State of the Campaign

Article II Section 3 of the Constitution declares "[The President] shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient...." Particularly in election years the speech has become more an occasion to give to the audience of television viewers information on the state of the domestic political situation. In its lead editorial January 21, titled "State of the Platform," the Washington Post declared, " President Bush offered less a description of the state of the union last night than an opening pitch for reelection." Bush spent more time discussing athletes' use of steroids than he did Social Security, prompting renewed speculation in some quarters that he still has his eye on the Major League Baseball commissioner's job.

Many pundits agreed that the date for the speech -- the day after the caucus in which Iowans chose who they wanted to represent their party in the presidential election -- was selected to provide maximum opportunity for political counterpoint. But the speech also provided an occasion to note the increasing criticism that has been leveled at administration policies from a diverse group of organizations and observers. In recent months:

  • Bush policies concerning terrorism and the war in Iraq have been criticized by the Army War College's Strategic Studies Institute and the Carnegie Endowment for International Peace.
  • Domestic security policies have been criticized by the executive director University of Maryland's Center for Health and Homeland Security, and an independent task force sponsored by the Council on Foreign Relations.
  • Economic policies have been indicted from the pages of the Economist, in a report from the International Monetary Fund, and by variety of economists.
  • The so-called Medicare "reform" has drawn criticism from across the political spectrum -- from the conservative Heritage Foundation to Donna Shalala (secretary of health and human services during the Clinton administration).

Reflecting widespread opposition to administration policies abroad, the Independent (UK) published its own "real" state of the union, including:

  • Iraq policy
    • 501 US servicemen killed in the war in Iraq.
    • 0 funerals of servicemen attended by Bush.
    • Approximately 10,000 Iraqi civilians killed in the war in Iraq.
  • Economic policy
    • A record number of bankruptcies in the US were declared in 2002.
    • This year the US deficit will be the largest in history.
    • 88% of Americans will receive a tax refund of less than $100 in 2006, while Bush cabinet members on average will save $42,000 from capital gains and dividend tax reductions, or approximately the median US household income in 2001.
    • 2.4 million Americans have lost jobs during the Bush administration's tenure.
    • 1,000 new jobs were created in the US in December, compared to the predicted 130,000.
  • Social policies
    • 6% increase since 2001 in the number of US families living in poverty.
    • $300 million cut from the federal program that provides subsidies to poor families so they can heat their homes.

In a related editorial the Independent declared Bush "not only the worst of America's last five presidents, but one of the worst, if not actually the worst, ever." The Independent noted that, not only does Bush fail in terms of what it would like to see in an American president, but -- in a series of observations that may well echo through the presidential campaign -- Bush fails by his own terms as set forth during his last run for office. Social and racial divisions are wider than when he took office. In Congress, Democrats are virtually excluded from the process of formulating legislation. Bush has transformed a record surplus into a record deficit. The dollar is weak; unemployment and the trade deficit have increased. His vaunted "compassion" is scarcely evident, as the Independent put it, outside "his immediate circle." He has attended no funerals of service people, and has prohibited photographing coffins of dead soldiers. And at a time when its economic and security policies rely perhaps more than ever on international cooperation, internationally, the Independent noted, the US is "more reviled than it has been since the Vietnam war."

Tilting at Windmills

Nearly half of Bush's speech dealt with the wars in Iraq, Afghanistan, and the "war" on terrorism. In a report dated December 2003, titled Bounding the Global War on Terrorism, Dr. Jeffrey Record of the Army War College's Strategic Studies Institute declared that the administration's war on terrorism "lacks strategic clarity, embraces unrealistic objectives, and may not be sustainable over the long haul."

The administration has postulated a multiplicity of enemies, including rogue states; weapons of mass destruction (WMD) proliferators; terrorist organizations of global, regional, and national scope; and terrorism itself. It also seems to have conflated them into a monolithic threat, and in so doing has subordinated strategic clarity to the moral clarity it strives for in foreign policy and may have set the United States on a course of open-ended and gratuitous conflict with states and nonstate entities that pose no serious threat to the United States.

Of particular concern has been the conflation of al-Qaeda and Saddam Hussein’s Iraq as a single, undifferentiated terrorist threat. This was a strategic error of the first order because it ignored critical differences between the two in character, threat level, and susceptibility to U.S. deterrence and military action. The result has been an unnecessary preventive war of choice against a deterred Iraq that has created a new front in the Middle East for Islamic terrorism and diverted attention and resources away from securing the American homeland against further assault by an undeterrable al-Qaeda. The war against Iraq was not integral to the GWOT [global war on terrorism], but rather a detour from it.

