President George W. Bush will seek to use Wednesday's State of the Union address to restore the fiscal credibility of his administration, calling on Congress to support a tough budget which reins in domestic spending.
In an effort to ease worries on both Capitol Hill and Wall Street that his second-term ambitions will increase the long-term budget deficit, Mr Bush will pledge to propose cuts in real terms across most areas of government spending.
“It is now time to focus on the priority of fiscal discipline,” a senior White House official said, previewing the president's speech. That call will be strengthened by a report on Tuesday by David Walker, US comptroller-general, which demands a “fundamental re-examination of all major existing spending and tax policies”.
He warned: “Continuing on this unsustainable fiscal path wil gradually erode, if not suddenly damage, our economy, our standard of living and ultimately our national security.
“The problem is too big to be solved by economic growth alone or by making modest changes to existing spending and tax policies.”
White House officials said most non-defence and homeland security spending was likely to be curbed. Congress last year approved a 0.8 per cent cap in discretionary spending, excluding homeland security. But Mr Bush “believes we can even go further” this year, the officials said.
The speech would also provide some details of the administration's plans for Social Security reform a signal that Mr Bush remains determined to use the power of the presidency to advance legislation this year.
With his approval ratings at a historic low for a president starting a second term, Mr Bush's programme is likely to prove contentious in what is already a bitterly divided Congress. Tom DeLay, the Republican congressman from Texas and House majority leader, said on Tuesday he saw a great opportunity to advance radical change but offered a note of caution: “The only thing that could dampen this opportunity is our hubris.”
Steny Hoyer, House Democratic whip, signalled the difficulty Mr Bush will face in securing bipartisan support for his Social Security proposals: “Privatisation is a Republican focus. . . overwhelmingly, verging on unanimously, opposed by Democrats.”
The 2006 budget, which will be presented to Congress on Monday, promises to sharpen these partisan differences, as Democrats and Republicans are likely to disagree vehemently over which government programmes should face the axe.
As in recent years, the first half of tonight's speech is likely to deal with domestic issues: not just fiscal discipline and Social Security reform but also tax reform, medical liability reform, relaxation of immigration laws and the president's “compassionate conservative” philosophy.
The second half is expected to address foreign policy, including the doctrine of spreading liberty set out in the Inaugural Address. By contrast with the idealism of that speech, however, Mr Bush is expected Wednesday to talk about global threats and opportunities.
