Differences on key Hill issues remain after Bush address

President Bush presented his economic strategy Tuesday night as one of three great pillars of his presidency, along with the war on terrorism abroad and safeguarding the American public at home.

Delivering his first formal State of the Union address, Bush said, "When America works, America prospers, so my economic security plan can be summed up in one word: jobs."

The President was interrupted 77 times by applause during a 45-minute speech that was part national pep rally and part sober assessment of military and other challenges ahead.

Bush urged support for his tax, trade and energy policies, but also stressed health care and retirement security--traditional Democratic themes. Bush said he wanted to address the domestic agenda "in the same spirit of cooperation we have applied to our war on terrorism."

Bush put in a strong plug for an economic stimulus package that includes extended unemployment benefits, and for accelerating and making permanent the estate tax repeal and other tax cuts passed last year.

A top Senate GOP aide observed: "The President is creating a domestic policy foundation based on his popularity. After this speech it's going to be hard for the Democrats to score any points against the President on the economy."

Senate GOP Policy Committee Chairman Larry Craig of Idaho said, "The President said, `Tom Daschle, let's get these issues to the floor, give them an up-or-down vote.'" Bush did not mention Senate Majority Leader Daschle by name, but for months, Republicans have denounced the South Dakotan as the chief obstacle to stimulus, energy and other legislation.

While Bush did not specifically mention the Enron collapse, he asked Congress to pass "new safeguards" for employee retirement plans.

The GOP aide said Bush had "inoculated" Republicans by mentioning a range of domestic issues, including prescription drugs and retirement security.

However, House Minority Whip Nancy Pelosi, D-Calif., demonstrated that bipartisan support for the war effort does not translate into a free ride at home: "We cheer him and applaud him for prosecuting this war. In economic [policy], I think the speech was lacking. The one thing that we know is that the Bush economic policy, which he promoted last year, has not promoted economic growth."

Delivering the televised Democratic response moments after the president finished speaking, House Minority Leader Dick Gephardt, D-Mo., commended Bush for a "strong and patriotic speech" and said there was "no daylight between" Republicans and Democrats in the war on terrorism.

Gephardt eagerly embraced the notion of a partnership on the domestic front, saying, "I refuse to accept that while we stand shoulder-to-shoulder on the war, we should stand toe-to-toe on the economy."

But the Democratic leader stressed that the nation's litany of needs had not evaporated in the aftermath of the Sept. 11 terrorist attacks.

"For all the things that have changed in our world over the past four months, the needs of our families have not," Gephardt said.

Gephardt pushed for patients' rights, pension reform "that protects workers from the next Enron," a minimum wage hike and a $10,000 tax deduction for college tuition, and he repeated his call for a bipartisan economic summit at the White House in February.

Gephardt also urged the public to turn up the pressure on Congress for campaign finance reform.

Republicans in recent weeks have come to believe they have the upper hand politically on the economic stimulus issue and hope a strong, public push by the President will prove decisive in the Senate.

"I believe eventually the Democrats will figure out this obstructionist thing is hurting them politically and we get a decent stimulus bill," said Sen. Phil Gramm, R-Texas.

But Rep. Robert Matsui, D-Calif., a senior Ways and Means Committee member, said: "I don't think [Bush's] power translates ... to the stimulus package. I don't think the public is there on the stimulus--they don't care about it."

Sen. John Breaux, D-La., a key moderate, said that in order to pass a stimulus bill: "They've got to be involved from the get-go [at the White House]. Otherwise, we're going to flounder."

But House Speaker Dennis Hastert, R-Ill., said: "The President has offered a stimulus package. We've passed that in the House. It's time for the Senate to act so we can get back into conference."

Regarding Bush's overall approach to the budget, Hastert said: "We know that we're in an economic downturn... We're at war ... and we're going to have to spend some money to get us out of the recession."

Bush's call for permanent enactment of last year's tax cuts drew cheers from K Street. Dirk Van Dongen, president of the National Association of Wholesaler-Distributors and a leader of the Tax Relief Coalition, said the business community was "absolutely delighted" that the President mentioned the issue in the speech and promised the business community was in "action mode" to pass such legislation.

But Ways and Means ranking member Charles Rangel, D-N.Y., said the country would fall off a "fiscal cliff" 10 years from now, once the tax cuts backed by Bush and enacted this year are fully phased in.

Rangel said the idea of making tax breaks permanent was unrealistic and irresponsible--especially in light of the ambitious spending agenda Bush embraced in his speech.

Indeed, Breaux expressed astonishment at the call for new spending. "I did not see any suggestion for holding the line," he said.

Rangel dismissed Bush's support for expanded jobless benefits, noting that GOP opposition to the comprehensive approach proposed by Democrats helped doom a stimulus bill last year.

Meanwhile, GOP moderates on Capitol Hill were pleased by the president's commitment to develop a prescription drug benefit as part of broader Medicare reform.

"I am encouraged that he is working with us to provide seniors with an affordable drug plan as part of an effort to strengthen Medicare," said GOP Sen. Olympia Snowe of Maine.

Added GOP Rep. Michael Castle of Delaware, "I applaud President Bush for his concentration on other domestic priorities in the area of strengthening Medicare, lowering the cost of prescription drugs for our seniors ... speeding up a full economic recovery, and creating jobs for all Americans."

Matsui, however, said the President was "a little too clever" in his prescription drug proposal because "he knows it can't be done fiscally ... The problem is he'll score political points with the speech. He'll come out of this better than he went in."

Bush spoke fondly of the successful and bipartisan effort to pass education reform last year, prompting Senate Health, Education, Labor and Pensions Chairman Edward Kennedy, D-Mass., to remark: "The education effort was a prime example of how we could find common ground and work together. That is the model that ought to be followed, particularly in the area of prescription drugs and patients' rights."

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