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PAULA ZAHN NOW
President Bush Prepares to Address State of the Union
Aired February 2, 2005 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: Good evening, everybody. Thanks so much for joining us tonight. Glad to have you with us.
Tonight, President Bush delivers the first State of the Union address of his second term, proposing some changes that will affect the lives of every American.
ZAHN (voice-over): Will you be able to find a doctor to bring your next child in to the world?
DR. ARNOLD PALLAY, FAMILY PHYSICIAN: I had to stop delivering babies because of the current medical malpractice climate.
ZAHN: Will the president's plan stop frivolous lawsuits?
And you want to retire, but you're worried about having enough money to do that. Will the president's plan really make your future more secure?
ZAHN: State of the Union speeches come and go, but tonight is different. Tonight, pay attention. If President Bush does what everyone expects, it's no exaggeration to say he will ask the country to leave behind the legacies of FDR's New Deal and LBJ's Great Society. About an hour from now, he will start making the case for what he calls the ownership society.
I want to begin tonight in Washington with senior White House correspondent John King.
So, are we going to really learn anything new about the president's Social Security plan tonight?
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: In fact, we are, Paula.
And it's quite significant. The president will not get into some of the most controversial details, but he will lay out tonight his plan, how he envisions these so-called personal retirement accounts, allowing you to take some Social Security money and put it in the stock market or a mutual fund. The president will draw a significant line. He will say those below the age of 55, younger than 55, should be eligible for these new accounts. Now, that is both a significant policy decision, as the president tries to make the case that these are not risky, but safe -- the Democrats say they're quite risky -- a significant policy line and a significant political line, because voters 55 and above tend to be the most reliable voters in congressional elections.
It is the congressional election two years from now Republicans are most worried about. By drawing the line there, the president hopes, by taking those people out of the debate over private accounts, it makes this less risky, if you will, for the Republicans to stand with him in this very difficult debate.
ZAHN: Well, John, what do outside analysts think? Is that what will happen?
KING: Well, the Republicans are nervous, Paula. And they are going to watch the president when he hits the road after this speech tonight to see if he can rally public support. This is a president at a historic low in terms of delivering a State of the Union, a 50 percent approval rating, despite winning the election. He needs to get that number up. And he needs to get convincing evidence in the polls that the America people are at least open to considering this.
ZAHN: John, Democrats are demanding an exit timetable from the president. Will he address that directly tonight?
KING: He will not give them a timetable. In fact, he will say it is way too soon to have any timetable for bringing home U.S. troops. And that's a delicate balance for the president, because a majority of Americans now say it was a mistake to go to war in Iraq. The president wants to reverse that number. And he wants to do so by claiming the elections last week were a significant success and proof his policy in Iraq is working.
But he also needs to make the case that Iraq has a long way to go toward being a democracy and that there is a lot more work to do in terms of training the Iraq forces to take responsibility for their security. Until that training is completed, until the U.S. is way further down that road, Paula, the president says you can't even think about bringing the troops home.
ZAHN: John, we're hearing an awful lot about other issues that will be important to this administration, energy reform, tort reform, immigration reform. Will we have much light shed on those issues tonight?
KING: You will hear those issues tonight.
And, in a sense, that's a bit of deja vu, in that the president pushed for immigration reform, legal reforms, energy bill. He pushed all those issues last year and did not get them through the Congress, even though it is a Republican Congress. They're important for different reasons. Immigration is an issue that divides the Republicans, some of the president's conservative members of his own vehemently opposed to his effort there. So, the president wants to do -- as he asks the Congress to deal with Social Security -- Republicans are scared of that one. As he asks Republicans to deal with immigration, Republicans are divided on that one, the president wants to talk about energy and tort reforms as well, because they are the glue, if you will.
Those two issues hold the Republicans together. And it's critical for the president to have some issues on which he's not in a tug-of-war with his own party.
ZAHN: It's a helpful preview for us tonight. John King, thanks so much.
KING: Thank you.
ZAHN: Also high on President Bush's to-do list, what he calls a remedy for the nation's health care ills that John touched upon, limits on malpractice lawsuits.
