Houses divided.

WHEN incoming Senate Majority Leader Robert Dole (Kan.) went before the TV cameras and presented his transition team of Thad Cochran (Miss.), Judd Gregg (N.H.), and Don Nickles (Okla.), audible groans went up from conservatives in Washington and around the country. These senators are not merely uninspiring; they lack energy, gusto, esprit de corps, new ideas. There was no sense of urgency or immediacy. Nor was there any trace of the Gingrich/ Armey/Kasich clarity and decisiveness. Dole himself, no slouch at spotting a turkey, exited soon after making the introduction.

Almost daily a member of Newt Gingrich's House transition team throws a new bombshell, while virtually nothing is coming out of the Senate. So a group of conservative Senate back-benchers known as the "steering committee" has pushed Trent Lott (Miss.) to replace Alan Simpson (Wyo.) for the number-two job of whip.

With Bob Dole certain to make a presidential run, the whip's job takes on greater than usual significance, and many rank-and-file conservative senators believe that three-term veteran Simpson is too much a part of the status quo to translate the Gingrich tidal wave into effective Senate action. One pro-Lott staffer describes Simpson as a "tired old conservative," unable to manage properly the whip vote-counting operation and afraid to take bold policy risks. A pro-Lott senator says Simpson is unreliable on tax and spending issues. Aside from voting for the 1990 tax hike, he once walked out of a leadership meeting in the Bush White House and told a news conference there were seven specific tax increases he could support.

Simpson maintains he had no choice as whip but to stand with his party and his President by voting for the 1990 budget, and he adds that some Republicans mischievously voted with left-wing Democrats to destroy George Bush. Meanwhile, Simpson voted against Clinton's 1993 tax hike and claims he was a strong supporter of the 1992 vote to repeal the luxury sales tax. What's more, the Wyoming senator favors tough welfare reform, saying, "We're not talking about Charles Dickens here, we're talking about young women who have child after child and continue to receive government compensation. It's absurd." He also favors a balanced-budget amendment and is opposed to future tax hikes. He strongly supports tighter immigration standards. He would accept a term-limits amendment "as long as it applies equally for everybody," and he is ready to cut farm and rural-electricity subsidies.

Former House Whip Trent Lott, however, is the clear choice of movement conservatives. As a first-term senator he voted against Bush's 1990 tax disaster, and down through the years he has compiled a solid record favoring growth-oriented tax cuts, domestic budget restraint, a strong military, and tough measures to fight crime. Lott believes the balanced-budget amendment should have a tax-limitation provision, favors a zero deficit by 2002, and is prepared to cut Medicare and Medicaid. "We have come to the realization that all groups must participate in domestic cuts," he says, "while stopping cuts on defense."

Most of all, Lott has positioned himself as the candidate of change versus Simpson's status quo. He believes he can work better with the Gingrich House group and with incoming senators who are House alumni. Citing Senator-elect Olympia Snowe of Maine, who was a deputy whip under him in the House, Lott argues that he knows how to bring along GOP moderates and Democrats. "In the early Eighties we had to get 50 House Democrats to pass Reagan's legislation," he says, "and I got them."

UNFORTUNATELY for Lott, Bob Dole has endorsed Simpson, and conservatives fear that if Dole works hard behind the scenes he will be able to get what he wants. Though Dole denies it, most observers believe a Simpson win would signal a victory for the Senate old guard and a warning to Gingrich Co. that the Senate GOP will be far less aggressive in promoting the Contract with America and shaking up the committee system.

So far no one would accuse the Senate of being overly aggressive on anything. Apart from a Gingrich-style broadside from Jesse Helms aimed at President Clinton's military and foreign-aid policies, the new Republican Senate has been woefully silent on virtually all issues. Two weeks after Gingrich appointed a transition team, Dole responded with his lethargic trio, and since then no Senate reforms have been announced. A week after Gingrich announced support for the GATT free-trade bill, Dole began a public negotiation with the Administration. He tweaked Clinton on revenue scorekeeping (if the pay-as-you-go budget rule can be waived on growth-producing tariff cuts, why not on capital-gains tax relief?). He worried about World Trade Organization decisions against the U.S., proposing a panel of judges to monitor the WTO. He objected to a provision giving special "pioneer" preferences to Cox newspapers and the Washington Post for FCC wireless-phone licenses. Ultimately he gave up on capital gains but agreed to support GATT in exchange for the watch-dog panel and some farm subsidies for the folks back home.

Meanwhile, Idaho Senator Larry Craig, a longtime crusader for a balanced-budget amendment, is looking for leadership from Dole and Judiciary Committee Chairman-designate Orrin Hatch as to which balanced-budget amendment the GOP Senate will propose. Last year the Craig--Simon amendment, which requires a three-fifths vote to raise the debt ceiling but has no tax limitation, was supported by 41 of the 44 Republican senators, with Mark Hatfield (Ore.), Nancy Kassebaum (Kan.), and Ted Stevens (Alaska) jumping ship. The Gingrich Contract, however, stipulates that taxes could not be raised without a three-fifths vote. We thus have a possible House--Senate conflict. With three GOP committee chairmen voting against any balanced-budget amendment, and a House version that is tougher than the Senate proposal, there could be a real impasse.

Though the Craig--Simon amendment could become a tax trap in future years under a less hospitable Congress, GOP Senate budget leader Pete Domenici (N.M.) will not press for tax limitation. Nor does he favor a "zero-deficit" budget resolution by 2002, which is the model proposed by House budgetmeister John Kasich (Ohio). "It could be balanced in seven years, or eight years, or more, but it will be a big burden," Domenici says.

Domenici does support a "more dynamic" accounting for the impact of tax cuts on the economy, especially concerning capital gains. But the House leadership is looking at a big-bang economic model constructed by Gary and Aldona Robbins, senior fellows at the National Center for Policy Analysis, which predicts a $3.9-trillion gain in gross domestic product by the end of the decade, 3.2 million new jobs over the next five years, and $623 billion in additional federal revenue over the same period if the growth policies in the Contract with America are implemented. Nothing like this will be acceptable to the Senate.

Finally, the GOP senators have developed a tin ear when it comes to social issues, including voluntary prayer in the schools. And leading Republican governors such as Christine Whitman of New Jersey, Pete Wilson of California, Tommy Thompson of Wisconsin, and William Weld of Massachusetts recently ran for cover when asked about school prayer on a Sunday talk show. The GOP is allowing itself to be mau-maued on the social issues by the establishment media even before the big battles have begun.

This despite numerous polls showing the importance of cultural conservatism in the backlash against the Clinton Democrats. Even Clinton pollster Stan Greenberg, commissioned by the Democratic Leadership Council, found that 51 per cent were against Clinton's effort to empower gays in the military. Newt Gingrich knew what he was doing when he labeled Bill and Hillary "McGoverniks." Why haven't the GOP senators and governors picked up on this?

If Republicans continue to trim their sails so early in the game, whether on a tough balanced-budget amendment, spending cuts to eliminate whole programs and agencies, serious welfare reform, or the cluster of social issues, they will be squandering an historic opportunity. At this moment the listless GOP Senate looks bewildered and befuddled, unable to exercise its new political power. Should the trend continue, Dole will never make it through the 1996 primaries, and the mantle of party leadership will pass to Gingrich. It may already have done so.

Mr. Kudlow is NR's economics editor.