Record went on to argue that it may be misleading even to characterize efforts to limit terrorism as a war, and that by attempting to direct the GWOT at the phenomenon of terrorism itself, rather than at specific organizations and individuals, the administration "sets itself up for strategic failure." "Terrorism is a recourse of the politically desperate and militarily helpless, and, as such, it is hardly going to disappear," Dr. Record wrote. He argued that a more useful characterization of the GWOT would be, like the war on drugs as a MOOTW -- which he explained is "an officially discarded but very useful" acronym for "military operation other than war." In fact, he suggested, GWOT is primarily intelligence and police work, with the military playing "an important but nonetheless supporting role." Quoting Daniel Byman, Record noted "Al-Qaeda is not a single terrorist group but a global insurgency." Like the misleading body counts of Vietnam, Record argued, "Against such an enemy tallies of dead and captured are dubious...."

Record criticized the administration's definition of terrorism -- "premeditated, politically motivated violence perpetrated against non-combatant targets by subnational groups or clandestine agents" -- because it excludes state terrorism.

By excluding state terrorism these definitions moreover give states facing violent internal challenges, even challenges based on legitimate grievances (e.g., Kurdish and Shiite uprisings against Saddam Hussein), the benefit of the moral doubt, and in so doing invite such states to label their internal challenges "terrorism" and to employ whatever means they deem necessary, including the terrorism of counterterrorist operations of the kind practiced by the French in Algeria and the Russians in Chechnya.

Quoting Conor Gearty, of the UK's Royal United Services Institute, Record noted that

Because the administration has cast terrorism and terrorists as always the evilest of evils, what the terrorist does "is always wrong [and] what the counter-terrorist has to do to defeat them is therefore invariably, necessarily right. The nature of the [established] regime, the kind of action that is possible against it, the moral situation in which violence occurs--none of these complicating elements matters a jot against the contemporary power of the terrorist label." Thus Palestinian terrorism is condemned while Ariel Sharon is hailed as a man of peace.

Polarizing moral labels do not contribute to the formulation of useful policies, Record asserted. For example, the US sided with Stalin against Hitler and with Saddam Hussein in his war against Iran.

In both cases, the United States allied itself with two of the 20th century’s greatest practitioners of state terrorism for the purpose of defeating what it at the time regarded as the greater evil.

Morally black and white choices are scarce in a gray world. One man’s terrorist can in fact be another’s patriot. "Is an armed Kurd a freedom fighter in Iraq but a terrorist in Turkey?" asks [NYU professor] Tony Judt. "Were al-Qaeda volunteers terrorists when they joined the U.S. financed war [against the Soviets ] in Afghanistan?"

After recapping a litany of Bush speeches and remarks that imply an association between Saddam Hussein and the September 11, 2001 al-Qaeda attacks, Record compared the "stapling together rogue states and terrorist organizations with different agendas and threat levels" to claims of a global Communist conspiracy in the 1950s, "which blinded American policymakers to the influence and uniqueness of local circumstances and to key national, historical, and cultural differences and antagonisms within the "Bloc." "Communism was held to be a centrally directed international conspiracy; a Communist anywhere was a Communist everywhere, and all posed an equal threat to America’s security. A result of this inability to discriminate was disastrous U.S. military intervention in Vietnam...."

Record noted that the failure to distinguish between terrorist organizations and rogue states obscures a crucial difference between them. While on the one hand, terrorist organizations have few assets that can be held hostage, "rogue states, notwithstanding administration declamations to the contrary, are subject to effective deterrence and therefore do not warrant status as potential objects of preventive war and its associated costs and risks." Record cited an article that Bush National Security Advisor Condoleeza Rice published in Foreign Affairs in January 2000 advocating a policy of deterrence toward Iraq, in which she urged "there should be no sense of panic about" about rogue states.

Record summed up the administration policy by saying "Operation IRAQI FREEDOM was not part of the
GWOT; rather, it was a war-of-choice distraction from the war of
necessity against al-Qaeda." Clearly, then, in Record's view, the war in Iraq has not made the world a safer place. Record quoted Steven Van Evera, director of the security studies program at MIT:

Defining it as a broad war on terrorism was a tremendous mistake. It should have been a war on Al Qaeda. Don’t take your eye off the ball. Subordinate every other policy to it, including the policies toward Russia, the Arab-Israeli conflict, and Iraq. Instead, the Administration defined it as a broad war on terror, including groups that have never taken a swing at the United States and never will. It leads to a loss of focus ....And you make enemies of the people you need against Al Qaeda.