The idea is backed by many doctors, who say huge damage awards are driving up the cost of their insurance and threatening to put them out of business. As evidence, one insurance company found that as many as half of the specialists in high-risk fields like neurosurgery are sued every year. Another survey found that one in seven obstetricians have even stopped delivering babies altogether.
Senior legal analyst Jeffrey Toobin has the story of one family doctor who took that drastic step.
PALLAY: And I think SpongeBob is in your ear. Let me see if SpongeBob is in there.
JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Caroline Barardo's (ph) doctor is the same one who delivered her three years ago.
PALLAY: I was there when you were born, yes.
TOOBIN: Dr. Arnold Pallay is a family physician. He treats the kids. He treats the parents. He even delivered babies -- delivered, past tense.
PALLAY: I've been doing obstetrics as part of my family practice for the better part of 17, 18 of those years. And last year, I had to stop delivering babies because of the current medical malpractice climate that is happening in the United States.
TOOBIN: After 13 years and five births, Kathleen Barardo and her family have grown to trust Dr. Pallay.
UNIDENTIFIED FEMALE: It made me sad. I was very comfortable with Dr. Pallay because he knew our family history. TOOBIN: Here is Montville, New Jersey, Dr. Pallay and his partner were paying $7,000 a year for their malpractice insurance three years ago. He says, if they kept delivering babies, this year, it would be $60,000. They couldn't just charge their patients more because the rates are fixed by the insurance companies. So they decided to give up one of the best parts of being a family doctor.
PALLAY: We didn't want to do that. But we had to.
TOOBIN (on camera): What was that emotionally?
PALLAY: It was one of the most enjoyable things we did. We went to the hospital. And even though it might take all night long to succeed with a good delivery, I'd come home the next day and I would feel like a million bucks. I would feel great. And I would feel ready to go to work and enjoy what I was doing. And that can't happen anymore, because we could not pay the premium dollar to do the obstetrical portion of our practice.
TOOBIN: Were you ever sued for something you did in the delivery room?
PALLAY: Never. No, never.
TOOBIN (voice-over): Medical malpractice cases generally come down to a question whether it was bad treatment or just bad luck.
PALLAY: People die. People get sick. That's the way the good lord made us. And when that happens, many a time what will occur, the family sometime later will decide, you know, we wish mom or dad didn't have that happen. Let's go find lawyer and sue.
And, suddenly, you're hit with a lawsuit, whether it's successful or not. And you look back and you say to yourself, but I did the best I could do. I did the right things. I was there at 2:00 in the morning. I held their hands. I explained what had to be done. But sometimes they will sue anyway. That's not a cost in business. That's a devastation personally.
TOOBIN: If a patient is hurt by malpractice, a jury can make two kinds of awards, compensation for economic losses and also payments for noneconomic things like pain and suffering.
PALLAY: Certainly, the family's entitled to have the cost of their health care for let's say a child and the cost for their living and all the good things that we call economic damages throughout their life.
The problem is when you do noneconomic damages, when you start giving these outrageous sums from juries, what are you going to pay a mom and dad in pain and suffering for a child's problem? Should they become millionaires? Is this a lottery system in the United States of America? That's not what it's meant to be.
TOOBIN: Dr. Pallay supports President Bush's proposal, which would cap pain and suffering awards at $250,000 and limit punitive damages. But, for now, he's telling families like the Barardos that he cannot deliver another baby.
PALLAY: People always joked throughout my career that they can tell when I have delivered a baby, because I'm usually grinning ear to ear when I come to the office after.
TOOBIN (on camera): Really? Why?
PALLAY: It's just a wonderful feeling. It's such a terrific thing when you have brought a child into the world and the moms and dads are so happy and they take your pictures. And it's a fun thing.
TOOBIN: How many babies would you say you have delivered?
PALLAY: Probably 400 or 500, at least, through my career. And if this continues at this present trend, I'm very afraid family physicians will stop. And good OB/GYNs will stop. So who's delivering our babies?
ZAHN: So, Jeff, here you have a doctor who has delivered, as he just said, hundreds and hundreds of babies. He can't do what he loves to do the most. Is this system out of control?
TOOBIN: It is. Think about that, going from $7,000 in premiums to $60,000 in premiums. That is something that some people just can't do. And Dr. Arnie, he gave up.
