(MONEY Magazine) – President Clinton and challenger Bob Dole agree on one thing this year: Whoever convinces you that he can put more cash in your pocket over time has the best chance of collecting your vote. So brace yourself for an unrelenting political promise-a-thon largely revolving around economic issues, which will be backed by at least $100 million in advertising. To help you separate the plausible from the puffery, MONEY's Washington, D.C. bureau, led by Teresa Tritch, recently spent three weeks crisscrossing the country interviewing the two leading candidates' most influential advisers as well as a number of independent experts. We topped off our reporting by questioning the President about his economic record for 40 minutes in the Oval Office in late August. (Dole--and the Reform Party's Ross Perot--declined requests for similar in-depth interviews.) You can read much of what we learned, plus excerpts from the revealing Clinton interview, in "The Candidates and Your Wallet" on page 82. And after listening to both camps' conflicting claims about economic issues, we also decided to help you sort out the meaningful from the misleading by presenting the facts behind some of the sweeping rhetoric you will be hearing between now and Nov. 5.

DOLE: I'm going to cut your taxes by 15% and balance the budget.

What Dole isn't spelling out on the stump is that his promise to slash tax rates by 15% is an interim plan that he intends to supplant after only about two years with a thorough restructuring of the tax code--what he refers to, with few specifics, as a "flatter, fairer, simpler" system. So why all the emphasis on 15%? It's good politics. It appeals to voters, while energizing his Republican campaign workers and others who believe lowering taxes will lift economic growth. A key Dole adviser, Stanford economics professor John Taylor, said the former senator does not intend to stick with the 15% cuts until he balances the budget in 2002 and added that the plan's economic impact was projected out over six years to make the cuts "credible." Sen. Robert Bennett (R-Utah), who has Dole's ear on tax policy, underscored that point. "What Dole has proposed," he said, "is the 15%, plus the kiddie cut, plus the capital gains, etc., for about two years, at which point he says we will then move to have a complete restructuring of the tax code." Bennett added that he is "willing to swallow the kiddie cut, or whatever it is, because it's not going to be all that damaging or expensive in that relatively short period of time."

The senator went on to compare Dole's commitment to reforming taxes to candidate Richard Nixon's winning assertion during the 1968 presidential campaign that he had a secret plan to end the Vietnam war. In that analogy, Dole's 15% tax cut is his "short fix" and his sketchy "flatter, fairer, simpler" system is his secret plan. "We're talking about restructuring the nation's basic tax system from top to bottom," Bennett said, "and you don't do that in a campaign document."

CLINTON: While Dole's 15% plan will blow a hole in the budget, our targeted tax cuts are paid for.

The President's budget plan starting in fiscal year 1997 eliminates the annual budget deficit by 2002 while providing $111 billion in tax cuts aimed at the middle class--including $58 billion for a $500-per-child credit, $43 billion for a $10,000-a-year tuition deduction and a $1,500-a-year college tax credit plus $8 billion for an expanded Individual Retirement Account. That's far different from Dole's massive $548 billion across-the-board plan.

Problem is, many serious economic analysts say neither candidates' numbers add up. Dole's more aggressive idea to "bet the country" on massive tax cuts, as he put it, could produce an estimated $392 billion deficit by 2002. But even Clinton's restrained approach could yield a shortfall, unless virtually all of the Democratic Administration's assumptions about the economy over the next six years come true. Therefore, to ensure that Clinton's budget will balance, the Administration's package specifies a number of contingency alternatives. One states that if the deficit in the year 2000 is not at least $20 billion below the Congressional Budget Office initial estimate for that year, then most of the tax cuts will be reduced or rescinded.

What this means is that the Administration's claim about its tax cuts being fully paid for should include this warning: If we can't pay for them, you may not get them.

DOLE: We'll be able to slash spending because I'll have the line-item veto and we'll pass the balanced-budget amendment.

Not so fast. Neither the veto that the next President will get for the first time in history nor the amendment is the all-powerful tool Republicans make it out to be.

Up close, the line-item veto looks more like a butter knife than a sword. On the tax side, the President can use it only on so-called limited tax benefits passed by Congress, which it defines generally as tax deals that benefit no more than 100 taxpayers (including 100 corporations). As a consequence, the line-item veto works best on the pointed special-interest breaks congressmen try to slip into law when nobody's watching.