Record's central conclusions and recommendations were:

  • ...[T]he global war on terrorism as currently defined and waged is dangerously indiscriminate and ambitious, and accordingly ... its parameters should be readjusted to conform to concrete interests and the limits of American power.
  • Lumping together all terrorist organizations, and lumping terrorist organizations together with rogue states "gratuitously
    makes the United States an enemy of groups that do not threaten U.S. security interests." Strategy requires discrimination and prioritization of efforts in order to optimally allocate scarce resources.
  • Substitute credible deterrence for preventive war as the primary policy for dealing with rogue states seeking to acquire WMD.
  • Refocus the GWOT first and foremost on al-Qaeda, its allies,
    and homeland security.
  • Seek rogue-state regime change via measures short of war.
  • Be prepared to settle for stability rather than democracy in Iraq, and international rather than U.S. responsibility for Iraq.
  • The United States may be able to defeat, even destroy,al-Qaeda, but it cannot rid the world of terrorism, much less evil.

The Unsaid

Commentators around the world noted that Bush's speech did not contain any reference to the as yet unsubstantiated claims he made in the 2003 State of the Union message concerning Iraq's possession of chemical and biological weapons, and in particular, the since discredited claim that Iraq had attempted to purchase uranium in Africa. The Carnegie Endowment for International Peace (CEIP) produced a report dated January 2004 that "attempts to summarize and clarify the complex story of weapons of mass destruction and the Iraq war." The 111-page report was written between September and December 2003 drawing on a large array of unclassified sources, most of which are available on the CEIP web site.

The central conclusions of the CEIP report are:

  • While Iraqi WMD programs represented a long-term threat, they did not -- despite administration claims -- represent an immediate threat to the region, the US, or the world.
  • Iraq's nuclear program had been dismantled by inspectors after the 1991 war; large quantities of chemical weapons had lost their lethality by 1991, and production had been halted.
  • The Iraqi biological weapons program was a potential future threat, but was designed to start producing weapons in time of war, rather than produce them in advance.
  • Prior to 2002 the intelligence community had a generally accurate picture of the Iraqi nuclear and missile programs, but "appears to have overestimated the chemical and biological weapons."
  • There was and is no solid evidence of a cooperative relationship between Saddam ’s government and Al Qaeda.
  • There was no evidence to support the claim that Iraq would have transferred WMD to Al Qaeda and much evidence to counter it.

In one key finding, the CEIP report noted that

The dramatic shift between prior intelligence assessments and the October 2002 National Intelligence Estimate (NIE), together with the creation of an independent intelligence entity at the Pentagon and other steps, suggest that the intelligence community began to be unduly influenced by policymakers' views some time in 2002.

The report identified two distinct periods in terms of the relationship between intelligence and policy: before 2002 and after 2002. In the earlier period the characterization above applied, namely that the picture of Iraqi nuclear and missile capability was substantially accurate, while the biological and missile capabilities were overestimated. The report suggested that In 2002 the intelligence community came under intense pressure from policymakers. As evidence of this the authors cited Vice President Cheney's repeated visits to CIA headquarters, demands by members of the administration for the raw intelligence that analysts were working with, the speed with which the October 2002 National Intelligence Estimate (NIE) was written and the large number of dissents "what is designed to be a consensus document," and finally, the establishment by "political appointees in the Defense Department" of an intelligence organization to counter CIA analyses.

The CEIP report asserted:

Administration officials systematically misrepresented the threat from Iraq ’s WMD and ballistic missile programs,beyond the intelligence failures noted above, by:

  • Treating nuclear,chemical,and biological weapons as a single "WMD threat." The conflation of three distinct threats,very different in the danger they pose, distorted the cost/benefit analysis of the war.
  • Treating nuclear,chemical,and biological weapons as a single "WMD threat." The conflation of three distinct threats,very different in the danger they pose, distorted the cost/benefit analysis of the war.
  • Insisting without evidence —yet treating as a given truth —that Saddam Hussein would give whatever WMD he possessed to terrorists.
  • Routinely dropping caveats,probabilities,and expressions of uncertainty present in intelligence assessments from public statements.
  • Misrepresenting inspectors ’findings in ways that turned threats from minor to dire.