But keep in mind one thing. You had all those premiums going up. You have tort reform, which is supposed to keep the damage awards down. The people who are making money off the system are the insurance companies. And they're sort of the invisible profiteers here. They're the ones who are making money.
ZAHN: And who are the ones behind this whole movement?
TOOBIN: Well, and that's right. And they're very much financing tort reform. It's not to say that they're wrong in wanting to keep down damage awards. But, remember, everybody here is motivated out of self-interest, including the insurance companies.
ZAHN: All right. Trying to cut through the grayness of this issue, give us the most compelling reason why you would want to cap these awards.
TOOBIN: Because pain and suffering, noneconomic damages, are a lottery. There's no formula for determining them. And that's where the extravagant awards come from, pain and suffering.
Economic damages, you can make a rational case. You know how much a wheelchair costs. You know how much home care costs. The good argument for limiting pain and suffering is that the system needs rationality and there's no way for a jury to be rational in that area.
ZAHN: So, at the end of the day, what does the system look like?
TOOBIN: Well, the system, it's just sort of a standoff at the moment, that, in a lot of states, tort reform has been raised, but it hasn't been brought in everywhere.
And what will be interesting to see, if President Bush succeeds in mobilizing the country as a whole. You know, interesting, on the campaign trail, this was something that got a lot of applause lines. I heard that from a lot...
ZAHN: I remember seven or eight references in speeches that I covered.
TOOBIN: In his convention speech, he made a big point of it. So it's a popular issue.
The trial lawyers, who are a very Democratically leaning lobbying group, they're fighting it hard. It will be interesting to see if he can get it through.
ZAHN: But, when you talk about egregious, frivolous lawsuits, the bottom line is, how many attorneys are going to take those suits if they know that they are not going to able to process them through the system?
TOOBIN: You know, there are a lot of urban legends about these frivolous lawsuits. In fact, frivolous lawsuits almost invariably fail. The real problem are how do you deal with malpractice that exists. That's what we need to talk about.
ZAHN: And we're going to address that again in part two. Jeffrey Toobin, thanks very much.
TOOBIN: All right.
ZAHN: When we come back, the other side of the story.
(BEGIN VIDEO CLIP)
SUSIE ZIONKOWSKI, MOTHER: I can feel elbows on my throat, they're all pushing so hard. People are on the table. And I can hear nurses crying. So I think that you definitely -- there's no doubt, it was chaos. It was mass chaos.
(END VIDEO CLIP)
ZAHN: Who can put a price on that kind of pain and suffering?
ZAHN: Beautiful, crisp night in Washington tonight. You're looking at a live picture of the Capitol Building, where the Congress, Cabinet members and others are beginning to gather for President Bush's State of the Union address. That speech begins in just about 45 minutes. We'll cover it live.
So, tonight, we're taking a close look at one of the president's major goals, cutting down on medical malpractice lawsuits, a step he says that will help control the high cost of health care.
But what about people who have been harmed by medical blunders? Critics says the president's ignores the pain and suffering of those people.
Once again, senior legal analyst Jeffrey Toobin.
TOOBIN (voice-over): For five years, Tony and Susie Zionkowski tried to have a baby. Then they got a surprise, twins. Susie's pregnancy was normal and so was the delivery of their daughter, Lucy (ph). Not so the other twin, Lily.
TONY ZIONKOWSKI, FATHER: To witness what happened when they could not get Lily out, it was just as if the world had just collapsed.
S. ZIONKOWSKI: I don't think most people have doctors in there screaming for help. And they were all pushing. I can feel elbows on my throat, they're all pushing so hard. People are on the table. And I can hear nurses crying. So I think that you definitely -- there's no doubt, it was chaos. It was mass chaos.
TOOBIN: Lily was finally delivered by emergency C-section. Her brain was deprived of oxygen for so long that she had to be revived.
S. ZIONKOWSKI: Truly and honestly, they sent us home planning a funeral.
TOOBIN: Today, the girls are 4 1/2 years old, Lucy and Lily.
S. ZIONKOWSKI: No, no, no, no. Let me see how tall you are. Let's see how tall you are. Let's pick you back up. Oh, need some help? Can you bend your knee?
TOOBIN: Lily has seizures every day.
