Washington, Jan. 29 (Bloomberg) -- President George W. Bush said the U.S. will ask the United Nations to convene a meeting next Wednesday for Secretary of State Colin Powell to lay out evidence of Iraq's longtime pursuit of prohibited weapons and efforts to hide them. Bush, in his second State of the Union address, cited intelligence information he said shows Saddam Hussein has material for chemical agents and recently sought to acquire uranium and equipment to refine it for nuclear arms. In addition, he has been aiding and protecting terrorists, the president said. ``With nuclear arms or a full arsenal of chemical and biological weapons, Saddam Hussein could resume his ambitions of conquest in the Middle East, and create deadly havoc in the region,'' Bush said. ``Secretly, and without fingerprints, he could provide one of his hidden weapons to terrorists, or help them develop their own.'' Bush is preparing the groundwork for a decision on whether the U.S. will lead a war against Iraq over the objections of allies France and Germany and with the reservations of some members of Congress. He also set out a broader agenda that includes a $670 billion tax cut to help a sputtering economy, subsidizing prescription drugs for senior citizens and spending more money to fight terrorism, AIDS, and drug addiction. Analysts said Bush did a better job selling his foreign policy priorities than his economic ones.
Closer to War
``Chances of war have increased,'' said Greg Valliere, chief strategist at Schwab Capital Markets. ``He made the case on Iraq, but didn't make the case on the tax cut.'' New Jersey Democratic Senator Jon Corzine, the former co- chairman of Goldman, Sachs & Co., agreed, calling Bush's comments on his tax cut proposals, such as making dividends tax-free to shareholders, ``repetitive.'' On Iraq, Corzine said, ``I don't think world opinion and public opinion changed tonight.'' The request for a Security Council meeting Feb. 5 may nudge the U.S. and Iraq closer to the brink of war because Bush said he is prepared to strike with or without UN sanction. France, Russia, and China, permanent members of the Security Council with power to veto any resolution, want to give weapons inspectors in Iraq more time to investigate. ``There is no question that this was as close to a declaration of a war that you can get,'' said Charles Gabriel, senior political analyst at Prudential Securities. ``Even though he tried to put out a bold economic plan, the talk tomorrow will be about the strong resolve on Iraq.''
Nuclear, Chemical Materials
U.S. 10-year Treasury notes rose in Singapore after Bush's pledge to hold Hussein accountable, raising the prospect of war and boosting demand for government debt as a haven. The dollar fell to 118.10 yen at 11:59 a.m. in Tokyo (9:59 p.m. in New York) from 118.77 yen in earlier New York trading. It dropped to $1.0865 against the euro from $1.0818. Bush said the U.K., the U.S.'s staunchest ally in the confrontation, has learned that Iraq recently sought ``significant quantities'' of uranium from Africa. U.S. intelligence reports show Iraq has ``upwards of 30,000 munitions capable of delivering chemical agents'' and hasn't accounted for 25,000 liters of anthrax, 500 tons of VX nerve agents, mustard gas, and sarin, and 38,000 liters of botulinum toxin, he said. ``We will consult, but let there be no misunderstanding,'' Bush said, ``If Saddam Hussein does not fully disarm, for the safety of our people, and for the peace of the world, we will lead a coalition to disarm him.''
No Date
Bush didn't say when U.S. troops might attack the country that sits on the world's second largest known reserves of oil, a prospect that has roiled markets in recent weeks and helped drive up the cost of oil 63 percent in the last year. ``Everyone will be in a state of uncertainty until the full execution of the war is complete,'' said Robert R. Bishop, chief executive officer of Silicon Graphics Inc. ``Until that war is executed the investment community would obviously have greater fear.'' The president, who last year branded Iraq, Iran and North Korea an ``axis of evil,'' said the three countries ``require different strategies.'' While Iran has continued to pursue weapons of mass destruction and support terrorists, Bush said, ``We also see Iranian citizens risking intimidation and death as they speak out for liberty, human rights, and democracy.'' On North Korea, the U.S. and its allies in Asia are working ``to find a peaceful solution, and to show the North Korean government that nuclear weapons will bring only isolation, economic stagnation, and continued hardship.''
Economics Agenda
More than half of Bush's speech was devoted to his domestic agenda. He renewed his call for $670 billion in tax cuts over 10 years, including elimination on the tax stockholders pay on dividends and an acceleration of income tax cuts slated to take effect in 2004, 2006, and 2009. He also urged passage of a $400 billion, 10-year plan to offer prescription drug coverage through Medicare, the federal health insurance program for those 65 and older and legislation to allow religious organizations that perform social services to compete for federal funds. In the broader war on terrorism, Bush asked Congress for funds to create a new $6 billion program called Project Bioshield to provide vaccines against agents such as anthrax, botulinum toxin, Ebola, and plague. He ordered the leaders of the Federal Bureau of Investigation, Central Intelligence Agency, Homeland Security Department, and the Department of Defense to create a central office to analyze all terror threat information.
Drug Treatment, AIDS
He also proposed $600 million to help drug addicts get treatment and $15 billion over the next five years to fight HIV and AIDS in Africa and the Caribbean. Bush said his fiscal 2004 budget, which he'll release on Monday, will boost federal spending on average by 4 percent, or no more than the average family increase next year. He made no mention of earlier calls to expand drilling for oil and natural gas in the U.S. to reduce dependence on foreign sources of energy. Instead, he proposed $1.2 billion in funds to research cars powered by hydrogen. ``This country has many challenges,'' Bush said. ``We will confront them with focus and clarity and courage.'' Democrats blasted Bush's economic plan as a giveaway to the rich that will give no boost to the economy and urged Bush to work with global allies to force Iraq to comply with UN mandates. ``It's deja `voodoo economics' all over again,'' said Maryland Representative Steny Hoyer, the No. 2 House Democrat. ``I hope every American asks one simple question tonight: Am I better off than I was two years ago? By practically every measure, the American people are not better off today.''
Democratic Plan
Washington Governor Gary Locke, who delivered the Democratic party's official response to Bush's address, said Democrats have a better plan to give money to cash-strapped states and target tax cuts to low-income workers to stimulate the economy. He said Bush should temper his rhetoric that the U.S. will act against Iraq without UN backing. ``Saddam Hussein is not America's problem alone. He is the world's problem,'' Locke said. Some U.S. business leaders applauded Bush's economic plan. ``Taking those steps is a healthy thing to do when you know you're going to war, when the stock market is dropping below 8,000 and the economy is going into a freeze,'' said Bishop of Silicon Graphics. ``I don't think they're going to drive the economy into growth; they're just going to stop it from falling farther, given the fact they're headed to war.'' //www.quote.bloomberg.com