(FORTUNE Magazine) – IN NEW HAMPSHIRE, where the February 18 primary is fast approaching, there is only one political issue: the sputtering U.S. economy. Now that Mario Cuomo has made his to-be-or-not-to-be decision, Democratic voters are looking to the surviving contenders for a compelling solution. To most, the candidates' messages are as distinct as barns in a blizzard. To clear the air, FORTUNE spoke with the three apparent front-runners as of now -- Arkansas Governor Bill Clinton, Nebraska Senator Bob Kerrey, and Iowa Senator Tom Harkin -- and found some surprisingly sharp distinctions. All three deride the broad supply-side tax cuts of the 1980s as Republican snake oil that ballooned the deficit and unfairly burdened the middle class rather than spurring investment and growth. Instead, they all call for productivity- boosting public investment in infrastructure and human capital. Where they differ dramatically is over how much to spend, exactly what to spend it on, and how to pay for it. They also disagree on what to do about the trade deficit. Their positions:

BILL CLINTON The fifth-term governor of Arkansas, 45, believes the way to return the economy to a high-growth path is to increase public and private investment that helps people become more productive. Says the boyish-looking former Rhodes scholar: ''We need a new economics that empowers people, rewards work, and organizes America to compete and win again.'' -- Taxes. Clinton would give the middle class a break by cutting the two lower income tax brackets from 15% to 13.5% and from 28% to 26.5%. He would pay for those cuts by adding a new 38% top rate for couples earning more than $200,000 a year and for single people with incomes over $120,000 (the top bracket is now 31%). He is also considering prohibiting companies from deducting from their taxes anything they pay a corporate chieftain that's more than, say, 20 times what the poorest-paid worker earns. Says Clinton, whose salary is $35,000 a year: ''It's not to soak the rich, but to return to basic fairness.'' He would index capital gains and make permanent the R&D tax credit that is to expire this year. He favors at least two tax breaks designed to stimulate small business -- a tax credit for investment in plant and equipment, and a 50% cut in the capital gains tax on investments in new enterprises if the taxpayer holds on to his stake longer than five years. -- Spending. Clinton would try to shift federal spending toward public investment by replacing the government's accounting system with three separate budgets. A ''past'' budget would cover interest payments on the national debt. A ''present'' budget would include current outlays; except in recessions, its growth would be limited to the rate of change in personal income in the previous year. A ''future'' budget would include long-term investments in infrastructure, R&D, education, and training, where borrowing can be justified as a strategy for creating wealth. He would double the share of the federal budget now invested in the future to 18%, or $260 billion in fiscal 1992. For education, where he has been one of the nation's leading innovators, his proposals are comprehensive. Among them: preschool for every needy child, job apprenticeships for the noncollege bound, literacy training, and guaranteed college tuition for qualifying students -- to be repaid in cash or with national service. Clinton would also require companies to invest something like 1.5% of payroll in training for all their workers. He would begin to finance all that by cutting back on unnecessary defense programs, saving $200 billion over six years. He would trim some $6 billion a year by shaving administrative budgets and loosening civil service work rules so managers can deploy federal employees better. While he has not unveiled a health care blueprint, he promises to enact a cost-saving plan during his first year in office. Says Clinton: ''Improving energy efficiency, controlling health care costs, and defense savings are the three silver bullets for the economy.'' -- Trade. Clinton supports President Bush's drive to set up a North American free-trade zone and to liberalize trade through GATT. He favors using pressure to open up restricted markets and wants to make it easier for the President to retaliate against countries such as Japan that have big trade surpluses with the U.S.

