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Bottom Line: 'W'ouldn't be prudent

By GREGORY FOSSEDAL, UPI Columnist

WASHINGTON, April 7 (UPI) -- White House strategists and Friends of W throughout the Beltway insist that President Bush "will not relent" on the effort to reform Social Security this year. But at a recent private consultation with Ed Feulner and other brain-trusters, Mr. Bush reportedly did just that. (Feulner did not return a call requesting comment.)

"I was right about this," the president reportedly told the group in mid-March, speaking in the past tense. "History will show that," according to a source that wished to remain anonymous.

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Still, the president who had the guts to run two campaigns calling for reform, and lived to tell the tale, seemed resigned to the fact that at least 42 Senate Democrats are not going to budge; enough to sustain a promised filibuster.

The Social Security push, Mr. Bush said, "doesn't seem to have worked. I thought it was important; I'm not giving up for the long run; it's just not the time. We're going to let it go," as a 2004 initiative. "We'll drop it -- for now," according to the source.

A senior White House aide who talked to Mr. Bush about the session said "the president loved the meeting -- he kept mentioning it for a couple days, they way he does when something has gotten him revved up." The aide said Bush "was in high spirits about his domestic agenda and his agenda for democracy all over the world," but on Social Security, added: "You've got to know when to fold 'em -- that doesn't mean it's the last hand."

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DICTATORS AND DOMINOES


Before reviewing the implications of a White House down-play on Social Security, it's worth noting other highlights reported from the meeting.

-- The president was optimistic and upbeat about other initiatives, noting Congress has already moved ahead on energy, tort reform, tax reduction, and other issues. The Social Security push, indeed, may have distracted (or provided an excuse for downplaying) a series of early-2005 achievements that in another presidency might have gotten more attention. "We've got a lot of issues," Mr. Bush noted, particularly on federal spending, according to the source.

-- Mr. Bush was "adamant and animated" about the rising threat of a Latin left tsunami, evident just this week in Argentina's renewed growlings over the disputed Falkland-Malvinas islands. He reportedly used expletives in referring to Mexico City Mayor Andrés Manuel López Obrador, and said there may be an emerging second war-on-terror front in the person of Venezuelan President Hugo Chavez.

Bush said Chavez is "stirring it up" in Colombia and throughout the region. Both Venezuela and Argentina are said to be funding far-left political parties and paramilitary groups in Nicaragua and Colombia. They are also reportedly increasing trade and economic aid to assist Cuban dictator Fidel Castro in his role as a kind of a Club Med hotelier for the region's terrorists and revolutionists. A former NSC staffer tells me the White House suspects Castro may be planning to do more than that.

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Mr. Bush reportedly made no comment regarding Argentina's coup d'ebtat, but it's notable that the approximately $80 billion taking is on a scale with a year of war effort in Iraq, or even with the (economic) damage done by 9/11 terrorists. A senior Treasury Department official said that in recent weeks, the president has been "on the bit" regarding Argentina's behavior. Treasury, this official said, cannot figure out what to do after a year of acquiescing in Argentina's program.

-- Asked about his favorite philosopher by a journalist last year, the president answered, "Jesus." But in the meeting, Mr. Bush added, according to the source, "I wish they had also asked about my favorite political philosopher. I would have said, 'Alexis de Tocqueville.' "


PASSAGE, OR PASS...


What would a Social Security pass, at least in 2004, mean for Mr. Bush's second term, off to such a promising start overseas?

Even when advised of the gist of the president's remarks, some of his most trusted friends on Capitol Hill say there will be no rest stop.

"They're doing things I've never seen them do before," says Cesar Conda, former advisor to Vice President Cheney for domestic policy. (Conda has a friendly bet with me that Social Security reform, including voluntary private accounts, will pass the Congress this year: "We'll pick off a couple Democrats.")

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A senior White House strategist notes that the administration is closely monitoring the activities of such outside groups as Progress For America and For Our Grandchildren so as to take maximum advantage of television advertising campaigns these independent groups are conducting. Conda says the Rove brigades are conducting a rolling, war-room-style GOP head count, which shows close to 218 House Republicans committed. He also notes the results of a recent sense of the senate resolution which urges the U.S. to "seek a permanent solution" to Social Security imbalances. The resolution passed, 100-0.

As that vote suggests, however, Democrats will gladly sign on to the idea of doing something (unspecified) to make sure Social Security stays solvent (undefined). What they won't do is betray a blood oath to filibuster any proposal for personal accounts.

A well-placed insider at one of the aforementioned pro-reform groups says that from his point of view, "our campaign is now aimed at the long-term. It's dead for this year." A member of Karl Rove's staff reportedly conceded in a meeting with some of Social Security reformers, "there's nothing to be gained by calling everything off and admitting defeat." The aide quickly added that the White House has hopes for the future -- suggesting that the administration's 60-60 program is aimed at "laying some long-term groundwork."

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In short, there may be nothing inconsistent between the president's somewhat reticent, place-in-history remarks, and Conda's insistence that "it's absurd to think that they're giving up." A White House strategist comments: "We're changing our time horizons, not surrendering. We'll continue the p.r. effort but with the long-term in mind."

Democrats are torn. After many losses to Mr. Bush, a large part of the party hopes merely to pocket at least this victory, and quickly, and move on to other issues.

A significant segment of Democratic Party opinion, on the other hand, actually hopes that the fight goes on. In an influential March 3 essay, Salon.com's Sid Blumenthal suggested that if Democrats maintain their discipline, Mr. Bush could be headed for a political Waterloo.

Recent polls indicate that Social Security barnstorming has done little to help the proposal, and depressed the president's fortunes. The White House hope had been that an historic reform of Social Security would provide irresistible momentum for other Bush initiatives. It may be, however, that the White House needs to focus on smaller but still important issues, and use these to seek a filibuster-proof Senate majority in 2006.

A minority of Republicans, but a substantial one, reportedly including Senate Majority Leader Bill Frist, now hopes the president does avoid a full-scale battle, as a foresighted assessment of GOP members, by former House Republican economist John Mueller, predicted early this year. Mr. Bush, for his part, seems disinclined to fulfill Mr. Blumenthal's fantasy of a high-casualty showdown by ordering a political Pickett's charge.

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Dirty secret: George Bush, frequently praised for "surrounding himself with competent people," is in fact the smartest guy in his own administration.


BOTTOM LINE


Mr. Bush's approval ratings have reached an all-time low during the Social Security campaign -- despite hopeful trends outside the U.S., and a relatively successful second-term start on other domestic legislation. In the meantime, and probably not by coincidence, U.S. stock prices have slumped.

A choice to redouble the battle for Social Security reform now would leave the White House with less political gunpowder every day to fight on issues Wall Street cares about and may see as more achievable and even more urgent, from Medicare and other spending restraint to locking in the Bush tax cuts, or even advancing tax reform.

Mr. Bush's father used to say: "Wouldn't be prudent at this juncture." Provided any White House pullback on Social Security enables the president to expend his energies on the considerable opportunities in his domestic agenda and foreign policy, the results should be bullish for both U.S. stocks and bonds.

--

(Gregory Fossedal is an advisor to international investors on global markets and ideopolitical risk, and a research fellow at the Alexis de Tocqueville Institution, www.adti.net. His clients may hold long and short positions in many of the investment securities and opportunities mentioned in his reports. Investors should perform their own due diligence and consult their own professional advisor before buying or selling any securities. Mr. Fossedal's opinions are entirely his own, and are not necessarily those of his clients, UPI, or AdTI. Furthermore, they are subject to change without notice.)

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