By Steven Thomma,Knight Ridder Newspapers

WASHINGTON – President Bush urged Congress on Wednesday to overhaul Social Security as the centerpiece of his ambitious second-term agenda, arguing that younger Americans can no longer count on the venerated New Deal program because it’s headed for what he called “bankruptcy.”

Bush made his bold proposal in a State of the Union address to a joint session of Congress and to Americans watching at home on live television, splitting his themes almost evenly between foreign affairs and domestic concerns.

Bush lauded the recent elections in Iraq, Palestinian territories and Afghanistan as proof that freedom and democracy are on the march worldwide and that his aggressive and sometimes controversial foreign policy is paying off. He said U.S. forces would remain in Iraq indefinitely and called for $350 million in assistance to the Palestinians.

He also issued new warnings to Syria and Iran.

Looking on from the gallery overlooking the House of Representatives, Laura Bush watched with two foreign nationals, who were meant to underscore recent U.S. successes abroad: One recently voted in Iraq and the other in Afghanistan.

In one of the evening’s more emotional moments, Bush introduced the parents of a Marine killed in Iraq, Sgt. Byron Norwood of Pflugerville, Texas, and read from a letter he’d received from Norwood’s mother, Janet:

“When Byron was home the last time, I said that I wanted to protect him like I had since he was born. He just hugged me and said: “You’ve done your job, Mom. Now it’s my turn to protect you.”

As Janet Norwood, gripped her husband Bill’s arm, her eyes misting over, the audience gave her a sustained ovation. Seconds later, Safia Taleb al-Suhail, the Iraqi woman who’d cast her vote last Sunday and whose father had been killed by Saddam Hussein, hugged Janet Norwood.

Bush brought an aura of political success to his address that few American presidents have shared, for he not only just won a second term in office, but he also helped his party expand its control of both houses of Congress.

Bill Clinton, Ronald Reagan and Richard Nixon – the last three presidents to win second terms – all faced Congresses controlled at least in part by the opposition party.

Lyndon Johnson in 1965 was the last president to enjoy a position of power comparable to Bush’s now. LBJ’s landslide 1964 win and his even larger Democratic majorities in Congress arguably gave him even more power, which he used to push through his Great Society domestic program and to escalate the war in Vietnam.

In his address, Bush reminded listeners that he, too, has a bold agenda at home and abroad, albeit with hopes for far different results. He cast it all in terms of his – and his country’s – obligations to history.

“Over the next several months, on issue after issue, let us do what Americans have always done and build a better world for our children and grandchildren,” he said.

For the nation’s domestic needs, Bush proposed dramatic changes in Social Security that he said are needed to fix a program headed for serious financial trouble.

“Social Security,” Bush said, “is headed toward bankruptcy. And so we must join together to strengthen and save Social Security.”

Bush pleaded for open minds, aware that Democrats are unified in opposing the central recommendation of his proposed changes – to divert wage taxes away from Social Security to pay for new personal investment accounts – and that many Republicans fear political fallout at the polls in 2006 elections.

“Fixing Social Security permanently will require an open, candid review of the options,” the president said. “I will work with members of Congress to find the most effective combination of reforms.”

He said options “on the table” include raising the retirement age, changing benefits or discouraging early retirees from drawing checks. He emphasized that he’s ruled out raising taxes.

Bush also spoke of the culturally conservative values that he and many of his supporters embrace, endorsing the “culture of life” that opposes abortion. He called for prohibiting the creation of human embryos for medical experiments and a constitutional amendment to ban gay marriage.

“Our second great responsibility to our children and grandchildren is to honor and to pass along the values that sustain a free society,” he said. “Government is not the source of these values, but government should never undermine them.”

He also proposed to make tax cuts permanent, impose strict limits on federal spending, cut the federal budget deficit in half over five years, overhaul immigration laws, extend federal education standards to high schools, limit lawsuits and train defense lawyers who handle death penalty cases.

The president also announced that his wife, first lady Laura Bush, would head a new national initiative against youth gangs.

Looking overseas, Bush spoke in more detail about his broad goal of spreading freedom, which dominated his recent inaugural address.

“Our third responsibility to future generations is to leave them an America that is safe from danger and protected by peace. We will pass along to our children all the freedoms we enjoy – and chief among them is freedom from fear,” he said.

