An article yesterday about Monday night's GOP presidential debate incorrectly reported that Arizona Sen. John McCain asked Texas Gov. George W. Bush a question about Clinton administration land policies in the West. It was Bush who asked McCain the question. Published 01/12/2000)

Texas Gov. George W. Bush and Arizona Sen. John McCain sparred over tax policy during a lively 90-minute debate here tonight at which they also unexpectedly shook hands after pledging not to run negative ads against each other.

The debate, the third in the last five days for Bush, McCain and the four other contenders for the Republican presidential nomination, covered a wide range of issues and was punctuated by several spirited exchanges between the front-running Bush and two of his rivals, publisher Steve Forbes and conservative activist Gary Bauer.

But except for his criticism of Bush's tax plan as too tilted to the rich, McCain was largely gentle in his treatment of the front-runner. The Arizona senator, who is considered Bush's main challenger, used a question from a student to prompt the handshake agreement on negative campaign ads.

Asked whether the candidates would agree not to run negative ads, Forbes declined but McCain quickly accepted and, turning to Bush, said, "I'd like to shake hands right now. We will not run negative ads." Bush and McCain then shook hands on the pledge.

Throughout the debate, held at Calvin College here, Bush appeared more relaxed than he has during earlier appearances with his rivals as he joked frequently and parried their thrusts with humor. When Forbes began a question to Bush by saying "let's assume you win the nomination," Bush quickly shot back, "I accept the premise."

But there was little humor evident early in the debate as first Forbes and then McCain assailed the Texas governor over tax policy, which is shaping up as a defining issue in the contest for the GOP presidential nomination. Bush has made his $483 billion tax-cutting plan over five years the key tool in his effort to appeal to the the conservatives who dominate many of the Republican primary and caucus states, while McCain prepared to unveil a smaller tax package Tuesday that he says would leave more money to shore up Social Security and Medicare.

Bush, his voice rising to a veritable yell, defended himself against charges leveled by Forbes that he had backed away from a no-tax pledge made six years ago in Texas and had once proposed increases in the state sales tax. "Look at the results!" Bush said, noting that he had pushed large tax cuts measures through the Texas legislature in 1997 and 1999. Forbes pressed Bush all night, saying that he was hedging on his answers on taxes and abortion.

McCain reacted to pressure from his right as well--answering charges that he was engaging in a form of "class warfare" more common to Democratic opponents by criticizing Bush for proposing tax cuts for the upper income brackets. "I have never engaged in class warfare," said the Arizona senator, while adding that he was "deeply concerned about a kind of class warfare," which he said was a growing gap between rich and poor.

But McCain, who plans to outline his own tax cut plan in a speech Tuesday in Concord, N.H., also sought during tonight's debate to sharpen his differences with Bush over the issue. He repeated his criticism that too much of Bush's proposed tax cut proposal would benefit the wealthiest of Americans while ignoring other needs such as shoring up the Social Security system and paying down the national debt.

"There's a fundamental difference here," McCain said. "I believe we must save Social Security, we must pay down the debt, we have to make an investment in Medicare. For us to put all of the surplus in tax cuts is not a conservative effort. I think it's a mistake."

Bush retorted that "my plan has been called risky by voices out of Washington. In my judgment, what's risky is to leave a lot of unspent money in Washington because guess what's going to happen. It's going to be spent on bigger federal government" programs.

On that point, Bush found some measure of unexpected help from another candidate, Sen. Orrin G. Hatch (R-Utah), who agreed that any surplus left in Washington would quickly be spent by Congress. "I guarantee those guys will spend it," Hatch said. "And I guarantee it will be both Republicans and Democrats . . . although less Republicans, naturally."

The debate topics covered a wide swath of social and cultural territory, including the little Cuban boy who made it to Florida in a life raft and has been ordered to be sent back by the INS, and the recent hijacking of an Indian airliner.

As much as Bush and McCain differed on taxes, it seemed for much of the debate that McCain was perhaps the front-runner's best friend among the six men on the stage. When the format allowed candidates to ask questions of one another, McCain asked Bush a tame question about what he felt about the Clinton administration's land policies in the West, and Bush thanked him profusely before and after the softball query.

