NEWS ANALYSIS : Clinton and Tsongas Share Themes but Not Priorities : Politics: Both reject many Democratic traditions, but they take different approaches to social, economic issues.

TIMES POLITICAL WRITER

The two leading Democratic candidates in next Tuesday's New Hampshire primary share a profound skepticism for ideas many in the party have long held dear.

"The traditional anti-business, class warfare, protectionist Democratic Party is one I want no part of," said former Massachusetts Sen. Paul E. Tsongas.

"I'm running against brain-dead politics in both parties," said Arkansas Gov. Bill Clinton.

That irreverence toward Democratic conventions unites Tsongas and Clinton, especially compared to Iowa Sen. Tom Harkin, who has staked his campaign on a defense of traditional liberalism.

But there are telling differences between Tsongas and Clinton on economic, social and foreign policy issues, and as they jostle for the top prize in next week's pivotal contest, the outlines of a debate that could frame the coming weeks of the campaign are beginning to emerge:

--Tsongas stakes his hopes for economic renewal primarily on providing new incentives for business investment, and he shows little sympathy for initiatives aimed at increasing equity, as opposed to efficiency, in the economy. He rejects a tax cut for the middle class in favor of a broad capital gains tax cut aimed at encouraging new business investment.

--Clinton's economic plan instead puts more stress on government efforts to increase the skills of American workers rather than initiatives that directly aid American businesses. At the same time, Clinton also espouses a middle-class populism on economic and cultural issues, symbolized by his support for a tax cut for middle-income families.

"Clinton is closer to the others on (supporting) a middle-class tax cut and not endorsing a full-blown capital gains tax cut," Tsongas said in an interview this week. "That's Santa Claus, and I'm not Santa Claus."

Clinton, in a separate interview, countered: "While I want to rebuild the manufacturing base as he does, I think mine is much more of a people-based, small-business-based, middle-class-based economic revitalization program. His is more oriented toward large corporations and industry alone."

While the debate between the two has not yet taken center stage in the presidential campaign, it carries within it a fundamental divide for Democrats.

Tsongas presents a program that substantially echoes neo-liberal priorities first proposed in the early 1980s, which marry traditionally liberal positions on foreign policy and social issues with greater cooperation between government and business in order to spur competitiveness.

Clinton's program, by contrast, emerges from a different critique of traditional liberalism that developed later in the decade around the Democratic Leadership Council, which is more skeptical of liberal approaches on social and foreign policy issues. At the same time, it envisions that Democrats would "reinvent" government by decentralizing services, provide greater choice in public education and other programs, and demand "personal responsibility" through work requirements for welfare recipients and tougher child-support collection.

These differences in intellectual lineage are reinforced by differences in experience. An attorney and corporate director since he left the Senate in 1984, Tsongas argues that his seven years "living in the business world" give him the strongest economic credentials of the Democratic presidential contenders.

Increasingly on the campaign trail, Clinton now maintains that his 11 years as a governor have given him greater insights than Tsongas on how to restructure government--and implement his ideas.

"There is a whole lot of difference between holding up a plan and changing people's lives," he said in the interview. "My work for more than 10 years has been changing lives."

"I want to do some things that make the country fairer again," he said Friday night.

Here are the chief differences between the two men:

THE ECONOMY: When Tsongas is asked how he would revive the economy, the first priority he usually lists is increasing the availability of capital to American business. "You have to give our companies venture capital, and you have to give them equity capital," he declared recently.

When Clinton was asked the same question at a high school in Keene, N.H., on Tuesday, he said: "The skills of the American work force will shape the future of this country more than anything else."

This philosophical distinction manifests itself in different priorities. Tsongas supports a much broader--and more expensive--cut in the capital gains tax than Clinton. Tsongas wants to reduce taxes on all securities transactions in which investors hold their stock for several years. Clinton has proposed indexing capital gains taxes for inflation. He has also proposed a new tax break specifically for entrepreneurs who start a new business and then sell it after five years or more.

On the other hand, Tsongas rejects as too expensive the centerpiece of Clinton's efforts to increase skills: a trust fund that would allow young people to receive financial aid for college in return for performing national service as teachers or police officers. Tsongas instead supports a plan where students could pay back college loans as a small percentage of their income over time. Such a plan is also one option under Clinton's proposal.

