Magazine

The State Of The Union: Secure


It's a Republican strategist's dream: In Iowa, tired and testy Democratic Presidential contenders blast their rivals' credibility, leadership, and foreign policy acumen as the clock ticks down on the party's Jan. 19 caucuses. A day later and a world apart, George W. Bush is set to stride to the rostrum of the stately House of Representatives. There, he hopes to deliver a lofty State of the Union address to a national television audience. His goal: to open his reelection bid with a dash of compassion and visionary rhetoric, leaving his political opponents to sling mud at each other.

While Democrats accuse one another of dirty tricks and flip-flops, the President intends to wax eloquent about an improving economy and positive developments in Iraq. Bush won't stop there, though. To give his campaign forward propulsion, he will outline an expansive blueprint for an "ownership society." That's Republican-speak for investor-friendly policies built on tax cuts, generous new savings incentives, and a renewed call for personal savings accounts carved out of the Social Security system. To underscore his can-do optimism, he'll talk about sending astronauts to the moon and to Mars. Says former Reagan Chief of Staff Kenneth M. Duberstein: "The contrast [with feuding Democrats] couldn't be better for the President."

It's all a far cry from a month ago. Bush's annual appointment with the American people was shaping up as an unpleasant reality show, thanks to a jobless economic recovery and the continued struggle in Iraq. Before the capture of Saddam Hussein, the President's approval ratings were at all-time lows, and Bush trailed a generic Democrat in a hypothetical reelection matchup. But good news from the Middle East, solid gains in the stock market, and rising public confidence about the economy's future have altered the political equation.

Despite White House insistence that the State of the Union address is a nonpartisan event, the speech is the President's best chance in early 2004 to outline the themes of his bid for another term. The overriding message: Bush is a safe choice in '04. "You are going to hear security, security, security -- national security, homeland security, and economic security," says R. Bruce Josten, executive vice-president of the U.S. Chamber of Commerce.

CORPORATE CROOKS. You're also going to hear a lot about compassion. And for good political reason: GOP operatives say Bush will use the State of the Union speech to reach out to swing voters on key domestic issues where Democrats have an advantage. On education, where the Republicans have lost ground in the past year, he is seeking $1 billion more for special education and another billion for public schools in poor communities. On the environment, where voters strongly favor the Democrats, he'll push for passage of a "healthy forests" initiative and promise to make drinking water and air safer.

For voters angry about CEO lawbreaking and mutual-fund abuses, Bush will promote closing some corporate tax loopholes and aggressively prosecuting corporate wrongdoers. And he'll reach out to the growing population of Hispanic voters by offering legal status to millions of undocumented immigrants. The compassion agenda will face serious obstacles on Capitol Hill, but advisers figure it's more important to attract centrist voters than to enact the proposals in 2004.

That's not the only way the White House intends to broaden the Republican base. Bush is expected to outline his vision of an "ownership society" that encourages small investors to renew their bet on America's economic future by building personal wealth. Among the key components: new tax-favored savings accounts, portable pensions, tax breaks for the uninsured, new tax incentives to encourage homeownership, and, eventually, private Social Security investment accounts.

The President will push for passage of Retirement Savings Accounts and Lifetime Savings Accounts that would allow Americans to shelter income by making withdrawals from these savings vehicles tax-free. GOP strategists think these so-called Super IRAs would attract baby boomers and young voters concerned about the meager long-term return on Social Security. Still, creating such accounts faces resistance from the insurance industry, which fears that consumers will switch from life insurance annuities to the new tax-advantaged plans. And business groups worry that the new plans would undermine corporate pensions.

Bush's ownership society also means further tax relief, including a proposal to make all of Bush's current tax cuts permanent. Given a deficit approaching $500 billion, the President also will ask Congress to hold the line on discretionary nonsecurity spending, capping its growth at 3%.

Democrats argue that it's too risky to tie workers' futures -- from retirement security to health care -- to the volatile stock market. That's one reason the White House waited until Wall Street rebounded before rolling out the "ownership society" rhetoric. Still, Democrats are convinced that Americans aren't prepared to gamble their economic security on GOP promises of future riches. "Beware of Republicans bearing gifts," warns House Minority Leader Nancy Pelosi (D-Calif.). "We're going to turn their [plans] into a weakness."

Even as Bush talks about long-term legislative objectives, he has a short-range political goal, too: convincing Americans that the recovery is real and lasting. The President's Democratic critics blast a "jobless recovery" that boosts corporate bottom lines without trickling down to average workers. To counter that argument, Bush will contend that the economy has turned the corner after shaking off the woes of the '90s, from the tech bubble to the corporate crime spree to the aftereffects of the September 11 attacks.

ENERGY LEGISLATION. At the same time, Bush will use the tenuous economic situation as a reason to pass long-stalled proposals, including tort reform, energy legislation, and, yes, more tax cuts. While Dems have the votes to block any legislation that does not have significant bipartisan support, GOP leaders are eager to have a debate over rolling back the Bush tax cuts. A tax increase "is a hard sell except for the [Democratic] partisans," says Rice University political scientist Earl Black. "People would much rather make the decisions on their own money than give it to the government."

Democrats also face uncertain prospects on foreign policy. Aware that over 60% of Americans now believe that, casualties or no, the Iraq war was worth the cost, the President will try to consolidate support by stressing the positive effect of his war on terrorism. That includes decisions by Libya and Iran to dismantle nuclear-weapons programs, as well as overtures from the North Koreans about disarmament and a new constitution in Afghanistan.

Still, Republicans should not get too comfortable. With three helicopters downed in just one week, the Administration knows things could worsen in occupied Iraq. And the still-weak job market has a lot of workers and employers worried about the strength and durability of the recovery. "There is a real difference between the Alan Greenspan indicators -- the Wall Street indicators -- and the Main Street indicators," says independent pollster John Zogby.

That's the challenge facing the Democrats. Just as Bush will try to frame the campaign debate, they'll counter with their own vision for the future as they attack cowboy unilateralism, corporate cronyism, tax cuts tilted to the superrich, environmental degradation, and hollow education reforms. It won't be easy. The campaign may just be getting started. But, as the State of the Union invariably reminds us, the President always commands the loudest megaphone. By Richard S. Dunham, with Lee Walczak, Stan Crock, Paul Magnusson, Rich Miller, and Howard Gleckman in Washington


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