Bush to use State of Union to revive tax proposals

<br>WASHINGTON (AP) _ President Bush will use next week's State of the Union address to try to revive a proposal that would allow younger workers to invest a portion of their Social Security taxes

Friday, January 16th 2004, 12:00 am

By: News On 6

WASHINGTON (AP) _ President Bush will use next week's State of the Union address to try to revive a proposal that would allow younger workers to invest a portion of their Social Security taxes in the stock market, the White House said Friday.

His election-year agenda also calls for pressing Congress to make already-enacted tax cuts permanent, such as the elimination of inheritances taxes and reductions in capital gains taxes. Bush is likely to renew his push for a new kind of tax-preferred savings accounts that could be used for retirement, college, health care or other purposes.

Bush will address the nation in a televised speech before a joint session of Congress at 9 p.m. EST Tuesday, three years to the day after his inauguration and one day after the Iowa presidential caucuses.

Approaching a battle for re-election, Bush will highlight economic growth and successes in the fight against terrorism, most notably the capture of deposed Iraqi President Saddam Hussein. He also will challenge Congress to address the rising costs of health care, presidential spokesman Scott McClellan said.

It will be a stay-the-course message at a time when his Democratic rivals are urging a change at the White House.

``He needs to make the case as best he can that people are better off and more secure than they were four years ago, and that maintaining the status quo is the better course for the nation,'' said Phil Trounstine, the director of the Survey and Policy Research Institute at San Jose State University.

``He has to be political but deft. It can't sound like a political speech,'' said Trounstine, a former communications director for ex-Gov. Gray Davis of California. ``He's got to sound like he is a statesman and the leader of the nation, not a politician and the leader of his party.''

A day after his speech, Bush will cross the country to emphasize his themes. He will travel to Toledo, Ohio, and Phoenix on Wednesday and then visit Roswell, N.M., on Thursday before returning home.

Bush held his first speech rehearsal Friday and planned to go over his remarks during a weekend stay at Camp David, the presidential retreat in Maryland's Catoctin Mountains.

``We're meeting our priorities at home and abroad,'' McClellan said. ``But I expect the president will say that there is much that remains to be done to continue to make America more secure, more prosperous, and more hopeful.''

The partisan atmosphere of the campaign year may diminish the chances of major action on Bush's initiatives, some of which have languished for years. But the administration hopes that last year's approval of sweeping changes in Medicare and the addition of a prescription drug benefit will clear the way for action on Bush's proposal to partially privatize Social Security.

As a candidate, Bush said he would shore up future funding for Social Security by giving workers the option of staying in the current retirement system or investing a portion of their Social Security taxes in individual retirement accounts.

Workers who chose to invest would receive a smaller Social Security benefit when they retire, which would be supplemented by earnings from their investment accounts.

Bush also is considering whether to renew his push for lifetime savings accounts that could be used for any purpose, with tax-free withdrawals, and for retirement savings accounts in which money could not be withdrawn tax-free until the accountholder reached a set age.

As originally proposed last year, contributions to the accounts would not be tax-deductible. Yearly contributions would likely be capped at $7,500.

Bush has already announced two large-scale proposals this month, rather than saving them for the State of the Union address.

On Jan. 7, he asked Congress to grant legal status to millions of undocumented workers in the United States. A week later, he said he wants to establish a long-term presence on the moon to serve as a springboard for ventures deeper into the solar system.

Rolling out those big initiatives ahead of the State of the Union garnered Bush several days of public attention, rather than one or two if he had saved them for Tuesday, Trounstine said.

In the State of the Union speech, Bush is likely to forcefully defend the immigration initiative against criticism from conservatives and from liberals alike, one administration official said.

One conservative activist who talks to White House officials often said Bush is under pressure to call for a constitutional amendment banning same-sex marriage.

But Bush is unlikely to wade into such a polarizing issue at the starting gate of an election year, the activist said.