NEWS ANALYSIS : Slump Even Takes Toll on Political Trail : Campaign: By failing to address the issue of hard times, the Kerrey and Harkin candidacies are suffering. The luster of earlier messages is fading.

To the growing list of such recession victims as bankrupt businesses and laid-off workers, add the sputtering presidential candidacies of Nebraska Sen. Bob Kerrey and Iowa Sen. Tom Harkin, who once were rated on a par with the apparent front-runner, Arkansas Gov. Bill Clinton.

The profound impact of the prolonged economic slump on the national political landscape has greatly contributed to their failure to fulfill the initial promise of their bids for their party’s nomination. At the same time, the recession has seemed to smooth Clinton’s path to the top of the heap in polls of the state’s voters.

With hard times prevailing and Democratic prospects of winning the White House improving, two factors seem to be dominating the outlook of Democratic leaders and rank-and-file voters as they compare the contenders for the nomination: economic problem-solving and electability.

Up to now, both of these have seemed to be Clinton’s strong suits, but unsubstantiated allegations of infidelity and Thursday’s new controversy about his Vietnam War draft deferment could undercut that perception. Meanwhile, the luster has faded from Kerrey’s personal charisma and the health care issue--which prompted some insiders last fall to view him as the favorite. Harkin’s fiery populist rhetoric and espousal of the traditional Democratic creed--which enabled him to dominate the early debate over the party’s 1992 message--has been similarly diminished.

“Voters have a very different set of needs and desires in a period of economic growth from what they have in a recession,” says Mark Mellman, who polled for Tennessee Sen. Albert Gore Jr.’s 1988 Democratic presidential campaign and is now uncommitted. “When they feel squeezed economically nothing is more important, and they want solutions.”

This sense of grim concentration is particularly evident in New Hampshire, where the economic decline has been steeper and broader than almost anywhere in the nation. Largely for this reason, analysts believe Harkin and Kerrey are locked in a struggle for third place and political survival. They trail not only Clinton but also former Massachusetts Sen. Paul E. Tsongas, whose sober focus on economic remedies has boosted him well above the level analysts expected.

Strategists for Kerrey and Harkin contend they still have time to adjust to the recession-dominated atmosphere, and in recent days both have been trying to do just that. This week Kerrey finally issued an economic position paper, something Clinton did at the start of the year. And Harkin tried to set aside misgivings about his chances of winning the general election by citing his success running against Republicans in his home state.

But polls suggest that both men face an uphill battle in reversing the impressions created by their early strategies. A survey released last week by the University of New Hampshire showed Kerrey and Harkin tied for third with 8% of the vote; Clinton led with 30%, followed by Tsongas with 25%. The margin of error was plus or minus about 5 percentage points.

“They’ve been fighting the last war,” Mitchell Schwartz, Clinton’s New Hampshire coordinator, says of Kerrey and Harkin.

He points out that Kerrey supporters were counting on their candidate’s exploits as a wounded Vietnam War hero to safeguard him from allegations that he would be insufficiently tough on national security, charges that hurt 1988 standard-bearer Michael S. Dukakis. Kerrey won the nation’s highest honor, the Medal of Honor.

But although Kerrey’s war record, which he mentions nearly every chance he gets, may win him personal admiration and respect, it is hard to find evidence that it has been gaining him votes amid the general anxiety about plant closings and mortgage foreclosures.

Likewise drawing on the past, Harkin has seemed preoccupied with correcting another Dukakis mistake: the failure to retaliate when Republicans attacked him on a range of issues from the environment to crime. “Harkin seems to emphasize the idea that he would fight back to contrast himself with Dukakis,” says John Sasso, Dukakis’ campaign manager. “That’s fine as far as it goes, but in 1992 it may not go far enough.”

“I think he (Harkin) needs to sharpen his message,” says Rep. Dave Nagle (D-Iowa), a longtime Harkin associate and supporter. In addition to breathing fire at Bush, Nagle suggests that Harkin point out ways in which Democrats have been right on economic policy in the past and how the Democratic approach could help end the recession.

The threat of extinction that hangs over the candidacies of Harkin and Kerrey is a far cry from the bright aura that surrounded them only a few months ago when they entered the race.

Back then, when the economy seemed to be on the rebound, Kerrey had in his favor not only his personal strengths but what many regarded as the silver bullet of issues--his blueprint for national health care on which he had labored for months.

But just as the economic recovery failed to materialize, so did the potency of health care as an issue. And by continuing to stress health care rather than remedies for the recession, some evidence suggests that Kerrey may be hurting his own cause.

“People feel he hasn’t been addressing economic issues enough,” says Kelly Myers, associate director of the University of New Hampshire survey center, which regularly takes the pulse of the Granite State. “People think health care is OK, but what they’re really interested in is jobs.”

At one recent campaign stop, a voter asked Kerrey what he would do to relieve the plight of the homeless, adding pointedly that he did not want to hear about health care. That didn’t stop Kerrey. He replied that homelessness did have something to do with health care.

As for Harkin, he got off to a promising start with his blistering attacks on Bush. His tactics found a warm welcome among Democrats weary of being on the defensive for more than a decade. But as Bush’s stock declined in recent months with the deepening economic doldrums, Democrats became less interested in having their morale boosted than in winning the White House.

Of course, not all of Harkin’s and Kerrey’s difficulties can be blamed on the recession. Both seem to lack Clinton’s polished skill at getting his message across. But the need to make mid-course corrections to adjust to the recession seems to make their awkwardness more conspicuous.

Thus, in an address last week introducing what his staff heralded as “a dramatic new economic blueprint,” Kerrey ad-libbed so often that he failed to finish his prepared text. Then he upstaged himself by suggesting that his program for improving the infrastructure might require new taxes.

Times political writer Cathleen Decker contributed to this story.