The Associated Press
Tuesday, Oct. 12, 1999; 2:47 p.m. EDT

BEDFORD, N.H. –– Republican presidential hopeful Gary Bauer said Tuesday that the United States should maintain control over the Panama Canal.

Control of the canal is scheduled to be handed over to Panama in December as the final act in compliance with Panama Canal Treaties, signed in 1977 by then-President Jimmy Carter.

Bauer told a breakfast audience that Chinese control of land on either side of the canal could jeopardize American interests and that the United States should use a loophole in the agreement that lets the country retain control of the canal if the nation's interests are at stake.

Some in Congress have expressed concern about the activities of the Hong Kong-based Hutchison Whampoa Co., which has been engaging in major construction activities at ports on either side of the canal. Rep. Dana Rohrabacher, R-CA., has said the company maintains close ties with China's People's Liberation Army.

The Clinton administration has expressed doubt about such claims and says it does not believe Hutchinson Whampoa's activities constitute a threat to the neutrality of the canal. In any case, the Panama Canal treaties authorize the United States to take whatever actions are necessary to maintain the neutrality of the waterway.

Bauer said in a statement Tuesday that Ron Blue, a personal financial adviser and Atlanta businessman, is joining his campaign as chairman and that Larry Smith of Orange County, Calif., and Lee Eaton of Sea Ranch Lakes, Fla., would be finance co-chairmen.

On the second day of a three-day bus tour of New Hampshire, Bauer said he wants to make federal taxes "family friendly" by replacing the current tax system with a 16 percent flat tax. He also would cut the Social Security payroll tax by 20 percent.

"My plan levels the playing field," he said of his proposal to create a flat tax on all income. "By bringing roughly $800 billion of currently exempt corporate property into the tax base, my plan is able to offer the lowest overall tax rate to all Americans."

Bauer had harsh words for Texas Gov. George W. Bush.

"As for the GOP front-runner, well, someday he may unveil a tax plan," Bauer said. "But I suspect that when he does, it will reflect yet more conventional Republican thinking, more tinkering at the margins of the existing anti-family tax system."