(FORTUNE Magazine) – POLITICALLY, 1992 has been the year of the roller coaster. Just last summer, flush from his Gulf war victory, George Bush looked like a shoo-in for reelection. Since then, recession and un-leadership have driven his presidential approval ratings from a record 89% to a 12-year low of 29%. Businessman Ross Perot briefly eclipsed the scene with a populist cry for fundamental change, only to disappear like some political shooting star. Now Democratic nominee Bill Clinton, written off by many as unelectable because of his alleged womanizing and efforts to avoid the draft, has captured the change banner and is beating Bush 2 to 1 in the opinion polls. But don't bet on Clinton yet. In this breathtakingly up-and-down year, Bush could still come back. What he needs is a little luck, a lot of fight, and -- most important -- a credible strategy for improving the country's long-term economic health. Just how crucial that last element is comes through loud and clear in a new poll of the CEOs who run America's largest corporations -- the FORTUNE 500 and Service 500. The survey was taken from July 23 to July 29 and conducted exclusively for FORTUNE by the opinion research firm of Clark Martire & Bartolomeo. Of the 184 CEOs who responded, 85% say they would vote for the President if the election were held today. Only 9% back Bill Clinton. The candidates roughly split the support of the tiny band of top executives who were for Ross Perot in late May, when FORTUNE last polled them on their presidential preferences. Compared with the average voter, the average CEO is considerably more optimistic about the economy. In July nearly eight out of ten Americans told pollsters they believed the country was seriously off on the wrong track -- a level of despair deeper than during Watergate, the Iran hostage crisis, or the 1982 recession. Just 38% of the CEOs in FORTUNE's survey think things are that bad. And 85% are either very confident or somewhat confident that the economy will continue to recover over the next 12 months. It's all the more striking, then, that even this bunch of stalwart Bush backers agrees with the disgruntled majority that the President's domestic leadership has been dreadfully inadequate. When asked to rate Bush's performance on a scale of 1 (poor) to 10 (excellent), the CEOs gave him a score of 8 on foreign policy but only a 4 on his handling of the economy. Says Automatic Data Processing CEO Josh Weston: ''Bush's strength is his international influence. But he has no long-term domestic insight, vision, planning, or effectiveness.'' Can Bush win in November without changing that damning and pervasive perception? Some Republicans appear to think better tactics alone will do the trick. They eagerly anticipate the return of Bush's longtime friend and adviser James Baker III, who is expected to resign as Secretary of State to coordinate and energize the White House and the campaign. Claims Republican pollster Richard Wirthlin: ''Clinton's chances of stealing a victory from the President are less than fifty-fifty if the Bush team can quickly mount a focused and disciplined campaign.'' Despite the soggy economy, the Democrats' more moderate party platform, and the dynamic duo heading their challengers' ticket, the Republicans still enjoy a big advantage because of their strength in the more conservative Sunbelt and Rocky Mountain states. You can calculate that edge simply by adding up the electoral votes of the states that Bush won in 1988 by a margin of more than 10%. The total comes to 216 of the 270 votes needed to win. (And that's excluding the 17 electoral college ballots of Arkansas and Tennessee, where Bush won big last time but probably won't now, since they're the home states of Clinton and his running mate, Al Gore.) By contrast, the Democratic strongholds that Dukakis took in 1988 add up to only 107 (see map). The basic strategy of the President's men is to shrink Clinton's lead by raising doubts about his experience, integrity, and policies, all wrapped up in the kind of aggressive, negative campaigning that sank Michael Dukakis last time round. They also hope to capitalize on any new international challenges, such as Bush's recent face-off with Saddam Hussein over weapons inspection. But in the end, this election will hinge on one thing, and one thing only: the economy, and Bush's ability to manage it. ''The negative stuff alone won't work this time,'' warns former drug czar and Education Secretary William Bennett. ''Bush has to convince voters in his own words -- not using Cyrano's voice to woo the lady -- that he has the right plan and is the right guy to deliver. That requires two things he's not shown to date: the vision thing and a willingness to confront Congress, special interests, the status quo.'' Allegheny Ludlum CEO Robert Bozzone is even more blunt: ''Why doesn't George Bush get off his duff and enunciate his domestic programs and beliefs? Why doesn't he do something major? We need leadership.'' So far, Bush & Co. don't seem to get it. Voters are furious, and that anger is especially strong among this year's key constituency -- suburbanites in swing states like California, Illinois, Pennsylvania, and New Jersey, a majority of whom normally vote Republican. This group was the force behind former Senator Paul Tsongas's surprise showing and, more recently, the Perot phenomenon. Says pollster Daniel Yankelovich: ''Bush has been talking about the business cycle, telling people that it will