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 Monday, 27 January, 2003, 15:14 GMT
Bush swings to the right
Dennis Hastert and Robert Byrd listen to President Bush's address
The president will mobilise his conservative supporters

The State of the Union address has provided George W Bush with the platform to push forward his conservative agenda at home as well as abroad.

In helping to elect a Republican-controlled Congress, the President has built up a bank of goodwill that will allow him to make progress on a domestic agenda that has been largely stalled by a Democratic Senate and the war on terrorism.

Elderly Americans
Elderly Americans have to pay for their medicines
Now the president is hoping to reward his conservative supporters with tangible benefits.

But he must satisfy two different constituencies: the Main Street small business supporters who want tax cuts above all, and the religious right, who is much more interested in advancing its social agenda.

Top of his agenda is a $692bn tax cut over 10 years that will largely benefit the rich, by eliminating taxes on dividend payments received by those who own stock.

The president argues that the plan will help stimulate the economy, both by putting money into the hands of those who will spend it and by increasing the productivity of the economy by encouraging investment and job creation.

Demonstrator dressed as death and doctor at anti abortion rally in DC
Abortion activists were glad of the White House support
But he faces an uphill battle in convincing the public, with only 44% of people approving Mr Bush's handling of the economy. according to a New York Times/CBS opinion poll.

And the Democrats are sure to round on the growing Budget deficit, expected to reach $300bn next year, and the need for further cuts in other domestic programmes to fund the new tax cuts.

Hope for abortion opponents

The president has been signalling his support for a raft of social conservative causes.

Last week he told an anti-abortion rally in Washington that he would sign a bill banning late-term abortions, and has hinted that if a Supreme Court vacancy arises, he will appoint a Conservative judge who may vote to overturn the landmark Roe v Wade case which legalised abortion in the United States.

He has also announced that he will oppose in the Supreme Court a University of Michigan affirmative action plan aimed at increasing the number of minorities who attend college.

The administration has also signalled further measures to weaken some environmental protection legislation, and to toughen up legislation on welfare reform.

But the key domestic political battle may well centre on President Bush's selection of federal judges.

Even if he does not get the chance to nominate a new justice for the Supreme Court, the Republicans - who have already re-nominated several southern Conservatives to the lower courts whose views on segregation and abortion are anathema to the Democrats - are hoping to control the Federal judiciary for a generation.

Healthcare battle

President Bush will also begin his push for private sector solutions to the problems of health and education.

Bernie Ebbers, former head of WorldCom
Corporate America took a beating last year - but will get tax cuts
He will push for his plan to provide more healthcare benefits for elderly people through private insurance plans, in order to curb the growing costs of Medicare.

The state-run Medicare insurance system covers most medical expenses for the elderly, but does not cover prescription drugs.

The drug companies fought hard to re-elect Republicans in order to block the Democratic plan to extend Medicare to cover medicines - which could have led to pressures on them to lower the cost of prescription drugs.

President Bush has decided that he must offer some kind of prescription benefit to the powerful seniors lobby, but he wants to couple it with the reform of the whole system, to ensure that more elderly people receive their medical care through health maintenance organisations (HMOs), which manage care.

Mr Bush will probably have to postpone his plans to partly privatise the US social security system which provides pensions for the elderly, due to the decline of the stock market.

Delicate balance

In domestic politics, President Bush has boldly decided to use his wafer-thin majority in Congress to push through as much of his agenda as possible.

Much of it could still be blocked or modified in the Senate.

But that might not worry Mr Bush too much.

He would be able to satisfy his conservative supporters without offending the moderates he will need for re-election in 2004.

But it still could be the economy, rather than the war, that proves George W Bush's Achilles heel if his tax-cutting plan does not deliver the growth he is hoping for.

  The BBC's John Terrett
"President Bush is expected to use the annual address to convince the public over his policies"

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