Tax Debate: Read My Lip Service

"Taxes are out of whack," said Max B. Sawicky, an economist with the institute, who notes that taxes relative to gross domestic product haven't been this low since the 1950s. That means, he said, the nation is paying "Ozzie and Harriett"-era taxes to support a much bigger 2004 budget.

Both Bush and Kerry have indicated they would like to balance the budget in 10 years, but this is almost impossible, said Sawicky. It would mean that once defense, entitlement programs such as Social Security and Medicare and interest payments were paid, 89% of other federal programs, such as education, environment, housing and agriculture, would have to be cut.

"The reality is," Sawicky said, "that the federal government will need to accept a combination of moderate deficits, cuts in defense and entitlements, and tax increases, all options that no politician seems prepared to face today."

Despite Bush's fervor for tax cuts, some observers believe that if the president is re-elected, he'll be forced to beat a tax retreat just as Ronald Reagan and his father did before him.

Although cutting taxes to stimulate the economy was the cornerstone of Reagan's first term in office starting in 1980, ballooning deficits led his administration to raise taxes in his second term.

During the 1988 Republican Convention, George H.W. Bush uttered the famous promise: "Read my lips: No new taxes." Within two years, however, he had agreed to a 5-cent increase in gas taxes. At first he first refused to call it a tax, but later did, apologizing during his losing campaign against Bill Clinton.

"They came to grips with the fact that supply-side economics doesn't work all that well," said Baumohl. Supply-side economics focuses on tax reductions, especially among the wealthy, to increase investments and stimulate the economy.