Do you want me to tell you what you want to hear or tell it like it is? -- Um, maybe the former since it is election season -- The deficit; Part III

Last month we had a post on 8-25-04 entitled "Please, pretty please: We know you feel compelled to talk the talk, but please Sen. Kerry, when elected, walk the walk -- the deficit; Part II" and one on 8-16-04 by the same title.

These posts reviewed how both Mr. Kerry and Mr. Bush are glossing over major omissions in their stated plans and goals of reducing the deficit.

I didn't major in economics, but I understand why David Stockman, President Reagan’s first budget director, said what he said that earned him a trip to the woodshed (“Lunch with the president was more in the nature of a visit to the woodshed after supper.”).

Although not be an economics major, it seems obvious -- you can cut spending and raise taxes, or you can cut taxes and raise spending. But you can't raise spending and cut taxes and reduce the deficit at the same time. Come on guys, Americans didn't fall of turnip trucks.

An AP article dated 9-5-04, AP veteran Washington reporter Tom Raum says it in a nice way with the understatement headline:

Next President to Face Pressure on Taxes

At their national convention, Republicans were short on specifics on how to pay for an economic agenda in a second Bush administration. One reason is that President Bush could end up having to back a tax increase, just as his father did.

"Taxes are going up next year no matter who wins the presidency in November," concluded conservative economist Bruce Bartlett, who advised both Ronald Reagan and the first President Bush.

"It's out of the hands of politicians," Bartlett said.

The annual $400 billion deficit leaves little room to maneuver. The shortfall was exacerbated by two earlier tax cuts that Bush pushed through as well as rising costs for Iraq, Afghanistan, homeland security and a major expansion Medicare.

Furthermore, the Federal Reserve has embarked on a course of raising interest rates from their recent 40-year lows. Higher interest rates combined with a continued weak dollar will put more pressure on the government's balance sheet.

Both Bush and Kerry have said they would cut the deficit in half in four years; neither has spelled out that would happen.

Bush still is on track to become the first president since Herbert Hoover in the Great Depression to lose jobs under his watch. Today, there are about 1 million fewer jobs than when Bush moved into the White House.

Kerry aides are quick to put a negative spin on every new piece of economic data. For instance, they claim job losses under Bush total 1.6 million. But the Democrat's advisers only count private-sector jobs, ignoring the hundreds of thousands of government jobs created under Bush.

Polls do show voters are wary of Bush's handling of the economy, even as his numbers have risen recently in categories such as protecting the nation.

At the convention, Bush was silent on how to pay for any of his second-term proposals.

"A presidential election is a contest for the future," Bush told the party faithful. But on the economic front, most convention speakers could not help but look back to what Vice President Dick Cheney celebrated as "the greatest tax reduction in a generation."

Republicans like to suggest that Bush is following in the path of Reagan, who pushed through Congress the then-biggest tax cut in U.S. history in 1981.

What they usually neglect to mention is that the following year, Reagan reluctantly signed one of the biggest tax increases in history.