GOVERNMENT SPENDING AND THE DEFICIT: Overall, Tsongas--with his focus on increasing the pool of savings for investment--displays much more concern than Clinton about cutting the federal deficit. Though Clinton says he wants to limit growth in federal spending to the increase in per capita income, he has in fact advanced a number of new spending initiatives without fully explaining how they would be financed.

"To Tsongas' credit, he has come closer than any of the others in saying there is a real problem there with the deficit," said Van Ooms, senior vice president of the Committee for Economic Development, a business group.

Tsongas supports last year's budget agreement hammered out between the President and Congress; Clinton says it should be scrapped. And though he rarely discusses it, Tsongas proposes in the 86-page manifesto he still distributes at campaign events that cost-of-living adjustments in federal entitlement programs should be held down to 1% below the rate of inflation.

"It must be seen as patriotic to rally all of us to this cause," he wrote.

In a broad sense, Tsongas appears to see less value in public spending than Clinton. During a debate between the candidates last month, he belittled Harkin's proposal to increase public works spending, arguing that the money would be better directed toward private investment in a new factory. Clinton is more sympathetic to recent economic research that concludes increased public investment in the infrastructure is essential to increasing productivity in the private sector.

BUSINESS, LABOR AND THE ENVIRONMENT: Both men tend to side with business more than most Democrats, but Tsongas is more consistently sympathetic to industry than Clinton. Tsongas, for example, backs nuclear power more enthusiastically than any of the Democratic contenders--despite persistent sharp questions from environmentalists.

Similarly, Tsongas maintains that antitrust laws need to be loosened to allow U.S. companies to band together more easily to meet foreign competition; Clinton sees more value in tough antitrust enforcement to encourage competition. Among the Democratic contenders, Tsongas alone opposes legislation, prized by organized labor, to prevent companies from hiring permanent replacement workers during strikes.

On the other hand, Tsongas--except for his views on nuclear power--draws higher marks from many conservationists, who believe Clinton too often sacrificed environmental protection to economic development in Arkansas.

TAX REFORM: Another divergence is Tsongas' skepticism of proposals advanced under the banner of economic fairness. Asked at a rally this week about inequities in the tax code, Tsongas said he thought that efforts to bring "fairness" to the tax system have to wait until "we return to prosperity."

To a considerable extent, Clinton's record as governor reflects similar priorities: He paid for educational improvements by raising the regressive sales tax. But in the presidential campaign, Clinton has advanced more ideas under the banner of fairness--which tends to distance him from Tsongas.

"There is almost nothing in the Tsongas program on . . . the increasing inequality of income," said Jeff Faux, president of the Economic Policy Institute, a liberal think tank.

Tsongas has made one of the centerpieces of his campaign opposition to the middle-class tax cut favored by Clinton and Nebraska Sen. Bob Kerrey. He argues that the government cannot afford such a reduction because it would not increase productivity.

Conversely, Tsongas backs an increase in the gas tax, which Clinton opposes because the tax is regressive. And he rejects a plan favored by Clinton to limit the federal tax deductibility of extremely high corporate salaries.

"I would not put that into legislation," Tsongas said in the interview, "because there will be circumstances where . . . you may be asking someone to take on a very hazardous risk with a company, and you would have to have the capacity to give them an upside."

SOCIAL ISSUES AND FOREIGN POLICY: Tsongas is more in tune with traditional liberal Democratic views than Clinton on such issues. Clinton expresses unqualified support for capital punishment; Tsongas supports it only in a single instance--for major drug dealers.

On abortion, Clinton, though supportive of a woman's right to choose, believes that minors should have to notify either their parents, another responsible adult (such as a minister or school counselor) or a judge; Tsongas, also an abortion rights advocate, opposes any notification requirement.

On foreign policy, Tsongas tends to be more skeptical than Clinton concerning the projection of U.S. power abroad, and he is more deferential to international institutions. Unlike Clinton, Tsongas opposed the use of force against Iraq in the Persian Gulf War.

Similarly, in his campaign manifesto, "A Call To Economic Arms" Tsongas writes that "it is essential that any future military actions clearly have . . . United Nations supervision."

Clinton, though, argues that the United States must retain more freedom for unilateral action. "We should bend over backward not to take any military action without a broad base of support, hopefully through the (United Nations), but I don't think we are in a position to commit ourselves to act only through the U.N.," he said in the interview.

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