The CEIP report agreed with the war college report several important aspects. It suggested that the administration's position that the September 11, 2001 attacks on the US invalidated the strategy of deterrence against states "does not stand up to close scrutiny." The authors of the CEIP report asserted that administration rhetoric about the ineffectiveness of deterrence reflects "a profoundly incorrect portrayal of the Cold War strategies of deterrence and containment." Far from being "reactive" postures, these strategies were designed to prevent an attack. As in the Record report, the CEIP report referred to Condoleeza Rice's published support for deterrence prior to joining the Bush administration.

The CEIP report rejected the National Security Strategy’s doctrine of pre-emptive military action as "a loose standard for preventive war under the cloak of legitimate preemption." This is important, the authors noted, because preventive wars "have no legitimacy under international law" while pre-emptive wars do. Legitimate pre-emption requires an imminent threat. The CEIP report suggested that the administration rhetoric betrays their understanding that they did not have a legitimate basis for a pre-emptive war, citing the fact that they did not use the term "imminent" but rather spoke of "grave and gathering danger", and approaching peril.

Dangerously Unprepared

Bush mentioned the Homeland Security Department in the second paragraph of his speech, adding that "their vigilance is protecting America." Tim Greenberger, executive director of the Center for Health and Homeland Security at the University of Maryland qualified Bush's remarks, "The country is safer, but not a lot safer. We are in a worse situation than the country has been led to believe." For example, the administration has spent $10 billion on passenger and baggage inspections, but most air cargo is still not screened. A new Terrorist Center opened last months, but watch lists maintained by separate agencies have not yet been merged. An upgrade of the FBI's computer systems to enable the sharing of terrorist case data among field offices is behind schedule and over budget. "The truth is, everywhere you look, if you look with a trained eye, there are serious shortcomings," Greenberger told the Philadelphia Inquirer the day after Bush's speech. "That we've escaped another attack is due in part to increased vigilance, but it's also largely a matter of luck."

A study by the Council on Foreign Relations (CFR) released at the end of July 2003 proclaimed right from its title Emergency Responders: Drastically Underfunded, Dangerously Unprepared. The CFR task force, headed by former Senator Warren Rudman, concluded that the US "may be spending only one-third of what is required to adequately provide for America ’s emergency responders." In a thinly veiled indictment of the Bush administration's system of patronage, the report warned that "Congress should work to establish a system for distributing funds based less on politics and more on threat," and that future appropriations should include strict distribution timelines. "... [F]unding for emergency responders has been sidetracked and stalled due to a politicized appropriations process,the slow distribution of funds by federal agencies, and bureaucratic red tape at all levels of government.The key shortcomings regarding emergency responders were:

  • On average, fire departments across the country have only enough
    radios to equip half the firefighters on a shift, and breathing
    apparatuses for only one-third. Only 10 percent of fire departments in the United States have the personnel and equipment
    to respond to a building collapse.
  • Police departments in cities across the country do not have the
    protective gear to safely secure a site following an attack with
    weapons of mass destruction (WMD).
  • Public health laboratories in most states still lack basic equipment and expertise to adequately respond to a chemical or biological attack, and 75 percent of state labs report being
    overwhelmed by too many testing requests.
  • Most cities do not have the necessary equipment to determine
    what kind of hazardous materials emergency responders may
    be facing.

The task force estimated that the homeland security budget leaves emergency responders be underfunded by $98.4 billion over the next five years. And, as the Army War College's Jeffrey Record noted, "emergency responders constitute just one of dozens of underfunded homeland security components."

'Don't Believe the Hype'

In his speech Bush trumpeted "the fundamental strengths of the American economy," claiming that because of his tax cuts, "this economy is strong, and growing stronger." "And jobs are on the rise," he added. While the statement was technically correct, December job growth was a fraction of what had been anticipated. Analysts called for 130,000 new jobs to be added, but the economy produced only 1,000. And although unemployment dropped to 5.7 percent, much of that was attributed to job seekers giving up the search -- nearly 310,000.

