Democratic Rivals United on Issues, Divided on Style : Politics: Clinton and Tsongas see many of the same problems, but their solutions form the dividing line.

The two leading Democratic presidential contenders--Arkansas Gov. Bill Clinton and former Massachusetts Sen. Paul E. Tsongas--offer a paradox: The two agree on most specific issues yet differ fundamentally in their philosophies and approaches to government.

The high-decibel media campaigns both sides have waged only underline that paradox. Each camp has accurately accused the other of exaggerating minor differences to score political points. At the same time, despite the exaggerations, the charges and countercharges have given voters an essentially accurate picture of the basic differences between the presidencies that either man might run.

Both candidates--and former California Gov. Edmund G. (Jerry) Brown Jr., as well--reject much of what used to constitute Democratic dogma on economic policy. That unanimity highlights a fundamental shift in the party’s approach toward economics--a move away from income redistribution and toward overall economic growth.

At the same time, all three sharply disagree with President Bush on the role of government in the economy. Bush advocates an essentially passive role while the three Democrats urge expanded government involvement in forming a “national strategy” for competing against Japan and Western Europe.

All three Democrats also differ from Bush almost across the board on social policy. Each of the Democrats embraces the social liberalism that forms the core of the party’s approach to issues as varied as abortion and civil rights, although they differ on some questions, such as the death penalty, which Clinton supports, Tsongas supports in only a few cases and Brown opposes.

Social issues, however, have taken a back seat in the campaign to debates over economic policy. In that realm, the clearest examples of the similarities and differences among the candidates are in the area of taxes.

All three Democrats--and Bush as well--agree that the tax system should be changed to encourage investment for economic growth, a position that many liberal Democrats have rejected in the past because investment incentives inevitably provide most of their benefits to the wealthy, who have money to invest.

Bush for several years has pushed for an across-the-board reduction in capital gains taxes, which are paid on the sales of capital assets, such as stocks, bonds or property.

Tsongas also has made a capital gains cut a central part of his campaign. But he would allow the cut only for taxpayers who sell a capital asset after holding it for several years--a move compelled by his strongly held belief that government must encourage investors away from short-term thinking that he feels has hurt American competitiveness. In addition, Tsongas has pledged to increase taxes on upper-income taxpayers to make up for any revenue that his capital gains tax cut would lose. Bush consistently has vowed to veto any upper-income tax increase.

Clinton has attacked Tsongas’ capital gains tax cut plan, saying it resembles Reagan-era “trickle down economics.” And, indeed, Tsongas accepts the central premise of President Ronald Reagan’s tax policies--that investment incentives will lead to economic growth, which, in turn, will provide jobs for lower-income Americans.

But Clinton too has accepted at least part of that premise. He too has proposed a reduced tax for at least some capital gains. In his case, however, the benefit would go only to those who start a new business. Those who buy and sell existing stocks--a much larger group than those who start businesses--would benefit under either the Bush or the Tsongas plans but would receive no benefit from Clinton’s plan. Clinton also would raise taxes for wealthy Americans, proposing a new 35% tax bracket for couples earning more than $200,000 a year.

He also advocates indexing of capital gains to compensate for inflation. Many tax experts support such a move, arguing that it is unfair to tax someone for a gain that is simply inflation. However, if the inflation rate increases, such a move could cost the government substantial revenue.

Brown agrees with the basic argument but has proposed a dramatically different plan, a flat-rate tax that would sharply lower income tax rates. A chief reason for the plan, he said in a recent interview, is to increase economic efficiency. “As you generate more wealth, you’ve got more to work with,” he said.

The tax debate may be the key to understanding the differences among the candidates.

The capital gains cut, for example, is central to Tsongas’ vision for the future. Among the biggest problems the economy faces, he has said repeatedly, is the lack of venture capital for new businesses. “The Great American Dream is by men and women in small garages that have great ideas,” he said during a candidates’ debate in Dallas. Right now, “there is no capital for them to grow their companies.”

For Clinton, by contrast, the capital gains cut is something of a tag line--a proposal that he added to his basic economic plan but not one on which he usually places great emphasis.

In Clinton’s world view, education and training take the central economic position that venture capital provides for Tsongas. “We need to invest more in education and training of the work force,” he said in the Dallas debate. “If you look at the way the world works, money’s mobile, management’s mobile. All we’ve got in this country is our people, our infrastructure and the natural resources God gave us.”

