The revolution, phase two

Feb 3rd 2005
From The Economist print edition

In his state-of-the-union address, President George Bush made it clear that he is willing to gamble hugely to bring about radical change, both in the United States and the wider world—and that he is intent on spending his political capital quickly

STATE-of-the-union addresses set a tone as well as an agenda. The “axis of evil” address of 2002 did so for George Bush’s first term. It was sombre, warlike, international. To judge by the latest address—Mr Bush’s first since his re-election—the second term could be very different.
For the first time in a long while, the domestic agenda was more interesting than the foreign one. The first term saw the ascendancy of America’s willingness to go it alone, the triumph of national interests broadly conceived. In this speech, Mr Bush promised both a more diplomatic America, one that stresses soft power, and a more idealistic one—a country that turns the rhetoric of his inaugural address about “ending tyranny” into policy. What both terms have in common, though, is Mr Bush’s self-confidence in his ability to change his country and the world—and his willingness to gamble hugely.

Social Security was the centrepiece of the address. The speech was not—and was not expected to be—a blueprint for reforming the pensions system. Mr Bush did not espouse any particular plan, nor propose specific changes. Rather, he offered explanations, reassurances and options.
He called the pensions system “a great moral success of the 20th century” (ie, we don’t want to change it just because we have hated the system on ideological grounds all along). But “on its current path, [it] is headed towards bankruptcy.” The system will be paying out more than it takes in by 2018, the president said (the Congressional Budget Office says 2020) and will be bankrupt by 2042. In an attempt to refute those who say this amounts to a long-term problem, but not a crisis, he put the case for acting now in household terms: 2018 is when your five-year-old would go to university; 2042 close to when your 20-year-old would retire.

As a piece of salesmanship, this may well be effective. But to bolster public reassurance, Mr Bush argued that reform is not as risky as opponents claim. Those over 55 would not be affected—an attempt to appease the powerful old people’s lobby. Personal retirement accounts would be voluntary. People could divert up to four percentage points of their payroll taxes. And the changes would be phased in (administration officials propose to start the reform in 2009 for workers 44 years or older).

All this is politically astute, and necessary. Mr Bush’s speech was less a policy statement than the opening move in a campaign to reshape a debate where public opinion is both sceptical and divided. This was the moment he nailed his colours to the mast of Social Security reform.
The president has to take his case to the public because in Congress even his supporters are nervous. Republicans do not want to reform Social Security without some Democratic support. But the Democrats are almost unanimous in opposition. And because Mr Bush does not have enough support to dictate terms to Congress (as he did with tax cuts in the first term), he has had to let Congress choose the particular reform, hoping to attract more votes for change that way.

But it is not so clear whether the state-of-the-union address has advanced or reduced Congress’s appetite for change. At a meeting in West Virginia the weekend before the address, congressional Republicans agreed to support the president’s cause. They did so without much confidence he will succeed. Roy Blount, the Republican majority whip, said his members had gone from “cautious to being cautiously optimistic”. But he conceded the battle was taking place “way out there beyond our defences”. As for the Democrats, their leader in the Senate, Harry Reid, claimed Social Security reform was dead. At least 40 of his colleagues in the Senate opposed it—enough to filibuster any proposal to death.

In attempting to change Democratic minds, Mr Bush listed a number of options for reform—increasing the retirement age, indexing benefits to prices not wages, changing the way benefits are calculated. All these are things that some Democrats have espoused in the past. Anything is negotiable, he implied.

But having opened up the possibility of negotiations, Mr Bush seemed to slam the door shut again. “We must, however, be guided by some basic principles,” he said: no increase in payroll taxes, and private accounts financed by diverting part of those taxes. Tom Mann of the Brookings Institution argues that the few Democrats who might possibly support some sort of change are more likely to be put off by these “basic principles” than encouraged.

In other words, the chances of Social Security reform hinge on Mr Bush’s ability to change the political landscape to make Democratic opposition unsustainable. The day after the speech, he began a two-day trip to states with wavering Democratic senators. Taking his case directly to voters worked with his tax cuts. But in the first term Democrats were on the defensive about tax cuts, and loth to oppose them. Now, Republicans are on the defensive about Social Security and unwilling to attack it. Where the first term saw a succession of relatively bloodless presidential victories—partisan routs in the case of tax cuts, bipartisan agreements in the case of education reform—the second term will see a bloodier battle on Social Security, whoever wins.

Freedom abroad

The second term is likely to see significant changes in foreign policy, too, though the consequences are harder to foresee. In some ways, the state-of-the-union speech was strikingly “soft” and multilateralist.

Mr Bush basked in the glow of the Iraqi election. The hard cases of diplomacy were almost waved away. He mentioned North Korea only to say America was negotiating with Asian powers to dismantle its nuclear-weapons programme. He mentioned Iran’s nuclear programme in the context of European-led diplomacy. He said a two-state solution to the Palestinian-Israeli conflict was “within reach”; promised $350m to support Palestinian reform; and dispatched Condoleezza Rice, his secretary of state, to the region. He even had nice words to say about the European Union and—gasp—the United Nations. In some ways, his speech confirmed the tilt from unilateralism that Ms Rice implied when she told the Senate that “the time for diplomacy is now.”

Yet the speech had a final, more intriguing component: unusually in a state-of-the-union address, Mr Bush urged two close allies, Saudi Arabia and Egypt, to “show the way toward democracy in the Middle East”. As Norm Ornstein of the American Enterprise Institute says, it was the kind of tough rhetoric that demands a response from the admonished—or they risk a more clamorous American follow-up. Mr Bush also seemed to encourage Iranians to rise up against their clerical regime by saying: “as you stand for your own liberty, America stands with you.”

In other words, Mr Bush went out of his way to insist that the recent inaugural hymn of praise to liberty was not just windy aspiration, but a guide to foreign policy. It is hard to say which is the more ambitious aim—this or transforming America’s largest and most popular domestic spending programme.

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