S. ZIONKOWSKI: Little seizures. It's all right. Hey, hey.
TOOBIN: She must be carefully fed.
S. ZIONKOWSKI: Good job.
TOOBIN: The cost of Lily's day-to-day care is astonishing. Her medication alone is $1,000 a month.
S. ZIONKOWSKI: Let me see your mouth.
TOOBIN: When the girls were still infants, Tony and Susie struggled to figure out what happened to Lily. After they looked at the medical records, they felt that many mistakes had been made. Then they made a difficult decision, to sue for damages.
S. ZIONKOWSKI: As a mother, you just -- it changes your whole mind-set. Before, I may have been a person that said, you know, if anybody asked me if I was going to sue someone in my lifetime, I would have said, slim to none; I don't believe in it.
TOOBIN: Their lawyers say the hospital played hardball.
MARK TATE, ATTORNEY FOR THE ZIONKOWSKIS: This particular expert also testified that Lily had the consciousness of a dog, and so that she -- while she may appear to be suffering and while she may appear to be in pain, that in fact she has no cognitive ability to actually understand that pain.
TOOBIN: But just before the trial was to begin, the Zionkowskis won a sizable and confidential settlement, far more than the $250,000 cap on noneconomic pain and suffering damages proposed by the president's tort reform.
(on camera): Do you think, you know, the ability to sue and the amount you can sue for should be limited?
T. ZIONKOWSKI: Cases like Lily's would warrant -- where there's evidence of many, many mistakes that were made that could have been rectified and because the mistakes weren't rectified, Lily suffers for the rest of her life, no, I don't think there should be limits.
TOOBIN (voice-over): The Zionkowskis are devoted to both of their daughters.
(on camera): Lucy is a gorgeous, outgoing, intelligent child. Does that make it more painful to see Lily's limitations?
S. ZIONKOWSKI: Some days, yes. I think that, you know, the hard part is that we can't dwell on what should have been, because you just wouldn't get through everyday that way. And Lily has her own special way about her, and it's just different. It's just in a different way.
TOOBIN: Like any parent, Susie has dreams for Lily.
S. ZIONKOWSKI: I want her as independent as she possibly can be, whatever that may be. It may not include walking or talking, but my goal is to get her to do everything that she physically can.
We take baby steps forward and we take gigantic leaps backwards. So it just -- you know, we have to take those baby steps as though they're little miracles.
You have got to take a step. Right off the mat. There you go.
ZAHN: So, Jeff, were you able to talk to the doctor involved in this case or the hospital?
TOOBIN: We tried both repeatedly. They wouldn't talk us to. ZAHN: That doesn't surprise you, though, does it?
TOOBIN: No. In a setting like this, it's unlikely.
ZAHN: So, how do you go about even putting a price tag on pain and suffering?
TOOBIN: Well, that's -- it's very hard. And that's where some of the irrationality in the system comes in, because, ultimately, it's a gut check for jurors.
Obviously, in a case like that, you can see why the hospital and the doctor settled, because...
ZAHN: And we have no idea what the terms of that settlement are?
TOOBIN: No. But it was substantial. The amount of money is enough so that Lily can be supported for the rest of her life. And she has...
ZAHN: You're talking about millions of dollars?
TOOBIN: It's got to be, because this is a woman who -- she is now obviously a child. She will be a woman some day. And she is going to need, it appears, 24-hour-a-day care for the rest of her life.
ZAHN: So, contrast that with some of these cases that have gotten through where there's just a blatant excess involved in the settlement.
TOOBIN: Well, the problem is that everybody thinks it's OK to have economic damages. Those kind of damages, everyone agrees on.
The problem is, under the definitions of economic damages in most states, it's really not very much money. So, that's where the pain and suffering comes in. That's where juries sort of apply rough justice, juries say, look, this is so awful. And imagine an injury like this to a child that is so preventable. Imagine seeing Lucy every day and knowing that Lily should, by all rights, look the same way.
Juries say, we are going to change that. We are going to make up for that. And that's what is going to get taken out of the system.
ZAHN: Isn't it a travesty, though, that the parents had to sort of do their own investigation to understand why one of the twins wasn't developing like the other?