"I think I owe you for this kind of question," the Texas governor said, breaking into a smile. There was no similar goodwill when Bush interacted with two of the candidates to his right, Forbes and Bauer, both of whom are struggling to keep their candidacies alive past the caucuses in Iowa later this month.

When the candidates were asked about the INS decision to send 6-year-old Elian Gonzalez back to his father in Cuba, they all disparaged the Clinton administration's handling of the case and in various ways said they would not allow the boy to be returned to his father. "We would no more send a child back to Hitler's Germany or Stalin's Russia than we should Castro's Cuba," Forbes said.

But when Bush expanded his answer to include a broad attack on the government of Fidel Castro and his reasons for opposing trade with Cuba, Bauer jumped in and said, "Governor, you just made the case for withdrawing most favored nation status with China."

"I did not," responded Bush, who has made expanded trade with China part of his foreign policy.

"Everything you just said about Cuba applies to China," Bauer continued.

Bush disagreed, saying there was "a huge difference" between the two communist regimes, because China had an "entrepreneurial class" while in Cuba capital investments were skimmed by the Castro government.

McCain, the former prisoner of war, dominated most of the foreign policy discussion. He repeated his recent attack on the Democratic candidates, Vice President Gore and former senator Bill Bradley, for their recent statements on gays and the military, and took an unflinchingly hard line when asked a question by moderator Tim Russert about negotiating with hijackers. If an American airline suffered the same fate as a recent Indian plane, Russert asked, would McCain ever negotiate with the terrorists and allow the release of prisoners in exchange for the release of passengers?

"I would not," McCain said.

"Never?" Russert asked.

"Never. Next question," McCain repeated.

If the hijackers began to shoot passengers one by one, would he still refuse to negotiate?

"I would," McCain said, adding that he would "have taken several measures that were not taken" in the Indian airliner case to prevent the situation from deteriorating to that point. He said he would have had American commandos tail the plane from point to point and make sure that the first time it landed it could not take off again.

Before the debate, aides released details of McCain's new tax plan, which also calls for devoting a substantial share of future budget surpluses to the Social Security system and setting aside some of those funds to help pay down the national debt.

McCain's plan represents a revision of a tax cut proposal he offered last summer, and some of the changes were made to counter criticisms by Bush that the earlier plan did not do enough for middle-income Americans. The plan is about half as large as Bush's proposal, cutting taxes by $240 billion over five years.

The major elements of the new proposal include: increasing the 15 percent tax bracket to include couples making up to $70,000 as opposed to the current level of $43,050; doubling to $1,000 the child tax credit; easing the so-called marriage penalty by raising the standard deduction from $7,200 to $8,600 for couples; eliminating the earnings test on Social Security income; eliminating inheritance taxes for most Americans by excluding from taxes estates up to $5 million; and creating Family Security Accounts that would allow tax deferral for as much as $6,000 annually for couples, and up to $3,000 for individuals. The accounts could be used for any purpose, so long as the money is held for at least one year.

McCain advisers said that the Arizona senator, as part of a proposal to extend the solvency of Social Security to 2050, would also allow taxpayers to invest up to 2.5 percent of their salary in a private security account.

As in the past, McCain pledges to put aside 62 percent of the projected non-Social Security surplus to save Social Security, with another 10 percent reserved to bolster Medicare and 5 percent for debt reduction.

Aides said he would pay for about one third of his tax cut with the remaining surpluses. The rest would be paid for by closing tax loopholes, which aides said McCain would detail in today's speech.

Bush and his entourage entered the debate seeming especially pleased with the course of the ongoing argument with McCain over the scope and nature of proposed tax cuts. In a line that brought a loud laugh from his communications director, Karen Hughes, hovering nearby, Bush offered another variation of the season's new cliche line spawned by the hit television show, "Who Wants to Be a Millionaire?"

"I'm going to quote Regis [Philbin] to Senator McCain," Bush said. "Regis should ask McCain, 'Is this your final tax plan?' "

Staff writer Dan Balz contributed to this report from Washington.

CAPTION: Sen. John McCain (Ariz.) and Texas Gov. George W. Bush agreed not to run negative ads against each other.