BOB KERREY A Vietnam veteran who lost part of his right leg in a fire fight, the Nebraska Senator, 48, conveys an intense faith in the power of government to help people. He has proposed a universal health care plan that would dramatically increase the size and cost of government. He also advocates an industrial policy, a prescription most Democrats have avoided as too interventionist. Says Kerrey, who built his own restaurant and health club businesses before entering politics: ''I'll declare what the key industries are and let somebody argue with me. I think they should be agriculture, consumer electronics, machine tools, computers and computer software, materials, steel. But you could add to the list, or subtract.'' -- Taxes. Federal taxes would skyrocket under Kerrey. Were his health plan implemented in 1991, he says, federal spending would have risen $236 billion, or 16% -- paid for by higher taxes. He would increase the top personal income tax rate from 31% to 33%, impose an added 2% tax on nonwage income, and expand the Social Security tax base from $53,400 a year to $125,000. The top corporate income tax rate would rise from 34% to 37.4%, and payroll taxes would jump from 7.65% to 11.65%. Kerrey argues that federal and state governments can hold down health costs and ration services more effectively than many thousands of private employers do now. While employees and employers would pay more in taxes, they would spend little or nothing for direct health care bills. Overall, the Senator estimates, his plan would be efficient enough to save Americans $150 billion over the next five years. In the long run, Kerrey would consider a value-added tax. In the short term, he supports indexation of capital gains and a ''muscular'' net investment tax credit, say, 20% for anything a company invests that's more than 90% of its average annual capital spending over the previous three years. -- Spending. Like Clinton, Kerrey would increase public investment in infrastructure, technology, and education. To do so, he would cut defense spending by 30% to 40% over the next ten years. He would also streamline government by reducing the number of congressional committees 75%, trimming their staffs 30%, and halving the number of Cabinet posts. -- Trade. Kerrey voted to give Bush fast-track negotiating authority for a North American free-trade agreement. But, like Clinton, he promises to be more aggressive in fighting to open markets abroad. He has called for a multilateral trade organization with strengthened powers to put an end to protectionist practices. And he would demand that the Japanese devalue the yen, using as leverage the threat of closing U.S. markets to their goods.

TOM HARKIN The combative son of an Iowa coal miner, Harkin, 52, is the 1992 campaign's most unabashed New Deal liberal. Recalling old Democratic heroes like Franklin Roosevelt and Harry Truman, give-'em-hell Tom would revive the economy through massive federal investment in public works and human resources. ''After World War II, our debt was 120% of our gross national product,'' says the Iowa Senator. ''Harry Truman probably wasn't a great economist, but in his gut he knew what he had to do. He said we're going to build highways and pay everyone's way through school. My God, the Republicans howled. The debt's too high! We can't afford it! But Truman understood you've got to put people to work and get the economy growing. He had the guts, and look what it did for America.'' -- Taxes. Harkin assails Democratic proposals for middle-class cuts as mere symbolism: ''A $300, $350, $400 a year tax break to a family is a dollar a day,'' he says, slicing the air with a greenback. ''It's a joke. It doesn't do anything to stimulate the economy.'' Likewise, he dismisses capital gains cuts and broad investment tax credits as giveaways to business and the rich. About the only such credit he would consider is for investment in new U.S.-made equipment and technology. -- Spending. Harkin argues that investing in infrastructure is the key to increasing productivity. He would spend $40 billion to $60 billion annually for several years to rebuild roads, bridges, sewers, and the like. Says he: ''That's big money you're putting into jobs. You buy American steel and American products. You use American labor. The multiplier effect is tremendous.'' He says he would save some $400 billion over ten years by cutting defense spending in half. But unlike Clinton and Kerrey, Harkin -- who gets campaign contributions from the health insurance industry -- is not talking about comprehensive health care reform. Before undoing the current system, he would look for savings by investing in preventive care. Says Harkin with Keynesian zeal: ''I don't believe we have to batten down the hatches and take a lower living standard while we pay off the deficit a little bit at a time. If we get our economy growing again, we can pay it off or make it such a small part of our economy that it doesn't worry us any longer.'' $ -- Trade. Harkin is by far the most protectionist of the front-runners. His ambitious goal: to eliminate the U.S. trade deficit over four years. A longtime friend of unions, he opposes a U.S.-Mexico free-trade zone, contending that it would cost American jobs. He supports labor's call for a system of managed trade that would apply import curbs to countries that fail to meet U.S. trade deficit reduction goals. As he proudly told the AFL-CIO convention in Detroit: ''When I'm President of the U.S., every double- breasting, scab-hiring, union-busting employer in America will know that working people in America have a friend in the White House.''