WASHINGTON -- During the pause in prematurely frenetic election campaigning forced by mourning for Ronald Reagan, senior policy advisers to George W. Bush pondered two serious questions: What domestic policy initiatives should President Bush pursue in a second term? Which of those should he campaign on this year?
The answers will soon be debated inside the White House over how much reform Bush should risk. Political advisers are cautious and policy advisers bolder as they ponder these areas: Social Security, Medicare and taxes. Most likely, the president will advocate Social Security reform during this year's campaign, wait for a second term to reform taxes and not venture at all into Medicare's troubled waters.
The broad strategic question is whether Bush should seek a second term strictly as a "war president" fighting terrorism, the one area where current polls show him well ahead of John Kerry. While the political team wants to stick to the anti-terror agenda, the policy team considers it vital for the Bush presidency to confront issues that he was expected to address in a first term but did not. These are the decisions that only Bush himself can make.
Medicare is the issue he almost surely will forgo. Senior administration officials privately admit that last year's prescription drug bill was a disaster substantively and politically. The golden opportunity for Medicare reform was squandered. Although the need for basic change along market-based lines persists, nobody has the will to revisit this issue any time soon.
Social Security is another matter. The need for change is pressing, and the basic element of reform has been decided: private retirement accounts. But that will not be enough. Means-testing is needed to remove from the rolls rich old Americans who don't need the federal stipend, many of whom long ago exhausted their contributions to the system. That change would demolish the fiction that this is a genuine insurance system rather than government welfare.
The big political problem is cost. Transition expenses for private accounts amount to $1 trillion over 10 years. A more radical reform, however desirable, will cost even more. The difficult argument against Democratic opposition will be that these costs eventually must be incurred by the federal government, if not now, then later.
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