Bush Agenda Not As Far-Reaching

Goals More Limited in Time of War

For each of the past five years, President Bush insisted that Congress make it easier for Americans to obtain health care by creating a tax credit for people with modest incomes to buy insurance if they could not get it through their jobs.

The ranks of the uninsured have continued to grow, and lawmakers still have not approved the refundable tax credit. But in Bush's State of the Union address Tuesday night, the tax credit plan was nowhere to be found. Instead, he recommended a far more modest tax credit only for people who have special health savings accounts.

The decision to drop the ambitious, expensive plan in favor of a more targeted initiative underscored a broader retrenchment in Bush's agenda. After his far-reaching domestic agenda of 2005 collapsed along with his poll ratings, he and his advisers have concluded that grand proposals of the magnitude of restructuring Social Security or rewriting the tax code are unworkable in a time of war.

Instead, Bush has come around to the notion that a presidency can handle only one truly big thing at a time, and for now that thing is Iraq. As long as U.S. troops are fighting overseas, advisers now say, the domestic agenda will be limited to more incremental, less polarizing ideas -- singles and doubles instead of home runs, in the vernacular of the Bush White House.

"He's a very practical, business-oriented CEO president who looks at the landscape, wants to continue to get important things done, and I think he articulated an agenda that can be prosecuted," said John Bridgeland, who directed the White House domestic policy council in Bush's first term. "There's a sense of learning. The country and the Congress didn't seem quite ready for Social Security reform."

"It's part of the challenge every president faces in a second term," said Leon E. Panetta, White House chief of staff under President Bill Clinton, who turned to incremental advances after his health care proposal failed. "They suddenly realize that all the bold dreams that they had . . . just aren't going to happen."

Democrats mocked the turnaround. "A year ago, the president overreached by threatening to privatize and dismantle Social Security," said Senate Minority Leader Harry M. Reid (D-Nev.), referring to the plan to allow Americans to invest some Social Security payroll taxes in stocks. "This year, he reached for too little."

Instead of reinventing the nation's retirement safety net, Bush was left talking about how wood chips might be made into fuel someday. He consigned Social Security to the third commission on entitlements in recent years. The menu of policies he presented included pumping more money into scientific research, science education and the development of alternative fuels. He called for an expansion of health savings accounts and limits on malpractice litigation.

Not only did he drop the health care tax credit he championed for five years -- a plan once estimated to insure 6 million Americans at a cost of $89 billion over 10 years -- the White House also dropped a plan to allow Americans to deduct out-of-pocket medical expenses. In the days before the speech, allies in Congress and think tanks reported such a proposal was in the works. But it would have cost $28 billion a year and never made it into the final draft.

Instead, the president proposed allowing only low-income people with health savings accounts to deduct medical expenses.

"To be honest, when we started out, we started with a blank sheet of paper to figure out what is the best way to approach" deductions, said Allan B. Hubbard, Bush's economics adviser. "We certainly studied" a proposal by three academics that would have allowed Americans to deduct health spending, he said, but recommended the narrower plan and Bush "decided that the proposal that was presented was a correct proposal."

Overall, Bush's domestic slate was so modest that the National Taxpayers Union found it the least expensive of any he has offered since becoming president. By studying the known costs of programs outlined Tuesday night, offset by promised spending cuts, the union estimated the net cost of Bush's State of the Union pledges at $91 million. By contrast, his promises totaled $12.8 billion in the 2005 address and $106.6 billion in the 2002 speech.

To some supporters, that was the mark of a president showing leadership in a time of rising deficits. "He wanted to talk about big themes," Vice President Cheney told radio talk-show host Rush Limbaugh yesterday. "He did not want to get into just a shopping list of 40 or 50 different items as so oftentimes State of the Union speeches do."

Other supporters were disappointed. "President Bush could have delivered a strong message to the Democrats and the nation on what the country and conservative legislation can do," Texas Republican activist Bobby Eberle wrote on http://www.gopusa.com . "Instead, he backed down."

Democrats complained that Bush did not address more issues. Rep. Rahm Emanuel (Ill.) said the president's speech "will be remembered for what it didn't do." He assailed Bush for saying little or nothing about the Medicare drug program, tax code restructuring or lobbying legislation. "By focusing too much on Iraq," added Sen. Russell Feingold (Wis.), "the president has taken his eye off the emerging threats around the world."

Rep. Jack Kingston (R-Ga.) disagreed. "To devote about half the speech to Iraq is proper," he said, because the terrorism fight is of utmost importance to the nation. As for domestic issues, he said, a president merely needs to offer "a couple of solid proposals" in the annual address, and Bush did so on education and energy.

Staff writer Amy Goldstein contributed to this report.