TOOBIN: One of the reasons the malpractice explosion has taken place is that the medical profession is very poor at policing its own members. A lot of malpractice lawsuits are generated by the same doctors. Most doctors do a great job. But the same group, same small group of doctors generate a lot of the cases.
Because there's no good internal mechanism for policing the medical profession, it's the legal system that winds up doing it, the tort system.
ZAHN: And it seems to me, the high-risk doctors are the ones that are most vulnerable to these attacks?
ZIONKOWSKI: Right. Well, they are.
And Dr. Arnie, at the beginning, he says, the people who get sued a lot are the people who are busy, who have a lot of cases. Yes, that's true. But it's also true that there are a lot of repeat offenders. And there is no really good system for getting them out of the medical profession before they do more harm.
ZAHN: So, if you're sort of at a logjam now, just, in closing, where do you find the compromise on this issue?
TOOBIN: Well, you know, actually, it seems like there is a potential compromise. If you expand the notion of economic damages to something that is realistic, that really could support Lily for the rest of her life, then you could have a cap on pain and suffering, because then it would not really be as necessary.
But you have got to have a realistic definition of economic damages or else you're never going to get rid of pain and suffering.
ZAHN: Jeffrey Toobin, thanks for dropping by tonight, our senior legal correspondent. By the way, do we have a junior legal correspondent?
TOOBIN: No. I'm the only one. That's not much of a promotion.
ZAHN: We love that title.
Expect the president to spend a lot of time tonight talking how to fix Social Security as well. Next, why he's targeting African- Americans with his message.
ZAHN: And welcome back.
You're looking at live pictures from Statuary Hall in the U.S. Capitol, reporters, photographers filling in to watch the arrivals of senators, members of Congress and other dignitaries for tonight's State of the Union speech, which the president will deliver at the top of the hour.
And nowhere will the fight over the president's agenda be more bitter than when it comes to Social Security. You see that deduction on every paycheck you get. Well, millions of Americans have no other income but their monthly Social Security check. Expect the president to argue that millions of others are being shortchanged simply because they're African-American.
Senior political correspondent Candy Crowley has more.
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): Barbara Hale (ph) never gave much thought to her husband's Social Security benefits until he died until he died.
UNIDENTIFIED FEMALE: I remember, someone said to me, you can go. Social Security will give you some money to bury him. So I just called them and they said $250. And I laughed. I'm like, what am I going to do with $250? It takes at least $6,000 to bury him.
CROWLEY: She should take the $250. It's all she'll ever see of the money her husband put into Social Security. Michael Hale (ph) died of bone cancer in 1997. He was 50, old enough to put more than 30 years of payments into Social Security, too young to have taken any out.
ROBERT WOODSON, CENTER FOR NEIGHBORHOOD ENTERPRISE: A black man 40 years old stand a 77 percent more of a chance of dying before he reaches retirement age than do white men. If you look at the numbers, under the existing Social Security system, black families transfer $10,000 from black families to white women, who live longer.
CROWLEY: It is a fact of death that life expectancy for blacks is shorter than for whites, a turn of the actuary aerial table the president is using to gather support for his plans to fundamentally change Social Security.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: African-American males die sooner than other males do, which means the system is inherently unfair to a certain group of people. And that need to be fixed.
CROWLEY: The case goes like this. Had Michael Hale been allowed to invest for himself just a portion of the money he put into Social Security for 30 years, his wife would have inherited that money no matter how long or short his life.
UNIDENTIFIED FEMALE: I think it's good to know that you have something that you have access to right away. I think it's good to give people an option, rather than just having it one way and that's the way you have to live with it.
CROWLEY: At the AARP, Marie Smith is quick to note that Social Security is a lot more than a retirement fund.
MARIE SMITH, AARP PRESIDENT: If you're thinking of the African- American population as a whole, African-Americans, children receive more benefits in relationship to their percentages in the population than any other group. And that would be survivors' benefits or dependent benefits, which could be from retirement or disability benefits.
CROWLEY: AARP says it's all about people investing for retirement, just not with the money they currently put into Social Security. The Hale children were too old for survivor benefits when he died. Barbara will eventually retire having worked longer than her husband , so she will take her own Social Security over his.
