Bob Dole may be 73, but he certainly knows how to liven up an election campaign. What was fast becoming a stuporous political exercise just weeks ago could now turn into an exciting debate on economic growth, prosperity, and how to achieve them. By framing his Presidential campaign in terms of tax cuts and trust--here are 15% cuts in income taxes, and trust me to find a way to pay for them--Dole promises to leave more money on the kitchen tables of anxious American households and balance the budget to boot. We like that idea, because if Dole is serious about tax and budget reform, he must force the nation to get serious about entitlement reform.

When it comes to cutting middle-class entitlements, we've all been cowards. Faced with the need to curb the rate of growth in Medicare and Social Security, kids can't face their parents, the elderly can't face their grandchildren, Democrats turn to demagoguery, and Republicans run for cover. We want to hold Dole to his word, and we trust him to be tough enough to face his own generation.

But first, Dole must level with us. The old deficit hawk who now embraces supply-side tax cuts knows perfectly well that the plan he enthusiastically proposed on TV doesn't compute. There is no way he can take entitlements off the table, cut $548 billion in income taxes ($406 billion from a 15% cut in marginal rates, $13 billion from cutting the capital-gains rate from 28% to 14%, $75 billion from a child tax credit, $27 billion from repealing a 1993 tax hike on Social Security benefits, and $27 billion from expanding IRAs and credits for education and training), and still balance the budget by 2002. This is pure campaign rhetoric. Even when he uses dynamic scoring and figures that the Treasury will get back up to 27% of lost revenues through higher economic growth, Dole can't finance his plan. He would have to take nearly $400 billion out of the small, discretionary part of the budget. In Dolespeak: "Can't be done. Bob Dole knows it. American people know it."

Entitlement programs--Medicare and Social Security being the largest and fastest-growing--eat up more than half the budget. In 1962, they accounted for less than 30% of the federal budget. Throw in interest on the debt left from the 1980s, and more than two-thirds of the budget is not at all discretionary: It's mandated. Even without a single tax cut, the rate of growth in these entitlement programs would have to be curbed if the budget were ever to be balanced.

People know this. Poll after poll, including the latest BUSINESS WEEK/Harris Poll, shows that the populace favors cutting spending and bringing down the deficit over blindly cutting taxes. But people think this way only in the abstract: They can't bring themselves to force Mom and Dad to end their fee-for-service medicine under Medicare and join HMOs, and they hesitate to cap Social Security benefits and the Cost of Living Allowance (COLA)--all of which would curb the growth in costs. And Mom and Dad sure as heck aren't volunteering to take less in order to help out their kids, much less their grandchildren, who will face enormous tax burdens.

The simple truth is that if Bob Dole's tax cuts are to be credible, he must find a credible means of financing them by cutting entitlements. What Dole should do is promise in advance to appoint a bipartisan commission on entitlement reform and pledge to abide by its recommendations. If he doesn't, voters will figure he's just as chicken as they are, and his tax cuts will only generate new deficits, higher interest rates, and lower economic growth.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE