The Bush team's foreign policy bluster may perhaps be softening. In three separate interviews in the run-up to the convention, the president admitted that there have been miscalculations in Iraq; that the war against terrorism may not be winnable; and that it may instead be a "long-lasting ideological struggle."

If President Bush can build on those comments, he may reduce the central weakness of his candidacy -- a reckless refusal to acknowledge how many troops, allies and resources are needed to prevail, whether in Iraq or in Afghanistan. If Bush offers more sober honesty, complementing the soaring paeans to liberty of his convention speech, he may present voters with the best of both worlds: a glorious belief in American power and a reassuring understanding of its limits.

There's no guarantee that Bush will manage this balance. After he wisely stated that the war against terrorism cannot be "won" as conventional wars can, he unwisely backtracked. But the small signs of foreign policy sobriety are in stark contrast to Bush's domestic-policy thinking. Here, the bluster blares at full volume. There's no evidence of honesty or reconsideration.

The central question about Bush's domestic agenda concerns his tax cuts. Abroad, Bush started out thinking allies didn't matter, and he has since learned better. At home, Bush started out thinking deficits didn't matter, but he shows no sign of shedding this illusion.

How else to explain the convention speech? Bush didn't merely fail to acknowledge that his tax cuts are unaffordable. He pledged to make them permanent, and he proposed a raft of new spending programs that would make the deficit still deeper. He even trumpeted the Medicare prescription drug entitlement, a measure whose astronomical cost his administration disguised from Congress.

This recklessness tarnishes ideas that might otherwise seem reasonable. Take for example the individual health savings accounts and retirement accounts that form the core of Bush's "ownership society." One can make a case for both these proposals. But in the hands of the Bush team, both would probably turn out badly.

The case for tax-sheltered health savings accounts is that, if you encourage people to pay medical costs out of their pockets, some will shop wisely. The shocking waste of America's health system reflects the fact that, most of the time, doctors and patients decide what medical services are necessary, but the bills are paid by insurers and the government. Unite the decision to consume with the responsibility to pay, and you're likely to cut waste a bit.

Only a bit, though. A large chunk of people's health spending comes in the last weeks of life, or during extremely expensive crises -- not times when consumers can be expected to calculate the costs and benefits of complex medical alternatives. Moreover, health savings accounts have their drawbacks. The tax-exemption costs the government money, adding to the deficit. It benefits rich people with high tax rates, unless it is cleverly designed. And it adds to the complexity of the tax code, which Bush himself lamented in his speech on Thursday.

For all these reasons, medical savings accounts need to be done right -- in a way that's not regressive and not too damaging to the budget. What are the chances of the Bush administration striking this balance? On the evidence of its regressive and unaffordable tax cuts and its Medicare reform, approximately zero.

The same goes for private retirement accounts. Paradoxically, the best case for these is that Bush is fundamentally wrong about fiscal policy. Because of exploding health care costs, driven by a mixture of new medical technology and demographic shifts, government's share in the economy is likely to grow at an alarming rate: In one estimate, Medicare plus Medicaid will rise by more than six percentage points of GDP between now and 2040. The implication -- that taxes will have to be about a third higher than they are today -- does not bode well for economic growth. Therefore, all opportunities to convert government programs into private ones have to be considered seriously.

But there are plenty of ways to get Social Security privatization wrong. Any reform would have to involve benefit cuts, and these take political courage. But Bush has shown no stomach for this sort of fight: Oblivious to the deficit, he has sprayed money at taxpayers, farmers, Medicare beneficiaries and other supplicants. Equally, Social Security privatization would have to avoid harming low-income workers. Bush's regressive tax cuts suggest that he can't be trusted on this question.

In his weaker moments, Bush sounds glib: Political liberty abroad will defeat terrorism and economic liberty at home will fuel prosperity. The truth, unfortunately, is more complex. After all, political liberty did not save Europe from terrorism in the 1970s; the Philippines, democratic for almost two decades, battles Islamic extremists. Equally, economic freedom, though wonderful, can't exist without wise government regulation, and government has to be paid for: Tax policy needs to weigh these awkward factors. To show he is big enough to lead the world, Bush needs to prove he understands this.