He praised the Iraqi people for braving violence to vote last Sunday and linked American success throughout the Middle East to their success at establishing a democracy.

“We will succeed because the Iraqi people value their own liberty – as they showed the world last Sunday,” he said. “We are standing for the freedom of our Iraqi friends, and freedom in Iraq will make America safer for generations to come.”

Looking on from the gallery overlooking the House of Representatives, Laura Bush watched with two foreign nationals meant to underscore recent U.S. successes abroad: one who recently voted in Iraq and one who recently voted in Afghanistan.

There was symbolism on the House floor as well. A number of members of Congress showed their solidarity with Iraqi voters by holding up fingers stained by purple ink – a symbolic salute to the joyous Iraqis who celebrated voting Sunday by waving the purple fingers that showed they’d voted.

Bush vowed to keep U.S. forces in Iraq indefinitely to help Iraqis secure their country.

“The new political situation in Iraq opens a new phase of our work in that country,” he said. “We will increasingly focus our efforts on helping prepare more capable Iraqi security forces – forces with skilled officers and an effective command structure.”

He said the goal of a democratic Palestine living peacefully side by side with Israel “is within reach” and promised continued U.S. help to reach that goal.

He warned other nations anew against harboring terrorists, putting Syria on notice that he expects it to stop and singling out Iran for special attention.

“Today, Iran remains the world’s primary state sponsor of terror, pursuing nuclear weapons while depriving its people of the freedom they seek and deserve,” he said. “We are working with European allies to make clear to the Iranian regime that it must give up its uranium enrichment program and any plutonium reprocessing, and end its support for terror.”

In a special message to the Iranian people, many of whom are restive for Western freedom and prosperity and chafe under the rule of strict Islamic mullahs, Bush said: “And to the Iranian people, I say to you tonight: As you stand for your own liberty, America stands with you.”

He also urged the leaders of Egypt and Saudi Arabia to allow their people more democracy.

In another remark meant to assuage fears that he acts unilaterally and alienates traditional allies, Bush said: “In the next four years, my administration will continue to build the coalitions that will defeat the dangers of our time.” He’s made overtures to European allies, notably by making Europe his first overseas trip of his second term.

On Social Security, the president said the system would be bankrupt by 2042, although Social Security actuaries project that the system then still will be taking in enough revenue each year to cover 73 percent of benefits.

The president promised he wouldn’t change Social Security in any way for Americans now age 55 or older.

Bush focused on his proposal to create personal investment accounts for younger workers. He said that the accounts would be modeled on the federal employees’ Thrift Savings Plan and promised that workers’ choices for investments in them would be limited to a handful of safe, conservative stock and bond funds.

He said that any need to cut traditional Social Security retirement benefits to make the system’s books balance would be addressed in negotiations with Congress.

Democrats responded that they would work with Bush when they agreed with him, but signaled that might be rare.

“When we believe the president is on the right track, we won’t let partisan interests get in the way of what’s good for the country. We will be first in line to work with him,” said Sen. Harry Reid, D-Nev., the Senate Democratic leader, in remarks prepared for delivery. “But when he gets off track, we will be there to hold him accountable.”

Reid said his party particularly opposes Bush’s proposals for Social Security because they would cut benefits and add what he said was $2 trillion over 10 years to the national debt. Earlier Wednesday, White House aides put the cost of shifting to the new accounts at $753 billion over six years, but they wouldn’t estimate longer-term costs.

Reid called the transition costs – borrowed funds to pay benefits to current retirees while wage-tax funds are diverted into the new personal accounts – “an immoral burden to place on the backs of the next generation.

“That’s why we so strongly disagree with the president’s plan to privatize Social Security,” he said. “The president’s plan is so dangerous. It’s wrong to replace the guaranteed benefit that Americans have earned with a guaranteed benefit cut of 40 percent or more. Make no mistake, that’s exactly what President Bush is proposing.”

Bush takes his campaign for Social Security changes on the road Thursday for a two-day swing through five states that are home to Democratic senators he hopes to win over on this: North Dakota, Montana, Nebraska, Arkansas and Florida. Bush carried all five states in November.

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(Knight Ridder Newspapers correspondents William Douglas, Kevin Hall and James Kuhnhenn contributed to this report.)

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