The home she bought with Michael was too much for her salary alone, so Barbara moved. She's doing fine, but sometimes when she's dealing with a young cousin she's raising or when she's with her mother, Barbara thinks about the things she could have done had Michael been able to save something for herself.
UNIDENTIFIED FEMALE: She's not able to afford all of her medicine. And I'd like to be able to do that for her. I can do it now, but it stretches me. I could use some money -- I could have used some money for her. And, even now, since I have him, I would really rather he be in a private school rather than public school. So, I could have afforded to do that.
ZAHN: I think that piece shows pretty powerfully why this is such a divisive issue.
Now, whatever happens with Social Security it is going to affect a lot of people. Consider this, 30 million retires are getting monthly payments right now. Those checks average $955 a month.
The centerpiece of the president's plan to fix Social Security is what he calls private retirement accounts. Coming up next, the tough job he'll face trying to sell that.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Right now, I'm operating on about half of what I expected to. It would be a lot less than that if Social Security hadn't been constant since the day I retired.
(END VIDEO CLIP)
ZAHN: What some former Enron workers have to say when we come back.
ZAHN: And we're moving up on just about half hour away from the start of the president's State of the Union Address. and one of the things he'll be talking about are these private accounts for Social Security. And that would be where you can invest some of your money and the markets earning a better return than the government bonds the system uses now.
But what happens if you bet your retirement on an Enron, for example? Dana Bash takes us to a place where that isn't a rhetorical question. (BEGIN VIDEOTAPE)
DANA BASH, CNN CORRESPONDENT (voice-over): Omaha, Nebraska, the heart of the conservative Mid West, home to trading giant Ameritrade, Fortune 500 companies like Union Pacific, Berkshire Hathaway and its oracle, Warren Buffet. It seems an ideal place for the president to sell his plan for workers to divert some of Social Security into private accounts.
(on camera): But hundreds of Omaha residents have also seen invests go south. This was a home base for Enron. The building is now empty.
(voice-over): Former employees like Larry Moore call it simply, the collapse. These letter brought word more than 60 percent of his retirement savings was gone.
UNIDENTIFIED MALE: Here's our most sincere wish that payments under the deferral plans could continue, however under bankruptcy law the payments must be stopped.
UNIDENTIFIED FEMALE: Reed Activity Center, this is (UNINTELLIGIBLE), how may I help you?
BASH: Nydra Karlen lost $340,000 in her Enron 401(k) and had to get a part-time job. She's not destitute, she says, but almost retired and now counting on Social Security.
NYDRA KARLEN, FORMER ENRON EMPLOYEE: And there were things I had planned for the grandkids I can't do.
BASH: Nydra and Larry share psychological scars of losing retirement money in Enron. But they differ on whether younger workers should be able to invest some Social Security in the private sector. Larry worries about market swings.
MOORE: Right now, I'm operating on about half of what I expected to. And it would be a lot less than that if Social Security hadn't been constant.
BASH: Nydra likes the president's idea.
KARLEN: One rotten apple doesn't spoil the whole stock market.
If you look at the market over the whole based on, you know, 50 years, you're going to see a huge difference between that and what you get from Social Security.
BASH: The stock market does yield an average 10 percent return, the Social Security trust fund, about one 10th of that. But Larry asks, what if the market tanks at the wrong time?
MOORE: If you're at an age five years from now I will be retiring and the market begins one of its long, downward slumps, you have to have some mechanism in place. BASH: Neither see an imminent Social Security crisis, but both want the issue addressed. Larry says he and his wife would be willing to help some.
MOORE: A small increase in contributions would probably be acceptable.
KARLEN: I have grandchildren, and I think about them.
BASH: But Nydra does not want her kids paying more.
KARLEN: Are we going to take 20, 30 percent when there's only two workers for every retiree? So, I would like these people now to get interested in investing it.
BASH: What about the younger generation the president keeps talks about saving Social Security for? We asked the 35-year-old manager here at Vitlacks.
(on camera): Is there a little bit of concern if you put some in the market, that perhaps, as Larry here was saying, if there's a downturn when you're ready to retire, it won't be insured like Social Security?
ERIK LINHARDT, GENERAL MANAGER, VITLACKS: Most people are putting their money in the stock market now anyway in addition to Social Security. If Social Security's not going to be there, which I don't think it will be, I think it's, you know, you're 50/50 either way.