The generally conservative Economist cautioned in late December "Don't Believe the Hype." Citing "massive" fiscal stimulus (from the tax refunds) supported by monetary policy (continued low interest rates and a lower dollar relative to other currencies), the Economist declared "There is, in fact, nothing very miraculous about the American recovery." But noting that Americans continue to spend and not save, the writers of the Economist added "Whether recovery is sustainable is another matter." (See The Dubya Report's It's the Economy.) "The fall in long- and short-term interest rates has boosted house prices and made Americans feel richer. But in the long term they will have to save more," they wrote. In the corporate world, despite improving balance sheets, the writers of the Economist saw "more talk than action." Credit agencies are still downgrading more companies than they are upgrading -- an indication that US corporations are still heavily in debt. One effect of this situation is that many corporate bonds no longer qualify for the label "high yield."

The Economist was also critical of the Bush administration's limits on trade. "This supposed bastion of free trade is rife with protectionism," they wrote. And they questioned the administration's promotion of a weak dollar (claims of a "strong dollar policy" aside): "The administration also risks creating a dollar crisis by talking down the value of the dollars it gives back to those investing in the country. That isn't very clever, given how much America has to borrow from abroad. There are already signs of unhappiness about this: portfolio flows to America have been drying up as the dollar continues to fall. It could get a lot worse."

The editorial writers of the New York Times wrote recently, "The president's domestic policy comes down to one disastrous fact: his insistence on huge tax cuts for the wealthy has robbed the country of the money it needs to address its problems and has threatened its long-term economic security." In a report published on January 7 titled U.S. Fiscal Policies and Priorities for Long-Run Sustainability, the International Monetary Fund seemed to agree. Noting that "fiscal policies have undoubtedly provided valuable support to the recovery so far," the report warned of two interrelated concerns:

  1. The large deficits could produce "upward pressure on interest rates, a crowding out of private investment, and an erosion of longer-term U.S. productivity growth."
  2. Without the surpluses the government is less well prepared to deal with the pressures on Social Security and Medicare that will come with as baby boomers begin to retire.

In the somewhat sterile language of academic economists, the study details how "Since FY2000 ... the fiscal position has eroded rapidly and, with the deficit expected to exceed 4 percent of GDP in FY2004, essentially all the gains achieved during the earlier decade have disappeared." The study assigns 25 percent of the responsibility for this reversal to the Bush tax cuts. Noting that the deterioration of fiscal position and the administration's emphasis on tax cuts have revived the debate as to whether tax cuts can boost the economy's supply side, the report warns, "It remains an open question whether the tax cuts adopted since early 2001 will have significant supply-side benefits.... Although the cuts in income tax rates will—at the margin—improve incentives to work, the labor participation rate is already high, and empirical studies do not suggest that it is highly tax elastic." Meaning that -- administration claims notwithstanding -- the tax cuts are unlikely to create jobs.

In a paper presented to the American Economic Association in early January, former Treasury secretary Robert Rubin quoted Gregory Mankiw (the current chairman of the Bush administration's Council of Economic Advisers), who wrote in 1995 that a crisis in investor confidence "may be the most important reason for seeking to reduce budget deficits. . . . As countries increase their debt, they wander into unfamiliar territory in which hard landings may lurk. If policymakers are prudent, they will not take the chance of learning what hard landings in [advanced] countries are really like." Rubin's paper, written jointly with Brookings Institution economist Peter Orszag warned of what such a loss of confidence could mean:

Substantial ongoing deficits may severely and adversely affect expectations and confidence, which in turn can generate a self-reinforcing negative cycle among the underlying fiscal deficit, financial markets, and the real economy. . . . The potential costs and fallout from such fiscal and financial disarray provide perhaps the strongest motivation for avoiding substantial, ongoing budget deficits.

As we've discussed previously in The Dubya Report, the economic crisis in Argentina in the 1990s provides a ready example of the consequences.

University of Texas economist James K. Galbraith noted recently that by numerous measures, the Bush administration's tenure has been bad for jobs. During the Clinton administration 23 million new jobs were created; during the Bush administration so far 2 million jobs or more have been lost. The recession officially ended in November 2001, but in something of a parallel to the deaths in Iraq since the end of "major combat" 22,000 jobs have been lost each month since then. Bush likes to blame the tough economic times on the September 11 attacks; Galbraith points out, however, that Bureau of Labor Statistics data show that job losses slowed when the war on terror began.

In Galbraith's view, Bush wants the employment high enough to get him elected, but after that "he doesn't care." Bush's clientele -- military contractors, energy and drug companies, and big media -- make their money patents, and have no interest in full employment. "They like unemployment, weak labor, low wages and a government that bullies on their behalf. And after the election, if Bush wins, that is what they will get for four more years," Galbraith wrote recently on Businesses, Galbraith argued, know that the recent flurry of economic activity is unsustainable. Production will increase briefly to meet demand, but business will "remain resolutely reluctant to hire new workers for the long term."