Brown, for his part, has taken on the role of critic of the entire government system, saying that the system has been corrupted by the power of big money. His proposals all have at their root a desire to take on what he sees as the nation’s powerbrokers.

The difference in emphasis between the two front-runners--Clinton and Tsongas--reflects the advisers to whom the two men listen. More importantly, it reflects their different life experiences--Clinton’s as a governor of a poor Southern state who became convinced that the key to improving Arkansas’ economy was to improve its education system and Tsongas’ as a lawyer and corporate director working with high-technology start-up businesses in Massachusetts.

The difference also reflects a large gap in the view the two men have of government and its role. Both believe--unlike Bush--that the government has a responsibility to set an overall economic strategy for the nation. Each points to the success of Japan as proof that a free-market economy can prosper, and in fact will prosper more if government provides guidance to the economy.

Bush, by contrast, accepts the traditional conservative premise that government involvement in the economy merely creates bureaucratic inefficiency. His Administration strenuously has avoided any move toward an overall government planning role.

But while Tsongas and Clinton accept the need for an overall national economic plan, Tsongas is much more skeptical about the efficiency of government. Government’s role, he often says, is to set an overall “climate,” then leave corporate entrepreneurs to do the rest. He often comments on the inefficiency of government, saying sarcastically during debates on health care policy that for people who believe “government is cost-efficient . . . we have counseling outside.”

Clinton, by contrast, having spent a lifetime working in government, believes strongly in the ability of the political system “to change people’s lives.” Few pastimes engage him more than the search for a policy that can address a pressing social problem. And Clinton insists that government can be made more efficient and more responsive to citizens. The task for Democrats, he says, is to reform the way government works and move away from the bureaucratic systems of the past.

“If we Democrats are to be the party that believes in government, we have to be the party of government reform,” Clinton argues.

By contrast to the debate over economic policy, the Democrats have been far more unified on other policy questions and far more sharply separated from Bush.

On abortion, for example, Bush repeatedly has said he wants to see the Supreme Court’s Roe vs. Wade decision overruled and pledged in his 1988 platform to appoint judges who would achieve that goal.

All three of the Democratic candidates, by contrast, support abortion rights. Clinton supports laws that would require girls under the age of 18 to notify some adult, not necessarily a parent, before having an abortion. As governor, he signed into law an Arkansas statute that required minors to notify either a parent or a judge.

Bush also has made an issue of his opposition to what he calls “quotas” in hiring, promotions and other employment decisions. All three of the Democrats have attacked Bush on that, saying he has used the quota issue as a veiled way of exploiting racial divisions in the country.

All three Democrats also support legislation to mandate universal health care coverage, which Bush opposes. Brown supports a system similar to the one in Canada, under which the government would pay all health care bills. Health care priorities and budgets would be subject to a “democratic vote,” he says.

Clinton and Tsongas, by contrast, support keeping private insurance but would require employers either to provide coverage to all workers or pay into a government fund that would provide insurance to the rest of the population.

The Democrats also all support deeper defense cuts than Bush has proposed. Clinton has made the most specific list of his plans, giving a lengthy speech last December that outlined a defense budget somewhat smaller than Bush’s. Brown has advocated the most sweeping reductions, calling for a 50% cut in defense spending over the next five years. Tsongas has generally avoided specific discussions of the issue, saying he would cut more than Bush but not saying precisely how much or where.

On the environment, all three have pledged to oppose Bush’s plan to open the Arctic National Wildlife Refuge to oil drilling, each has called for the United States to take a more active role in drawing up international agreements to forestall the threat of global warming, and all three have attacked the Administration’s attempt to slow down regulations that have been drawn up to implement the 1990 Clean Air Act.

The one environmental matter that has become an issue so far in the campaign has important symbolic value but little effect in the real world. Both Clinton and Brown have criticized Tsongas for supporting nuclear power. Tsongas, for his part, at times has tried to fuzz his position on the issue.

Tsongas has supported nuclear power for more than a decade, writing in his campaign booklet, “A Call to Economic Arms,” that “there must be a major base-load energy capability that is sustainable. Inevitably that capability has to be nuclear.” Nuclear power, he argues, carries far fewer environmental risks than either oil or coal, both of which aggravate the “greenhouse” phenomenon that many environmental scientists believe may lead to a disastrous warming of the Earth’s climate.

The safest way to maintain that capability, he wrote, would be to develop a new generation of small 300-500 megawatt nuclear reactors to replace the 1,200 megawatt plants now in place.

