, Reich and Thurow, two deep thinkers the Democratic presidential candidates find stimulating if not always practical. Reich argues that conventional mass manufacturing will inevitably disappear in the U.S. because it can be duplicated in many lower-wage countries. The salvation for U.S. industry will be a highly flexible manufacturing system that can shift quickly with new technology. Such versatility requires a High Flex force of working people with a solid grounding in language, math, and science. But the U.S. educational system is not providing that human capital (see Managing). Reich and Thurow say American kids will have to put in more class time than the current average of five or six hours a day for 180 days a year. Japanese children spend six to eight hours a day in school 240 days a year. Thurow proposes that each worker entering the labor force from high school be assigned a $12,000 individual training account that could be drawn on throughout his career to learn new skills. A worker who thinks the steel industry is finished might take classes in shaping carbon fiber. The plan differs from present job training programs because a worker would not have to be unemployed to qualify; also, knowing that he was drawing down his account, he would not sign up to learn a dead-end trade. TRW's Choate would apply High Flex to pension programs so that workers could leave USX, say, and go to work for Du Pont without losing retirement benefits. William Galston, who developed issues for Mondale in the '84 campaign, believes paychecks should be flexible as well, shrinking and swelling with the employer's revenues. Galston, now director of economic and social programs at the Roosevelt Center, a small Washington think tank, will use focus groups, a marketing technique, to see how many managers and workers would accept such a revolutionary wage system. Like other Big Ideas, High Flex has its soft spots. The weakest is whether there will be enough high-tech jobs to compensate for losses in industries like autos, rubber, and steel. Charles Schultze, chairman of the Council of Economic Advisers for President Carter, thinks Democrats ought to concentrate on the basics. If the budget deficit and the dollar are knocked down far enough, U.S. exports will rise again, not in consumer goods but in capital goods. Schultze does not think much of new ideas in general. ''The fewer we have the better,'' says he. ''I shy away from anyone who wants to change the American economy radically.'' Presidential candidates are not breaking down the door of his modest office at Brookings. WHETHER OR NOT High Flex proves to be the Big Idea, it has clearly influenced many of those Democrats who are lusting after the White House. But Democratic hopefuls also have to distinguish themselves from one another as well as from Republicans, so many Democrats have worked up some medium-size ideas of their own. Most of those address economic issues. With the exception of Gary Hart, no candidate yet has a clearly articulated defense or foreign policy. A few appear to have no new thoughts at all. What follows is a rough ranking of how the leaders measure up, based on both the quality and quantity of their ideas. The master builder among the idea men and the front-runner for the nomination is Hart, 49. The studious, somewhat aloof Senator from Colorado has founded the Center for a New Democracy, which sponsors seminars around the country on such issues as protectionism and budget deficits. He has turned out a prodigious number of proposals on the economy, defense, and foreign policy. To make the U.S. competitive, Hart put forward a Strategic Investment Initiative, which contains elements of both new High Flex and old Industrial Policy. He would extend the use of government bailouts, such as the one that resuscitated Chrysler, to entire industries. These would qualify for federal loan guarantees if they were failing and presented acceptable modernization plans to turn themselves around. Hart would also invest $7.6 billion over three years in retraining workers. Unlike some other candidates, who are fuzzy about how they are going to finance their ideas, Hart bravely promises to impose a $10-a-barrel import fee on oil, which he figures would raise $90 billion over five years. Hart lays out his strategy for the armed forces in America Can Win, a book that has sold a respectable 20,000 copies. In it Hart argues for an Army divided into smaller groups using simpler weapons and vehicles and a Navy that ) relies on the submarine rather than the aircraft carrier as its capital ship. And to make the military more efficient, he wants to fire half the officers in the higher ranks, arguing they do not have enough to do during peacetime. On foreign policy he is not nearly as specific. But in three long and thoughtful lectures at Georgetown University this spring, he unveiled a policy he calls enlightened engagement, which disavows protectionism and argues that the U.S. should count as much on its economic alliances as on its military ones in confronting the Soviets. Bruce Babbitt, 48, the intelligent, intense governor of Arizona, is chairman of American Horizons, an 18-month-old idea shop that is studying welfare and family policy. Babbitt has come forth with the most courageous idea to date: Federal help should go only to those who are truly needy. He wants crop subsidies limited to farmers who are in trouble, for example, and also argues that employee fringe benefits, such as health insurance, be taxed. Some elderly listeners worry that Babbitt wants to stop sending Social Security checks to middle-class retirees. He does not go that far. But he would fully tax the Social Security benefits of those with incomes of more than $25,000 a year; at the moment retirees in that group pay taxes on only 50% of their benefits. Senator Bill Bradley of New Jersey, 43, often looks as though he spent the night in fitful sleep and in the suit he is wearing, but his mind is crisp and he is the fastest comer among the new-idea men. He was co-author of the highly detailed Bradley-Gephardt tax reform proposal and played a key role in getting tax overhaul through the Senate Finance Committee. Now he has a plan to reduce the trade deficit. Bradley points out that because Mexico, Argentina, Brazil, and others have been so heavily burdened with debt in recent years they have less money to spend on U.S. goods. To earn foreign exchange, they are pumping out soybeans, textiles, and other exports that are underpricing U.S. producers in world markets. So Bradley has devised a so-called 3-3-3 plan to shrink their debt. Banks and other lenders