June 23 (Bloomberg) -- Bill Clinton and George W. Bush never ran against each other. Their economic legacies are about to.

The 2008 presidential election will present voters with an economic choice between Bush-like tax cuts and support for private Social Security accounts -- positions embraced by John McCain -- and Barack Obama's calls for a return to a Clinton- era progressive tax structure and universal health care. Obama has even named a disciple of Clinton's Treasury Secretary Robert Rubin to direct his economic-policy team.

``Each candidate is hearkening back to the policies of these two predecessors,'' says Jim Leach, a former 15-term Republican congressman from Iowa who is now director of Harvard University's Institute of Politics. ``The edge on this goes to Obama, especially because of the economic and political morass we're currently in.''

The Clinton years were more prosperous than those under Bush. Gross domestic product growth in Clinton's term averaged better than 3.7 percent, compared with 2.4 percent in Bush's presidency so far. Incomes rose faster -- weekly earnings were up 6.4 percent, compared with 1.3 percent under Bush -- and Clinton left office with a $128 billion budget surplus, while the Congressional Budget Office projects a deficit of $357 billion for 2008.

For McCain, 71, the Arizona senator and presumptive Republican nominee, backing Bush-like policies is a way to solidify his support among orthodox supply-side Republicans who might be suspicious of his occasional maverick tendencies. So although he voted against Bush's 2001 and 2003 tax cuts, calling them too expensive and skewed toward the rich, he now wants to make them permanent.

More Relief

McCain would also add significant new tax relief of his own. He says he would scale back the alternative minimum tax, a levy originally aimed at wealthy Americans that, because it isn't indexed for inflation, is increasingly ensnaring the middle class; double the personal exemption for dependents to $7,000; and cut the corporate rate to 25 percent from 35 percent.

Obama's plan includes a $1,000 tax reduction for workers that would effectively eliminate all taxes for 10 million low- income Americans. The Illinois senator and likely Democratic nominee supports a child-care credit for poor families, and would roll back some of the Bush cuts that went to households with incomes above $250,000.

His plan is reminiscent of 1993 legislation signed by Clinton that reduced taxes for 15 million low-income families and implemented what the press dubbed a ``millionaire surcharge'' -- a 39.6 percent rate that applied to households earning more than $250,000.

`Back to the Future'

``Both their tax proposals have a back-to-the-future quality,'' says Leonard Burman, director of the nonpartisan Tax Policy Center in Washington. ``McCain would extend President Bush's tax cuts and lower marginal tax rates on companies, and Obama's list of targeted tax breaks would have looked perfectly at home in one of President Clinton's budgets.''

Neither of their proposals would pay for itself. Revenue flowing into the Treasury would decline by $3.7 trillion over 10 years under McCain's plan, while Obama's would bring in $2.7 trillion less, Burman's group says.

The gap would narrow if their overall economic programs were considered, because Obama would likely spend more than McCain. Clinton's first four budgets resulted in deficits and his last four generated surpluses. Bush has relied on deficit spending in every year of his presidency.

Fixing Social Security

Obama, 46, and McCain disagree over how to fix Social Security, the pension system that is projected to run out of money by 2041. McCain, like Bush, favors letting workers put some payroll-tax money into individual investment accounts. Negotiations between Bush and Congress in 2005 over a possible solution to the funding shortfall collapsed because of Democratic resistance to Bush's plan for private accounts.

``It's broken, and we've got to fix it,'' says McCain, adding that he ``will not privatize Social Security.''

Obama said last week that ``John McCain's ideas on Social Security amount to four more years of what was attempted and failed under George Bush.'' His plan for shoring up the system would apply the payroll tax, currently 6.2 percent on incomes up to $102,000, to incomes above $250,000. Incomes between $102,000 and $250,000 wouldn't be taxed. Obama also promises to ``protect'' Social Security from privatization.

Criticism From a Clinton

During the battle for the Democratic nomination, Obama's principal opponent, New York Senator Hillary Clinton, criticized his health-care plan for leaving some Americans uncovered; his proposal would rely less on the federal government than did the one she and President Clinton attempted to put in place in 1993.

Still, Obama vows to get every American access to health insurance, at a cost of at least $65 billion a year. He would require parents to insure their children and large employers their workers, and help low-income households buy insurance.

McCain proposes insurance-market deregulation, along with tax credits, to extend coverage to the 47 million uninsured Americans. He would also give low-income families money to buy insurance, and lift the tax break for employer-provided insurance to move it away from the workplace, as Bush proposed last year.

Not Carbon Copies

To be sure, the candidates aren't carbon copies of Clinton and Bush. Obama took a turn against trade by promising to renegotiate the North American Free Trade Agreement, a highlight of Clinton's tenure. Americans have soured on trade since Clinton left office: In a May Bloomberg/Los Angeles Times poll, 50 percent of respondents said trade hurt the economy, while just 30 percent held that view in a 1997 Los Angeles Times poll.

McCain, meanwhile, plans to address global warming, which Bush has avoided because of the economic cost. And with the U.S. economy barely growing and inflation on the upswing, Douglas Holtz-Eakin, McCain's top policy adviser, prefers to draw a comparison with a Republican president other than the current one.

``Dating to Ronald Reagan, low taxes, free trade and domestic competition through deregulation have been hallmarks of an economy that has grown rapidly,'' says Holtz-Eakin, 50.

Similarly, Obama's team plays down the similarities between its proposals and Clinton's policies.

``The challenges we face today are different from the challenges of the 1990s,'' says Jason Furman, an economist who worked in the Clinton administration and was named Obama's economic-policy director on June 9.

A Rubin Associate

Furman's appointment angered some Democrats because of his association with Rubin, a former top Goldman Sachs & Co. executive who steered Clinton toward fiscal discipline and free trade. After leaving the Treasury, Rubin, now chairman of Citigroup Inc.'s executive committee, founded the Hamilton Project, a policy-research group that Furman headed.

Furman, 37, wants to capitalize on Clinton's two terms. ``Those who say higher taxes on the most fortunate Americans will destroy the economy should take a close look at the last time it happened and the 23 million jobs that followed,'' he says.

Returning to the policies of recent presidents presents risks to both candidates, says Greg Valliere, chief political strategist at Stanford Group Co. in Washington.

``Hillary Clinton learned in the Democratic primary that recalling the Clinton White House years wasn't as effective as she hoped,'' Valliere says. ``But it's far riskier for McCain, since reminding voters of the Bush years is a minefield.''

To contact the reporters on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net.

Last Updated: June 22, 2008 19:00 EDT