America needs to concentrate on boosting personal income and take an active role on the international scene, Sen. Richard M. Lugar (R-Ind.) said yesterday in a short speech at the Kennedy School of Government.

Lugar, who is seeking the Republican nomination for president, delivered his remarks at an intimate breakfast attended by new Kennedy School Dean Joseph S. Nye and about 35 Harvard students and professors.

Lugar said that stagnating wage levels are the most serious problem facing America. He said that inflation-adjusted family incomes are at the same level they were 20 years ago, and pointed out that real growth in national income has also declined significantly over the past several decades.

In order to help tackle the problem, Lugar proposed scrapping the federal income tax and replacing it with a national sales tax. Doing so would boost America's savings rate, leading to an increase in the capital stock that would promote economic growth, Lugar said.

Indeed, Lugar cited one economist's estimate that a consumption tax would nearly triple the national savings rate to seven percent.

"Investments don't happen without savings," Lugar said. "It's sort of the old Econ 101 formula: savings equals investment."

Lugar acknowledged that a consumption tax would fall disproportionately on those with lower incomes, and he proposed exempting certain classes of goods (such as food and medicine) in order to make the tax more progressive.

The senator, generally regarded as possessing enormous intellectual but relatively weak communication skills, criticized some of his opponents, including Patrick J. Buchanan, for blaming other sources for America's economic problems.

"There are some candidates who always say that there's an enemy responsible for this, not our savings," Lugar said. "Occasionally it's immigrants, blacks, Hispanics.... None of that has had any real effect on what we're talking about; it's savings."

Lugar's second broad theme was America's role in the new world order.

He said that America had "enormous opportunities" to take a leadership role in the coming years.

Lugar cited a poll showing that just 27 percent of those surveyed took an interest in international affairs.

"I mentioned Africa at a Republican rally and was chastised by the press, who said nobody ever mentions Africa at Republican rallies," Lugar quipped.

But Lugar said it was important for foreign policy issues to remain on the table in America.

He said that continuing American involvement on the international scene would lead to a "much safer, more secure, more prosperous world."

Lugar said his other foreign policy priorities include continuing President Clinton's military strategy in Bosnia and controlling the spread of nuclear arms from the states that formerly comprised the Soviet Union.