Just one year after his now-infamous claim that Saddam Hussein was seeking to buy African uranium for use in Iraq's apparently nonexistent nuclear-weapons program, President George W. Bush has once again chosen to paint a picture of the State of the Union -- and, indeed, the world -- that is essentially fraudulent.

Like last year, he started his speech with foreign affairs. He first sought to parry the main lines of criticism against his policies in this regard: that Iraq did not, in fact, have the weapons of mass destruction against which he warned last year, and that the administration's policies have been dangerously unilateral.

On the weapons-of-mass-destruction front, Bush said, "Had we failed to act, the dictator's weapons of mass destruction programs would continue to this day." It's an elegant shifting of the goal posts away from the actually existing weapons of which the president used to speak. Regarding unilateralism, the president professed not to understand calls to internationalize the conflict in Iraq. After all, he reminded us, 34 countries have joined our coalition there. Never mind that the United States provides the vast majority of the troops and cash (and that Britain accounts for more than half of the coalition forces).

More broadly, the president sought to cloak his foreign policy in the noble mantle of democracy promotion, a concept that goes over well with the bien-pensant elements in the press corps. Some skeptics on both the left and the right have denounced the president's bold vision on this front as infeasible. The president obliquely acknowledges this point, saying, "It is mistaken, and condescending, to assume that whole cultures and great religions are incompatible with liberty and self-government."

The fact of the matter is, however, that this vision is less unrealistic than simply nonexistent. The Bush administration has used human rights and democracy as rhetorical bludgeons against governments it dislikes, such as the former Baath Party regime in Iraq and the current theocracy in Iran. At the same time, however, the United States continues to enjoy close ties to traditional autocratic allies like Saudi Arabia and Egypt. And the Bush administration has formed an even closer relationship with dictators in Pakistan and Uzbekistan. Regarding Libya, certainly no bastion of freedom, the president himself noted that his government had chosen to cut a deal, lifting sanctions in exchange for a halt to weapons-of-mass-destruction programs rather than pushing for freedom. Regarding North Korea, a charter member of the "axis of evil" and a tyranny if ever there was one, the administration appears to have no policy at all.

On the home front, the gap between the president's claims and the real world is even more astonishing. The backdrop for the domestic agenda is the claim that Bush intends to do something about reversing the trend toward medium-term bankruptcy upon which the administration had set the country during its first three years.

"This will require," he told us, "that Congress focus on priorities, cut wasteful spending and be wise with the people's money. By doing so, we can cut the deficit in half over the next five years."

The idea that a president could come into office inheriting a surplus in the budget, then generate a massive deficit and then propose cutting the deficit in half as an example of fiscal responsibility is fairly astounding. But it doesn't quite describe the scope of the president's agenda.

Indeed, Bush's description of his budget omits the rather hefty costs of many of the initiatives described in the speech. Notably, costs for the war in Iraq (thought to be in the vicinity of $50 billion) are omitted. While marriage promotion ($1.5 billion) and the plan for a mission to Mars (roughly $700 billion) appear to have been cut from the speech, these items would seem to still be part of the president's agenda.

On the tax front, the president's deficit projections fail to take into account his own proposal to make his earlier tax cuts permanent. "Unless you act," he said, "Americans face a tax increase."

The notion that writing sunset provisions into the federal tax code does not make a great deal of sense is true; it is also one of the rare moments of accuracy in the speech. Nevertheless, Bush failed to note that the provisions were included in the first place at his own insistence in order to make the cuts seem less costly. By his admission, permanent tax cuts were not affordable when he first proposed them. And they have become no more affordable during the intervening period. The only thing that has changed is the political calculus.

Even if the proposed short-term budget figures did add up, they would make little difference to the long-term fiscal challenge, which is created almost entirely by entitlement costs -- Social Security, Medicare and Medicaid -- that will increase dramatically as the baby-boom generation retires. The president's main proposal is to allow younger workers to divert some payroll taxes into private retirement accounts in exchange for reduced fixed payments from the government. This makes sense in isolation, but it will make the fundamental problem worse rather than better. The problem is that the money the president proposes to divert is already slated to pay the bills for those nearing retirement today, not finance the Social Security outlays directed at the younger generation.

The government would be running two federal retirement programs simultaneously, with one generation funding both its own retirement and that of the one before it. The result? Costs of about $1 trillion over many years -- money the administration has no plan to raise.

This unfunded partial privatization of Social Security will be supplemented by the creation of Retirement Savings Accounts (RSA), which will allow each worker to set aside up to $7,500 a year, tax-free, for his or her retirement. These RSAs will be joined by Lifetime Savings Accounts, permitting another $7,500 of tax-free investment to be used for any purpose, and Health Savings Accounts, which will similarly allow money set aside for medical expenses to go untaxed. Altogether, this superficially plausible "ownership society" initiative should allow individuals to meet the main needs (retirement, health, education) that are currently provided for by government programs.

Such tax-free savings accounts already exist under law. Yet more than 90 percent of Americans currently fail to make the maximum permissible contribution. The remaining 10 percent of very wealthy Americans who do use them will secure a minor windfall, but these are not the people who need government assistance.

There's nothing wrong with a short-term deficit to weather a recession or a national crisis, or even a modest deficit for the long term. But endlessly increasing expenditures while relentlessly decreasing revenues simply won't work. Last night, the president spoke eloquently on a somewhat offbeat topic.

"The use of performance-enhancing drugs like steroids," he said, "in baseball, football and other sports is dangerous, and it sends the wrong message: that there are shortcuts to accomplishment and that performance is more important than character."

Much the same could be said about the Bush agenda. This snake oil may work on election, but character -- exhibited by a determination to implement viable public policy -- is fundamentally more important. Too bad the president doesn't seem to care.

Matthew Yglesias is a Prospect writing fellow.

For an analysis of the State of the Union from the Moving Ideas Network: the leading source for progressive policy on the net, see State of Our Union: Reality Check.

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