Popular issues, unpopular president

Bush's State of the Union speech reached across party lines on some issues, but the war in Iraq overshadows all. Fortune's Nina Easton analyzes the political divide.

By Nina Easton, Fortune Washington bureau chief

WASHINGTON (Fortune) -- If this was 2003, or even 2004 - before the Iraq war went south, before Hurricane Katrina swept ashore, before last November's devastating Republican losses - Bush's State of the Union ideas (which his aides are calling "bold" and "innovative") might have been embraced. Unlike his politically risky 2005 proposal to reform Social Security, the plans he unveiled last night to combat climate change and soaring health care costs neatly catch the current wave of public sentiment.

But newly emboldened Democrats, with their own ideas on how to solve these problems, weren't impressed. First-term Virginia Senator Jim Webb, a Vietnam Marine whose son is serving in Iraq, briskly dismissed Bush's domestic initiatives, expressing doubts about the seriousness of the president's intent. By the fourth paragraph of the Democrat's official response - a speech delivered to the nation as Bush left Capitol Hill - Webb's attention was elsewhere: on the gap between middle class workers and the rich (especially CEO's) and the Iraq war, which he accused the president of "recklessly" instigating.

In the coming months, Bush will probably see one of his initiatives enacted: immigration reform that includes a temporary worker program. On this, Democrats and the president agree, while conservative Republicans who oppose the approach have been marginalized.

And there is little doubt that Congress will act to promote alternative energy. The scent of ethanol was in the air last night and Iowa's two senators - Democratic Senator Tom Harkin and Republican Charles Grassley - were all smiles. (Harkin, who agrees with Bush on little else, patted the president on the back and whispered in his ear as he exited the chamber.)

The president wants to forcibly increase the use of renewable fuels in gasoline mixes, a big boon for ethanol producers. But yesterday some analysts questioned whether his ambitious goals to increase the use of, say, corn-based ethanol could actually be accomplished without dangerously reducing American food exports. "This is not a free ride," said Lawrence Lindsey, Bush's former top economic adviser.

On energy, President Bush went farther than he did last year, when he declared that America must end its "addiction to oil," and set a goal of reducing gasoline use in the U.S. by 20 percent over 10 years. His comments came on the heels of a statement this week by ten leading CEOs who called for reductions in greenhouse emissions. "Extending hope and opportunity depends on a stable supply of energy that keeps America's economy running and America's environment clean," the president said.

But environmental groups and some Democrats attacked the other piece of Bush's plan: to "reform and modernize" auto emission standards. Critics said automakers would do an end-run around the requirements by building bigger cars to qualify for more exhaust.

On health care, President Bush's proposal to alter the federal tax code to subsidize people in need of health insurance while penalizing those with expensive, employer-provided policies also faces resistance on Capitol Hill. The idea "has the potential to move the debate forward," said Mark McClellan, who until recently served as Bush's administrator for Medicare and Medicaid. But McClellan conceded that most of the political support for Bush's plan would come from state governors, not leaders on Capitol Hill.

In the run-up to the speech, White House officials offered their own spin of the November election that gave Democrats control of Congress, arguing that it was less a repudiation of Bush and Republicans than a call for more civility in the nation's capital. "Americans sent the signal that they want Washington to act differently," said White House counselor Dan Bartlett, who called the speech "the basis for bipartisan outreach." Bush's speech last night was carefully calibrated to find common ground with the Democrats while sending them warnings that there were some issues on which he would yield no ground-raising taxes, "backsliding" on No Child Left Behind standards, and - most importantly - altering his troop-surge plan for Iraq. "Whatever you voted for, you did not vote for failure," he told the assembled lawmakers after making the argument that if US troops pulled out (as many Democrats propose) the Iraqi government would crumble while Shia extremists backed by Iran and Sunni terrorists aided by Al Qaeda clashed in an "epic battle" that spilled across the region.

Symbolic of Bush's political predicament with the Democrats in power, he used the first half of the speech to outline domestic concerns that even his political opponents would applaud. But his voice was far more passionate when he spoke of Iraq--and the political divide on Capitol Hill was far more clear, as House Speaker Nancy Pelosi sat behind him with pursed lips and arms folded.

Bush's pursuit of an unpopular war has driven his public support as low as Richard Nixon's in 1974. But when he finished his speech and left the podium, he was besieged by lawmakers, Democrat and Republican, wanting his autograph on the evening's program. They may hate his policies, but staunch liberals like Texas' Sheila Jackson-Lee and sometime presidential candidate Dennis Kucinich of Ohio lined up for the president's attention. There is still a little clout in being the commander-in-chief.  Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.