Bush Seeks Leadership on Social Issues

President Bush, seeking to reassert leadership on key social issues, proposed a wide variety of domestic initiatives Tuesday, ranging from programs for highways, energy, space and education to a plan to transfer billions of federal dollars to the states.

He proposed eliminating altogether the use of political action committees to finance political campaigns, pledged to step up enforcement of existing civil rights laws and renewed a proposal--rejected by Congress last year--to cut taxes on capital gains.

The full plate of domestic initiatives, contained in Bush’s annual State of the Union address, was a surprise--apparently reflecting White House concern about criticism that the President had been ignoring domestic issues.

Still, many of the proposals that Bush mentioned Tuesday night represented either old or recycled plans from earlier years, many of which had been rejected previously by Congress.

For all the heavy emphasis on domestic issues, Bush’s speech Tuesday was short on specifics for the proposals he outlined and gave no indication of either how much they would cost or how he planned to pay for them.

Officials said only that they would fit within budget guidelines. They said specifics will not be provided until the Administration’s 1992 budget package is made public next week.

The President coupled his initiatives with an upbeat assessment of the economic outlook, saying that he believes the United States “will get this recession behind us and return to growth--soon.”

And he once again eschewed any proposals to help stimulate the economy. Instead, he emphasized a package of longer-range initiatives that he said would provide a “forward-looking plan of action . . . for the next American century.”

He said his proposals are aimed at creating an economic environment for growth and another long economic expansion such as the one the nation enjoyed during the 1980s.

“I know tonight, in some regions of our country, people are in genuine economic distress,” Bush said. “I hear them . . . . But there are reasons to be optimistic about our economy.”

He confirmed that he would propose a reform plan designed to bolster the nation’s ailing banking system. And he called for an end to the credit shortage. “Sound banks should be making more sound loans, now, and interest rates should be lower, now,” he said.

Despite the heavy emphasis on domestic initiatives, the President warned Tuesday that he wants to continue to abide by the deficit-reduction accord worked out with Congress last fall.

He said that the fiscal 1992 budget that he will formally send to Congress next week will seek to hold the growth of federal spending below the current rate of inflation, now about 4.6%. That means, again, that some programs will suffer cuts in actual services.

To ensure that his proposal for a capital gains tax cut does not violate the budget agreement’s deficit-reduction targets, Bush said that he will ask Federal Reserve Board Chairman Alan Greenspan to head a study of the tax cut’s budgetary impact.

Democratic congressional leaders strongly oppose cutting taxes on capital gains, arguing that it would worsen the budget deficit while providing an extra tax break for the rich. Capital gains are the profits from the sale of stocks or other investments.

Bush’s legislative agenda includes proposals to revive initiatives--previously rejected by Congress--to provide for tax-free family savings accounts and penalty-free withdrawals from individual retirement accounts in order to buy homes.

In an attempt to satisfy conservative Republicans, Bush announced his support for several controversial GOP programs such as the creation of enterprise zones for inner cities and giving public housing tenants the right to manage and own their projects.

Those ideas--along with companion proposals to give parents greater freedom in choosing the schools their children will attend--have been championed by Housing and Urban Development Secretary Jack Kemp as a means of giving individuals greater choice and individual power.

White House officials said that the education provisions of this “empowerment” theme announced by Bush will be part of a new legislative package designed to achieve “educational excellence,” which will be proposed by the White House later this year.

The proposal to transfer more money to the states--by shifting responsibility for existing programs to governors and state legislatures--amounted to a major initiative in a time of budgetary austerity.

Although Bush did not specify which programs might be involved, he said that he has drawn up a list of $20 billion in grants and that he will work with Congress and the governors to decide on about $15 billion that ultimately would be turned over to the states.

The transfer would be in the form of a “consolidated grant, fully funded,” Bush said, and would be designed to provide for “flexible management” by the states.

“The value of this turnover approach is straightforward,” Bush said. “It allows the federal government to reduce overhead. It allows states to manage more flexibly and more efficiently. It moves power and decision-making closer to the people.”

The Richard M. Nixon Administration proposed a similar transfer of programs, known popularly as “revenue sharing,” during the early 1970s, but the initiative eventually was scrapped after Washington encountered budget problems and states absorbed the money for operating funds.

White House officials said Tuesday that Bush’s proposal would differ markedly from the Nixon programs and would involve funds that now are administered by states under strict federal controls.

The banking reform package, which will be formally disclosed by the Treasury Department next week, has been widely debated both inside the Administration and in Congress for months.

And White House officials acknowledge that Bush’s energy strategy will likely be a watered-down version of the one originally proposed by the Energy Department.

Bush, who campaigned on a pledge to become the “education President,” hopes to provide greater local control over schools by providing increased flexibility in the ways federal education funds are targeted.

In addition to providing parents greater choice over schools, he intends to create non-traditional means for teachers to be certified, so that a broader pool of professionals can be tapped for teaching.

“Freedom and the power to choose should not be the privilege of wealth,” Bush said. “They are the birthright of every American.”

A new push to improve the nation’s highway system and the rest of the aging infrastructure of roads and bridges also will be included on the Bush agenda this year. But Administration officials did not provide details Tuesday on what that transportation package will include.

“Yes, the largest peacetime economic expansion in history has been temporarily interrupted,” Bush said. “But our economy is still over twice as large as our closest competitor . . . . We will get on our way to a new record of expansion and achieve the competitive strength that will carry us into the next American century.”

Bush said that he will call a summit meeting of the nation’s top law enforcement officials to deal with the country’s worsening crime and drug problems.