President Bush's veto of the Civil Rights Act of 1990 yesterday is the latest chapter in a bitter, 20-year partisan conflict over racial policy that historically has hurt the Democratic Party.

However, with Bush already weakened by his wavering stands in the debate over tax policy and the federal budget, politicians and activists in both parties are unsure who will gain the political edge in the current dispute.

"If Bush does a good job labeling the bill as a quota bill, it will be okay {for the Republicans}," said Fred Steeper, a pollster for the Republican National Committee. "Americans want to be fair, and reverse discrimination in their minds has never been fair, even to make up for past wrongs. That does not sell. . . . Quotas have been a very strong issue, one that has been hurting Democrats in presidential elections."

But if the Democrats and civil rights advocates can define the opposition to the measure as the work of corporations "hiding behind the quota issue" and persuade voters that the bill is needed to force big business to end job discrimination against blacks and women, then Bush loses the advantage, Steeper said.

"The veto is going to help Democratic candidates," argued Rep. John Lewis, a black Democrat from Atlanta. "It will inspire black voters to turn out. We roll out in traditional support of our friends." Black turnout is likely to be a major factor in key races next month, including the gubernatorial contests in Illinois, Alabama and Florida.

Rep. Robert G. Torricelli (D-N.J.) contended that while "George Bush believes that he can cast himself as the protector of working-class whites," Democrats will place the focus of the debate on women as well as minorities. Bush's veto, combined with the impact of the budget debate over taxes, "will confirm the most serious doubts people have about the Republican Party -- that it is trying to protect those with extraordinary wealth and is not really committed to working women and minorities," he said.

The conflict over racial preferences has its roots in a set of policies initiated in large part by the Republican administration of Richard M. Nixon in the late 1960s. At that time, he and other Republicans were advocates of "black capitalism," backing the "Philadelphia Plan" that mandated goals and timetables in the hiring of minorities on government construction contracts and expanded programs guaranteeing government business for minority-owned enterprises.

But Nixon and other Republicans quickly abandoned support for preferential hiring of blacks and other minorities once GOP strategists recognized how powerful the charge of reverse discrimination could be as a tool to mobilize traditionally Democratic white voters.

By 1972, three years after initiating the Philadelphia Plan, Nixon was on the campaign trail denouncing racial preferences to white blue-collar voters: "When young people apply for jobs . . . and find the door closed because they don't fit into some numerical quota, despite their ability, and they object, I do not think it is right to condemn those young people as insensitive or even racist."

By the start of the 1980s, there was a canyon-wide difference between blacks and whites on the issue of racial preferences in hiring and in college admission. The difference remains as wide today.

Throughout the Reagan administration, the Justice Department placed heavy emphasis on the charge that Supreme Court decisions resulted in "reverse discrimination" against whites. In 1981, William Bradford Reynolds, then head of the Civil Rights Division, declared: "We no longer will insist upon or in any respect support the use of quotas or any other numerical or statistical formulae designed to provide to nonvictims of discrimination preferential treatment based on race, sex, national origin or religion."

This emphasis helped build support for the GOP in beleaguered white, working- and lower-middle-class communities. In a post-1984 election study of white voters in McComb County, a working-class suburb of Detroit, Democratic pollster Stanley Greenberg found that the traditional Democratic theme of "fairness" had become invested with "cynicism and racism. . . . On hearing the term 'fairness,' these voters recall, on the one hand, 'racial minorities' or 'some blacks kicking up a storm', and on the other hand, 'only politics,' or politicians who are 'lying'."

While the continuing drumbeat against reverse discrimination strengthened white support for Ronald Reagan, some Republican operatives privately voiced concern that Bush will not be able to gain as much. "He {Bush} has been courting blacks since he took office," said one GOP strategist. "He looks and acts and talks like someone who wants to be remembered as a Republican who restored relations with the black community. That does not establish the tenor you need to juice up the white cop in Chicago."

But R. Marc Nuttle of the National Republican Congressional Committee contended that the veto will help stop what he said was a sharp, 10-to 12-percentage-point decline in voter identification with the GOP during the past three weeks of the budget debate. "This helps us get back to our themes of individual freedom versus government intervention," he said.