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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.


MANCHESTER, N.H. — 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.

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