BASH: Either way, perhaps the president's biggest second term challenge.
ZAHN: Dana Bash reporting from Omaha. The political rhetoric on Social Security reform is more than bitter, it can be mind numbing at times. Yesterday, House Minority Leader Nancy Pelosi called the idea of privatizing the program unconscionable, obscene and immoral.
Well, David Gergen's heard plenty of tough talks during the years he has served 4 U.S. president from both parties and he's fully thought out from his outside inaugural duties for CNN. Good to see you again, David.
So, what's the truth here? You know, the president's saying Social Security is in crisis, the Democrats saying the program is secure for at least another 50 years.
DAVID GERGEN, HARVARD UNIVERSITY: The truth is Social Security is running into bankruptcy over time. It's farther away than we estimated only a few months ago. Recently the congressional budget office said it will run out of money in 2052. Now, that's a long way off.
ZAHN: All right. So, the Democrats are not exaggerating on this one when they say the system's secure many decades more than the president says it is?
GERGEN: It's not an immediate crisis, Paula. And we face this kind of problem back in the early 1980s, under President Reagan. He formed a commission with Allen Greenspan as chair. And that commission worked out some fixes that really extended the life of Social Security without moving towards this privatization.
Privatization has been an idea that been around a long time, partial privatization, since Barry Goldwater. It was regarded as radical back in 1964. But today, it's regarded much more reasonable by a number of conservatives. And it has some momentum behind it. But the real problem for the president is that so many people in this country depend on Social Security so heavily.
In recent years, Paula, about half the people who receive Social Security benefits depend on Social Security for at least half of their income. In other words, about half of the people on Social Security are heavily dependent on Social Security.
And they're very risk adverse in this situation. And that's what I think the president is up against. Ironically, as we just saw in that piece out of Omaha, the corporate misdeeds that came out of Enron are coming back to haunt the president now.
ZAHN: But it strikes me the president is up a lot here. He has to fight the public perception. You look at every poll, it's not like the American public is clamoring for this. And then he has this huge divide in Congress that he has to bridge. Can the president win on this issue?
GERGEN: There was a time when it appeared he might. That was 4 years ago, when he had a big surplus to play with and he could have paid for the transition much more easily. With the disappearance of the surplus, it's meant that Republicans who were loyal to the president in the first term almost to the point of being obsequious are no longer with him as much now.
And it's not only the Democrats, but a Bill Thomas, for example, who's Republican chair of the House Weighs and Means committee has signaled he's not going to buy this Social Security plan. So, the president can't count of this. He's got to make the arguments in a very persuasive way.
Paula, the -- couple of things about it, one is, the business community does not see this as a high priority. They would much rather see tax reform and tax reduction and tort reform than Social Security.
And the public is starting to turn sour on it. The polls two months ago in favor of the president's principles or the main ideas of the president's plan were much higher then than they are now. We've gone from a, like a 60 or 50 percent approval for this idea to about a 40 percent in the recent poll. And that -- he's got some slippage.
ZAHN: Final question for you, talk about slippage, this president comes into the State of the Union address with a 50 percent approval rating. What challenge does that present? That's one of the lowest ever, isn't it?
GERGEN: It's the lowest approval rating heading into a second term since that of Richard Nixon. And of course, we all remember -- this president doesn't have anything like that problem.
But nonetheless, I think it illustrates four years ago when he came to make this important State of the Union, kicking off your new term. You're framing your agenda; you're trying to build momentum. There are a lot of Democrats who are willing to say, well, let's wait and see. Maybe we'll go along with him on some of this stuff.
Now the opposition has congealed very heavily, and -- against him, and it's a very polarized country and a polarized Congress. That makes it much tougher.
Can he still do it? Listen, I -- I would never count George W. Bush out. And as he himself says, he always benefits from being misunderestimated. And that's always worked in his favor.
And so this is going to be a political battle. It's going to be dramatic. He is facing high odds. Right now the chances of getting this done are not high.
But there's one line in his speech which I think a lot of us should pay attention to. And that is, he says in the speech in the excerpts released ahead of time, that he is prepared to work with Congress to figure out what their views would be and follow their -- and fashion a bill with them.