run its course, and there is little he can do. But people are focused on long-term structural problems besetting the economy. Chief among them: the nation's enormous and growing debt burden, the quality of education, the cost of health care. They want an activist President who will solve those problems.'' Instead, Bush seems out of touch, out of ideas, out of steam. Says Yankelovich: ''It drives people wild.'' Taken together, Bush's recent budgets offer at least the partial outline of a long-term strategy for attacking these problems, but they've been poorly packaged and unenthusiastically sold. Says economist Larry Kudlow of Bear Stearns: ''Bush and ((Treasury Secretary Nicholas)) Brady send up a proposal, then Bush flies off to Kennebunkport, and Brady puts on his spikes and heads to the golf course.'' What policies should Bush be advocating? The economics are simple: The U.S. needs to invest and save more, and consume less. As FORTUNE has often argued, the best way to boost national savings, lower long-term interest rates, and reduce the risk of a fiscal meltdown is to stop dissaving. How? By setting the federal budget deficit on a firm downward path. America's CEOs agree. When asked in our poll what were the most important things the next President should do to improve the economy's long-term health, 72% backed pushing down the deficit -- more than any other action. The political rub is that this can't be accomplished without pain. Take the bold -- and largely admirable -- plan to attack the deficit that Ross Perot's advisers cobbled together over the summer. This scheme, many elements of which FORTUNE has endorsed in the past, coupled new tax credits for investment and long-term capital gains with sharp spending cuts in defense, Medicare, and farm programs. Perot's team also advocated some new taxes aimed mainly at consumption, including a 50-cent-per-gallon hike in gas taxes and less generous deductions for mortgage interest. Another revenue raiser: increasing the top individual income tax rate to 33%. Could this pain-today-for-gain-tomorrow bromide have been sold to American voters? Said Perot strategist Hamilton Jordan shortly before the billionaire dropped out: ''To 35%, yes. To 51%, no.'' For Bush, in particular, any talk of revenue raising would be electoral dynamite, since it would likely cost him dearly with core conservative supporters, still bitter over his broken no-new- tax pledge. WHAT THE PRESIDENT could do, instead, is to finally announce a serious, all- out attack on government spending. His stump speech could go something like this: ''ENOUGH! The U.S. taxpayer won the Cold War. Now it's time to win the global economic war by boosting U.S. competitiveness. Business spent the 1980s downsizing and restructuring. In recent years families have been climbing out of debt, often painfully. Now it's time for government to serve you better by downsizing, reducing its debt, and increasing its productivity and accountability.'' Says American Enterprise Institute political expert William Schneider: ''Any way you cut it, smaller government and lower taxes are the Republicans' best pitch to suburban voters.'' Bush could start by talking up the courageous -- and so far almost unremarked upon -- proposal to cap entitlement spending already in his 1992 budget. This would save $88 billion by fiscal 1996 by holding the growth of all mandatory spending, except Social Security, to the rate of inflation plus population growth. Aggressive privatization should be another element of any comprehensive assault on spending -- massive sell-offs of government buildings, loans, rural electric authorities, even military bases. Republican governors like Massachusetts's William Weld and Michigan's John Engler have downsized state governments and prospered. So could Bush. To take some of the sting out of this austerity pitch, the President could point out that during his first term, the federal government increased its & public investment in education, training, infrastructure, and civilian R&D an average of 5% a year after inflation. That contrasts with cuts in investment averaging 5% a year under Ronald Reagan. Bush would still want to back judicious increases in some public investments, such as Head Start programs, but he could contrast his limited approach to the more dramatic expansion in such spending advocated by candidate Clinton. That would win him further points with America's top CEOs, only 17% of whom, according to FORTUNE's poll, see big increases in public investment as a priority. Inevitably, the President will also try to come back by tearing down his Democratic challenger's credentials as an effective leader. Says Bush campaign policy adviser Jim Cicconi: ''Arkansas is last or close to last on almost every front -- environment, job safety, income.'' Bush strategists also point out that while Clinton has balanced 11 budgets, the state constitution requires it -- even though Clinton opposes a constitutional amendment to balance the federal budget. What's more, spending and taxes have risen dramatically during his tenure. The Republicans believe it will be easy to fan primal fears of increased regulation under the Democrats. They plan to harp on Hillary Clinton's advocacy of children's rights to sue their parents, Al Gore's enthusiasm for stiff environmental and safety regulations, and the support the Democratic ticket has gotten from powerful trial lawyers who oppose Bush proposals to reduce litigation by doing things