Turning to spending, as a practical matter, about all the President could do is wipe out funky projects like, say, the Lawrence Welk museum. That's because the veto can be used only on new spending. Moreover, the larger the size of a new spending initiative that passes Congress, the greater the likelihood that the proposal would have broad bipartisan support. That support would make it politically difficult for the President to veto it. Even if the President is tempted to break up such a deal, legislators could outflank him by inserting language in the bill exempting it from a line-item veto. In addition, Congress could reject any presidential line-item veto by passing a "disapproval" law with a simple majority, thereby forcing the President to either fold or veto the disapproval law as well.

"The line-item veto could have a deterrent effect on the little things," says Rick Grafmeyer, Ernst & Young's national director for tax legislation. "But it won't touch the real money."

The balanced-budget amendment is no cure-all either. The amendment, which presumably would call for balance by 2002, would not become law until 38 states ratify it, and they have seven years to decide. Proponents insist the amendment would sweep through the states in two years. Maybe so. Maybe not. But even after it became law, Congress could still suspend it with a three-fifths vote in each chamber if, say, we slipped into a recession.

CLINTON: We cut at least some middle-class families' taxes.

Back in New Hampshire in 1992, candidate Clinton's mantra was: "It starts with a tax cut for the middle class." Once in office, however, the President said he shelved the broad tax cut because he learned the deficit threatened to balloon beyond $300 billion a year. Yet he insists that he made a "down payment" on the middle-class cut by expanding the earned income tax credit to 5 million new taxpayers and increasing the amount of the credit for another 10 million working people.

In his interview with MONEY, the President said: "We doubled the credit, which this year will be worth about $1,000 in lower taxes to families of four with incomes up to $28,000. Now that's not the whole middle class....But that's a significant down payment."

However, our analysis suggests that characterizing the credit as a middle-class tax cut is a stretch. To collect a $1,000 credit, the family of four must earn no more than $23,746 in 1996. The credit also phases out sharply, down to a mere $100, as the family's income reaches $28,020, and it disappears entirely at $28,495.

The bottom line: The earned income tax credit helps lower-income working families. That's nothing to be ashamed about. Nor is it anything to brag about as middle-class relief.

DOLE: President Clinton signed the biggest tax increase in history.

Following President Reagan's 1981 tax cut, his '82 tax increase, which Dole championed and voted for, topped Clinton's '93 law by more than 19% adjusted for inflation, $269.8 billion to $226.2 billion. Economists also compare taxes as a percentage of the nation's gross domestic product. And again, on average, Reagan's tax increase at 0.96% of GDP dwarfs Clinton's at 0.68%. "Either way you look at it," says the Tax Foundation's senior economist Arthur Hall, "the Reagan tax increase is larger than Clinton's."

CLINTON: The Republicans tried to destroy Medicare. We saved it.

Although the President vetoed last year's G.O.P. budget that would have reduced Medicare spending by $226 billion, he has not saved Medicare. Without broad reform, the so-called Part A trust fund that covers hospital bills will become insolvent in 2001, and overall Medicare spending will soar nearly 50% over the next decade to account for 3.8% of the GDP, up from 2.6% now.

Furthermore, the President's own long-term budget plan that starts this month calls for Medicare cuts totaling $124 billion over six years, compared with the G.O.P's $168 billion. Even at that magnitude, however, Clinton's cuts are just a stopgap. According to CBO estimates, the President's plan would postpone Medicare Part A insolvency by a mere four years--to 2005. Moreover, the President's plan envisions some of the same changes to Medicare as the Republican proposal that he's attacking so relentlessly. For example, both approaches envision Medicare beneficiaries shifting into managed care. Also, the President doesn't even reject making wealthier Medicare recipients pay more for their Medicare Part B premiums--a controversial feature of the G.O.P. plan that he vetoed last year. (Currently, Medicare recipients pay $42.50 a month, while the government picks up $127.50.) True, Clinton didn't include such means testing in his latest budget. But he told MONEY: "I wouldn't rule it out."