May The Best Plan Win

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Bill Clinton and Paul Tsongas are a far cry from traditional Democratic presidential candidates who stressed spending and aid for the poor. Instead, both have set their sights on long-term economic growth and the restive middle class. Apart from a sharp disagreement over the value of a tax cut for the middle class that Clinton supports and Tsongas opposes, the difference between them lies mainly in the contrast between Tsongas' tough prescriptions and pro- business leanings and Clinton's emphasis on training and education and seemingly greater willingness to tailor his message to the prevailing political mood. The strengths and weaknesses of their major economic proposals:

INCOME TAXES. Clinton has grabbed center stage with his tax-cut plans. But while shifting burdens from the middle class to the rich might make the tax system fairer, it would do little to stimulate the economy. Clinton would reduce the 15% and 28% rates to 13.5% and 26.5% and pay for the cuts by raising the top bracket from 31% to 38.5%. So the extra $350 a year -- or 97 cents a day -- that the plan gave the average family would simply come from the rich without creating new spending power. "This will not do anything in the long term to increase people's standard of living," says Nariman Behravesh, president of the Pennsylvania forecasting firm Oxford Economics. "It deals more with politics than with economics."

But the 10% tax cut is not the only arrow in Clinton's quiver. When combined with the child credit, he says, his program would save the average family with two children as much as $1,300. However, Clinton's promise to finance the credits partly through cuts in federal administrative costs sounds suspiciously insubstantial.

Tsongas, who would increase the tax rate on incomes of $200,000 or more, charges that if Clinton's boons for the middle class worked at all, they would merely stoke consumption rather than encourage savings and investment. Concurs Jeff Faux, president of the Economic Policy Institute, a liberal Washington think tank: "The No. 1 priority should be investment in resources that help the country produce efficiently." In rejecting Clinton's politically flashy but economically pallid proposals, Tsongas has a strong case and gets the better of the argument.

CAPITAL GAINS. Both candidates have ventured into traditional Republican waters just by offering capital-gains cuts, but Tsongas has taken a far deeper plunge. His plan, which calls for rates to decline the longer a stock is held, would cost about $5 billion a year, vs. $200 million for Clinton's proposal. For the money, Tsongas wants to encourage long-term investment in U.S. manufacturing while Clinton would funnel funds to start-up companies that could become hotbeds of jobs and new technologies.