like setting limits on product liability. GOP strategists also plan a frontal attack on Clinton's fairly detailed blueprint for economic reform. ''It's a godsend,'' cries one GOP budgeter. ''It's tax and spend all over again.'' Drawing upon estimates from the Urban Institute, Texas Senator Phil Gramm figures that Democratic proposals to require companies to provide health care and parental leave would cost $61.6 billion a year. Says Republican Congressman Vin Weber: ''This kind of hidden tax on business is the biggest threat of a Clinton presidency.'' True, many of the $140 billion in budget cuts in Clinton's plan are soft and squishy. And he will be under intense pressure from his left to spend even more. Worries Beneficial Corp. CEO Finn Caspersen: ''When push comes to shove, it will be difficult for Clinton to withstand the more liberal elements of his party.'' It is also true that Clinton's plan, even if it's enacted intact and works as promised, offers no significant reduction in the federal deficit for four years. BUT RIGHT NOW, Republican assaults on Clinton's budget plans don't carry much weight since Bush has offered no detailed explanation of how -- or even whether -- he proposes to slay the deficit dragon. As Bill Bennett argues, without that positive leadership on Bush's part, old-fashioned Republican fear-mongering may not do the job this time.

Would additional personnel changes in the Bush team help? Probably. So far, Bush has dismissed calls to dump Vice President Quayle, as well as Brady and Budget Director Richard Darman. His strategists are afraid of looking panicky, and the President himself remains loyal and risk-averse. But the result is a perception of paralysis. At a minimum, replacing Brady and Darman, who it is rumored will be leaving in a second term anyway, could recharge and crystallize Bush's economic message. Promoting Housing Secretary Jack Kemp would please many GOP faithful. But bringing in dynamic governors like Weld or Engler, lawmakers like Gramm or Weber, perhaps even an energetic business leader such as financier Ted Forstmann, would send the same message: Bush is for change that works. The President also needs to use the enormous powers of his office more effectively. In his first term he failed miserably at that. His speech after the Gulf war victory was a perfect occasion to lay out a bold domestic agenda and a timetable for achieving it, but he didn't seize the opportunity. Instead, Bush waited almost a year, until his 1992 State of the Union, to call for an underwhelming growth package. At that point he set a March deadline but did little to keep the heat on Congress. Nothing happened. Says Republican pollster Ed Goas: ''When the history of the Bush's first term is written, it will be a tale of missed opportunities.'' Blaming congressional Democrats for the country's troubles isn't good enough. Between now and November 3, Bush needs to pick a few high-profile fights by vetoing appropriations bills filled with pork and demanding fiscal restraint. He might test his authority to use a line-item veto, or at least proclaim what wasteful outrages he would cut were he given the power. If he really believes the budget ought to be balanced, perhaps he ought to create a movement -- and a mandate -- for fiscal responsibility by asking the congressional candidates of both parties to sign a pledge to voters to achieve | that balance by whatever year he deems desirable. The President should also insist more vehemently than he has that Congress enact proposed Administration investment incentives: among them, an investment tax credit, cuts in capital gains taxes, and enterprise zones. Economist David Hale of Kemper Financial Services recommends that Bush push especially hard to advance the interests of small businesses. Says he: ''In contrast to the 1980s, small businesses have failed to expand employment during the recent recovery and offset the job losses resulting from restructuring in the big firms.'' One way to do that would be for Bush to go to the mat for reforms he has already proposed that would make health insurance more available and less costly to small business. Many Democrats, including Senate Finance Chairman Lloyd Bentsen of Texas, support a similar package. But congressional leaders are playing politics and delaying a vote. Bush could raise the ante and insist that if Congress doesn't act on health care before the election, he won't sign the congressional appropriations bill that funds their perks. Even if he lost that battle, he'd win. Will Bush take the bold course? It won't be easy for this archdefender of the status quo and instinctive derider of things visionary. Still, as the President's old mentor Richard Nixon has cautioned, ''You want to remember, every time you tend to write off George Bush, he makes the big play.'' The first real clue to the kind of campaign he will run comes in Houston, at the GOP convention. If Bush starts talking more like a leader and less like a politician, it just might signal the next big roll of coaster 1992.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Who the CEOs would vote for

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Will the economy continue to recover over the next 12 months?

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Looking longer term, is the economy on the right track?

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: What should the next president do to improve the health of the U.S. economy?