would knock down the interest rates on the outstanding loans by three percentage points and reduce the principal by 3% a year for three years. Bradley does not explain what gun he would use to persuade big bankers to be so forgiving. ''It would cost them only three or four months a year in profits,'' he says breezily. Bradley has not yet expressed a clear interest in the White House, but Ted Van Dyk, a consultant to the Democratic National Committee, views him as everyone's second choice. ''He has a lot of friends and no enemies,'' says the consultant. Except, perhaps, some large banks. Richard Gephardt, 45, the low-keyed, cautious Congressman from Missouri, has produced the worst new idea so far, an amendment to the House's Omnibus Trade Bill that would require Japan, Korea, and Taiwan among others to reduce their trade surpluses with the U.S. 10% a year. The Gephardt amendment is an egregious piece of protectionism that seems calculated to win labor support. Consultant Van Dyk generally admires Gephardt but regrets his recent tactics. ''I guess the tax train wasn't moving fast enough, so he jumped onto the protectionist train,'' says the consultant. ''Still, he's salvageable.'' Gephardt's more creditable accomplishment is his chairmanship of the House Democratic Caucus, which recently published a 68-page document on where the U.S. should be headed. The report was strong on delineating the country's problems, such as the budget deficit. But it was puny on solutions, as seen by its disputable idea for reducing the trade deficit: Instead of merely allotting quotas for imports, like shoes and textiles, the U.S. should auction them to foreigners and raise perhaps $6 billion a year. CHARLES ROBB, 47, is chairman of the Democratic Leadership Council and consequently one of the designers of the new strategy. The former governor of Virginia, he is socially gregarious and politically conservative. ''My wife calls me cheap,'' says Robb. His wife, Lynda, is, of course, the daughter of President Johnson, who spent freely on a costly war in Vietnam and an expensive Great Society at home. Robb cut 2,200 jobs from the state payroll. Labor dislikes him because he has supported right-to-work laws and opposes strikes by public employees. Robb has also produced one of the more provocative thoughts of the year: It's time to shift attention away from racism as the force from without that is suppressing blacks and Hispanics and look at the enemies within, such as school truancy, teenage pregnancy, and drug addiction. That's not an idea big enough or new enough to open the door to the Oval Office, but it could be the beginning of one. Most of his thinking he says is directed at reaching 16- to 18-year-olds and helping them shape their lives. For a start, he favors national service, military or other, for all young people. ^ Jesse Jackson, 44, who pulled 3.5 million votes in the 1984 primaries, has no new ideas this time around. But the impassioned minister is attempting to add a couple of stripes to the National Rainbow Coalition, which seeks to blend racial and other distressed minorities into a majority. Noting the depression in the Farm Belt and the Oil Patch, Jackson has invited farmers and energy workers to join his group. But he has not quite figured out what new role they should play. For example, at the coalition's April convention Jackson announced a campaign directed at presumed bias against minorities in the media. CBS executives in the broadcast group are all white males, he declaimed. ''There are no women, blacks, Hispanics, or farmers.'' Whether the newly dispossessed sign on with the Rainbow Coalition or not, Jackson remains a vital force, the candidate who could be the largest single vote getter in the Southern primaries. Joseph Biden, 43, of Delaware, may be the best orator in the Senate, expounding passionately against the government of South Africa or in support of SALT II. His critics complain he is thin on substance, however, with no major legislation to his credit. That's a little harsh. He did co-sponsor an overhaul of the criminal code in 1984, which among other things makes it easier for federal prosecutors to nail drug dealers. But Biden does not claim to be an idea man and ribs those who are. ''The whole notion of new ideas is a bit of a hype,'' he maintains. ''We have a lot of people planting trees without understanding what the shape of the forest ought to be.'' Biden believes that a candidate wins voters' confidence with a vision of what the future should look like, not a step-by-step plan of how to get there. If Mario Cuomo, 54, had any new ideas he might try to pass them off as old ones. That does not mean that the governor of New York is not a thinker. Perhaps he ponders moral and ethical questions more seriously than any other candidate. He insists, for instance, that judges be chosen on merit alone. He recently announced that he was drawing up proposals to restore the teaching of values in public schools -- values like respect for the law and the environment. Cuomo's ideas are rooted in the old Democratic traditions of championing the newcomers, outsiders, and have-nots. As recently as a couple of months ago, Cuomo had not even heard of the Democratic Leadership Council and its new strategy. ''I don't see the need for a new set of basic emphases and / principles,'' he says, although he qualifies that by adding, ''I'm not implying we shouldn't be looking for new ways to apply our philosophy.'' To create jobs, for example, he cut individual income taxes in New York State. Because he does not believe in the new strategy, Cuomo feels no pressure to produce novel, adventurous ideas to support it. New ideas or no, Cuomo is still a formidable candidate for the Democratic nomination. ''If there's a downturn in the economy Cuomo will do very well,'' says William Schneider, a resident fellow at the conservative American Enterprise Institute. ''He's dynamite among old Democrats who remember when big government worked, gave us the New Deal, and won World War II.'' The trouble with old dynamite is that it might be powerful enough to secure the nomination but not explosive enough to win the election. The Democrats have lost four of the last five presidential races. Clearly, they've been doing something wrong. Over the next few years candidates in pursuit of new ideas are going to repeat themselves and each other and grab at schemes that are sometimes far-fetched. But Democrats need new ideas, even highly unusual ones, to get the attention of an increasingly complacent electorate. If they fail, it will be a long time before they are back in the White House.