Viewed from this perspective, Bush's recent immigration "reform" merely further skews the labor balance of power in favor of employers. "Forget labor rights. Forget unions," Galbraith wrote. The employer gets to decide who stays and who goes home. The program allows employers to admit workers from any country, any time, provided that there is a job that an American worker is unwilling to take. "But," argued Galbraith, " it is easy to create such jobs: Cut wages. Terminate the unions. Lengthen the hours. Speed up the lines. Chicken farmers have known this for years. Bush's plan is a blank check for every bad boss this country has." The real effect of the program, Galbraith wrote, will be to create a rotating class of foreign workers. When one group outstays their permits, another group is brought in. Galbraith envisions a labor market where terms of employment steadily deteriorate.

It's hard to imagine anything worse for our social life -- more productive of petty crime -- or for that matter, riskier for our national security.

I am not exaggerating: This is a threat to us all.

Medicare Deformed

"I signed this measure proudly," Bush said of the Medicare so-called reform bill, "and any attempt to limit the choices of our seniors, or to take away their prescription drug coverage under Medicare, will meet my veto." But from across the political spectrum the bill has come under criticism. In an opinion piece for the Washington Post former Health and Human Services (HHS) Secretary Donna Shalala questioned whether the HHS department could realistically implement the drug plans outlined by the legislation in the available time. In 15 months, she writes, the department must "transform the theory that Congress has put forward into a working market that can provide prescription drug coverage to Medicare beneficiaries," using a type of plan that does not currently exist in the US healthcare system. Neither benefits nor premiums are fixed, and " one can currently say who will offer this coverage or how precisely the plans will operate."

The agency will have to make literally thousands of decisions as it develops the rules and procedures for this program, many of which will significantly affect beneficiaries and prescription drug plans alike. It will get a strong push from industry groups to write minimal regulations that leave most of the details to the private prescription drug plans. That is largely what Congress did in drafting the law.

Meanwhile, it is the cost of the program that has conservatives up in arms. In July, flat-tax proponent and Heritage Foundation tax-policy specialist Daniel Mitchell warned that the Medicare bill represented "bigger" government, and that its cost would threaten the Bush tax cuts (and the feasibility of future tax cuts). On the eve of the bill's passage the Heritage Foundation staff wrote in their regular "Medicare Maladies" column

God forbid what life in the third decade will be like if real reforms in Medicare never materialize:

... People paying more in taxes for Medicare than for defense or Social Security. Companies dropping drug benefits promised to their retirees because they want to increase their profit margins.

...But senators didn't seem to think about this as they voted 54-44 on Nov. 25 to approve the Medicare measure and send it to Bush. Why should they? Their kids will deal with it.

That’s been the problem from Day One. Lawmakers never saw past the next election cycle....

At a recent conference at the non-partisan Urban Institute, Bob Berenson, who served in various capacities at the Health Care Financing Administration (now the Centers for Medicare and Medicaid Services) summarized some of the criticisms:

  • The bill actually picks up less than 25 percent of estimated Medicare drug costs in the eight year period after the provisions takes effect. Of an estimate $1.5 trillion in drug costs for Medicare beneficiaries between 2006 and 2013, the legislation budgets $395 billion. $100 billion of that is already designated for transfers to employers, or to states.
  • The legislation is extremely complex, so that although it is touted as providing "choice" it's not clear how to choose whether and how to participate. Private plans include regional PPOs, local HMOs, private fee-for-service plans, etc. A local HMO can offer a plan with or without a drug benefit, or with a supplemental drug benefit. Rather than freeing, older seniors, or those with cognitive impairment may find the array of choices daunting.
  • Nothing in the legislation addresses the rising costs in the existing Medicare Part A (hospital insurance) or Part B (medical insurance, e.g. doctor's care, etc.). The Congressional Budget Office (CBO) recently estimated that Medicare prescription drug costs could reach 1 percent of the Gross Domestic Product (GDP) by 2050. Other less optimistic put that number at as much as 4.5 percent.
  • Despite the substantial subsidies in the recent legislation to encourage employers to continue to provide health coverage for retirees, the trend is for fewer employers to offer such coverage. While the trend existed prior to passage of the legislation, some have suggested that the legislation will accelerate the trend, or that employer plans will skim off the healthier and more affluent beneficiaries.
  • There may be a significant negative impact on low-income people who receive both Medicare and Medicaid. As of 2006, these individuals can enroll in Medicare drug-coverage plans, and drug coverage under Medicaid will stop. Private plans in Medicare have lists of approved medications (formularies), and they may not include drugs that were available under the Medicaid plans. (See The Dubya Report's The Trojan Horse Medicare Bill.)