Reaching that decision “remains the most difficult and uncomfortable policy position I have ever taken,” he wrote, but “more than a decade later, I still feel the same way.”

But when the issue arose during the primary in Colorado, a state with a strong anti-nuclear environmentalist constituency, Tsongas angrily accused Clinton of telling “a lie” when Clinton said Tsongas’ plan would require building many new nuclear reactors.

Nonetheless, despite the considerable heat over the question, no U.S. utilities have plans to build nuclear reactors. Regardless of who wins the next presidential election, that is not likely to change.

Where the Democrats Stand

Here is a rundown of the views of the three major Democratic candidates on the key issues. ECONOMIC ISSUES:

Income Taxes

Jerry Brown: Replace most current federal taxes with a 13% flat-rate income tax and a 13% value-added tax.

Bill Clinton: Cut current 15% and 28% tax brackets by 10% each to help low and middle-income taxpayers. Raise taxes to 35% on those making over $200,000.

Paul E. Tsongas: Raise rates for upper-income taxpayers.

Business taxes

Jerry Brown: Flat tax would offer no deductions for investments.

Bill Clinton: Targeted investment tax credit plus capital gains cut for those who start a new business.

Paul E. Tsongas: Across-the-board cut in capital gains tax for investments held more than five years. Expanded research and development credit.

Energy taxes

Jerry Brown: Eliminate federal gasoline tax.

Bill Clinton: No change.

Paul E. Tsongas: Increase federal gasoline tax 3 to 5 cents annually.

Trade

Jerry Brown: Opposes fast-track negotiations for Mexican free trade.

Bill Clinton: Supports Mexican free trade negotiations.

Paul E. Tsongas: Supports Mexican free trade negotiations.

Budget Deficit

Jerry Brown: Constitutional amendment to require balanced budget.

Bill Clinton: Cap overall federal “consumption” spending. Reduce spoending on federal personnel and overhead 3% annually.

Paul E. Tsongas: “Flexible freeze” to cap overall spending.

Labor

Jerry Brown: Support law to forbid businesses from hiring permanent replacements for strikers.

Bill Clinton: Support law to forbid businesses from hiring permanent replacements for strikers.

Paul E. Tsongas: Opposes striker replacement law.

DEFENSE:

Troop Strength

Jerry Brown: Cut defense 50% over five years. Remove all U.S. troops from Europe.

Bill Clinton: Cut budget 30% over five years. Cut U.S. troops in Europe to 100,000.

Paul E. Tsongas: Cut troops in Europe to 50,000-90,000.

ENVIRONMENT:

Nuclear Power

Jerry Brown: Eliminate all nuclear power plants in 10 years.

Bill Clinton: Leave current nuclear plants but build no new ones.

Paul E. Tsongas: Build small nuclear plants to replace current plants.

Wetlands

Jerry Brown: Reverse Bush plan that would reduce wetlands protection.

Bill Clinton: Reverse Bush plan but provide some new leeway for wetlands already used for agriculture.

Paul E. Tsongas: Reverse Bush plan.

Global Warming

Jerry Brown: Support international treaty to limit emissions of greenhouse gases.

Bill Clinton: Same.

Paul E. Tsongas: Same.

Energy Conservation

Jerry Brown: Require utilities to spend $600-$700 billion for conservation over next 15 years.

Bill Clinton: Change regulations to encourage utilities to invest in conservation.

Paul E. Tsongas: Allow higher profits for utilities that conserve.

SOCIAL POLICY:

Abortion

Jerry Brown: Favors abortion rights.

Bill Clinton: Favors abortion rights, supports laws to require minors to notify an adult before abortion.

Paul E. Tsongas: Favors abortion rights.

Death Penalty

Jerry Brown: Opposed in all cases.

Bill Clinton: Supports.

Paul E. Tsongas: Supports for major drug crimes, killing of police or judges, not other murders.

Health Care

Jerry Brown: Support government-run system such as Canada’s.

Bill Clinton: Require employers to provide insurance or pay into government fund to guarantee universal coverage. Reform insurance market to control costs.

Paul E. Tsongas: Require employers to provide insurance through system of “managed care.”

OTHER:

Jerry Brown: Term limits: Eliminate large campaign contributions. Impose term limits on office holders.

Bill Clinton: Welfare reform: National fund for college loans to be paid back through tax withholding or through two years of national service. Welfare reform to provide training and child care, then require all able-bodied recipients to work after two years.

Paul E. Tsongas: Business reform: End corporate quarterly reports and limit stockholder lawsuits to encourage long-term planning.