Berenson asked the question "...[W]which is the leading issue: the prices of drugs or coverage for drugs?"

The bill clearly espouses the private delivery of prescription drug benefits by private insurers, some of whom will be stand-alone private insurers, an entity that does not now exist, and there is specific language that the secretary may not interfere with the negotiations between drug manufacturers, pharmacies, and sponsors of these plans. And so there is also a reimportation provision, but that would require FDA sign-off, and they've made it pretty clear they're not about to sign off. Although there are some changes to the Hatch-Waxman Act, which promotes more generic use, at least some will say that this legislation, although starting to make progress, is a prescription drug benefit, has not really done anything to deal with prescription drug prices.


The State of the Union message offered few policy adjustments, domestically or internationally, but it may have laid out something of a road map for the coming presidential political campaign. Former Vermont governor Howard Dean labeled the Bush proposals a "stale agenda. " Senator John Edwards asked, "The question is which union. The union of the special interests and the insiders in Washington is strong. The problem is there are a lot of Americans who are struggling every single day, and they're the people who need our help." Retired general Wesley Clark turned Bush's rhetoric around. "Two years after President Bush coined the term 'axis of evil,' we've got a new axis of evil, and it's one our president himself created," he said. "It's an axis of fiscal policy that threatens our future, foreign policy that threatens our security, and domestic policy that puts families dead last."

In their commentary on the Bush speech, the editorial writers of the Independent (UK) spelled out the task ahead in simple terms:

The biggest challenge for the Democrats is to force Mr Bush to fight on his record, his whole record, not the laurel-wreathed warrior version. We must hope that whoever emerges from the primaries has the strength and conviction to unify the party and give American voters the choice they deserve.


Shalala, Donna "Making the Drug Plans Work" Washington Post 29 Dec. 2003

Balz, Dan and Paul Schwartzman "On Campaign Trail, Union Is Not So Rosy" Washington Post 21 Jan. 2004

"State of the Platform" Editorial Washington Post 21 Jan. 2004

"State of the Union at Home" Editorial. New York Times 21 Jan. 2004

"George W Bush and the real state of the Union" The Independent (UK) 20 Jan. 2004

"George Bush has presided over a vast catalogue of failure and division" The Independent (UK) 20 Jan. 2004

Douglas, William "As Bush outlines goals and themes, analysts question his record" Knight Ridder Newspapers. 20 Jan. 2004

Record, Jeffrey Bounding the War on Terrorism Strategic Studies Institute, U.S. Army War College. Dec. 2003

Cirincione, Joseph, et al. WMD in Iraq: Evidence and Implications Carnegie Endowment for International Peace. Jan 2004

"Don’t believe the hype" Economist 30 Dec. 2003

"Not quite fully on the money" Associated Press 21 Jan. 2004

Galbraith, James K. "The no jobs president" 19 Jan. 2004

Vital Signs: Health Care in AmericaThe Urban Institute. 6 Jan. 2004.

State of the Union Address 20 Jan. 2004

State of the Union Address 28 Jan. 2003

"Medicare Malady #90: The Truth Is Out There" The Heritage Foundation. 25 Nov. 2003

Mitchell, Daniel J. Why Medicare Expansion Threatens the Bush Tax Cuts and Undermines Fundamental Tax Reform Heritage Foundation. 25 Jul. 2003

Douglas, William "Bush's claims are just part of the story" Philadelphia Inquirer 21 Jan. 2004

Mühleisen, Martin and Christopher Towe, Eds. U.S. Fiscal Policies and Priorities for Long-Run Sustainability International Monetary Fund. 7 Jan. 2004

For press reaction from around the world, to the State of the Union message see the Guardian (UK)'s "'He has already lost his halo'".

For more information on the jobless recovery, see Job Watch, and a new report from the Center on Budget and Policy Priorities

CEIP has a section of its web site devoted to its report on pre-war intelligence about Iraq.

Read Jeffrey Record's Bounding the Global War on Terrorism.