If that's true and if he's really open to that with no conditions, maybe he can bring some Democrats into it.
ZAHN: But David, you and I have to remember what his former spokesman told us on inaugural day: he doesn't think the president has any incentive to bridge that divide. We'll be watching with rapt attention in the months to come.
GERGEN: That's what Ari Fleischer did say. You're absolutely right.
ZAHN: He did. We were both stunned, David Gergen, as cold as we were.
GERGEN: And cold.
ZAHN: Exactly. David Gergen, thanks so much.
Whatever the president proposes tonight, he'll need to sell it to the American public. The view from the heartland when our State of the Union special continues.
ZAHN: Welcome back.
We're just about 15 minutes away from the start of the president's State of the Union address, the House chamber beginning to fill in.
And to find out what Americans really think about the State of the Union, it helps to get out of Washington. Our John King went to a place he visited during the presidential campaign, a landmark eatery in Bettendorf, Iowa, where the politics is slathered on as thick as the cheese sauce on fries.
KING (voice-over): Working the crossword puzzle is part of Jim Gall's lunchtime routine, not to mention jousting with the Republicans across' the counter.
JIM GALL, ROSS' CUSTOMER: Iraqis had nothing to do with 9/11, and Bush planned on going into Iraq long before 9/11.
KING: Bill Harvey begs to differ and is never shy about interrupting lunch to launch at the liberals.
BILL HARVEY, ROSS' CUSTOMER: They don't like the war. They don't like the economy. They don't like anything.
KING: Welcome to Ross's, a Bettendorf landmark for 66 years now. Order the Magic Mountain if you've brought a hearty appetite. Come at lunchtime if you want a daily debate over the State of the Union, whether or not the president is delivering a big speech.
Carl Sandhome (ph) has been a Ross' regular for 42 years now, and is upbeat about one State of the Union test for any president.
UNIDENTIFIED MALE: The economy, fantastic, couldn't ask for anything better.
KING: The debate here doesn't always track the issues dominating politics back in Washington. But the Iraq war is as much a staple as the bottomless coffee.
Glenn Boyles opposed the war but says Congress should give the president another $80 billion in military spending.
GLENN BOYLES, ROSS' CUSTOMER: I wish we weren't there. Now that we are, if the money's necessary what can you say?
KING: Fred Stanton worries all the president's talk of freedom means there will be another war to pay for, and that's not his only worry.
FRED STANTON, ROSS' CUSTOMER: Why should he impose his moral values on everyone? I mean, it's the Moral Majority is what they're pushing.
KING: Craig Hignight speaks for the Republican side on that one. Twenty-eight years now he's been coming to Ross', a president talking of God and morals overdue, in his view.
CRAIG HIGNIGHT, ROSS' CUSTOMER: He's just pointing out what the moral values of the country have been and what they should be. You know, the country will just literally go to pot if there is not some basic moral construction -- basis.
KING: Susan Esser sits in when she thinks the men need a fresh perspective or when the Democrats need some spice. She gets a little stirred up when Bill Harvey calls her a communist and is still mad at herself, too, for not working harder in last year's campaign.
SUSAN ESSER, ROSS' CUSTOMER: A few times I was laying in bed drinking coffee, watching "The View." I should have been out knocking doors.
KING: The Republicans are fiercely loyal to the president and at the same time want some second term shifts.
HARVEY: I'm concerned that they're spend doing much money and advancing big government too much.
KING: Carl Christian chose the clam chowder and hopes Mr. Bush chooses to focus more on pocketbook issues.
CARL CHRISTIAN, ROSS' CUSTOMER: I think he's done plenty worldwide, you know. I would like him to maybe concentrate more on domestic.
KING: It is perhaps fitting that Carl is out of place, a Republican in enemy territory, because the Democrats are slightly outnumbered this day, just how the vote went in Iowa two months ago.
But here, the disagreements are pointed without getting overly personal.
CHRISTIAN: We're enemies in ideals but friends all the way.
UNIDENTIFIED MALE: Headed for San Francisco.
STANTON: I was reaching for that knife in my back.
KING: Fierce but friendly partisanship, always on the menu at Ross' and perhaps a State of the Union lesson for Washington.
ZAHN: And as John king continues our conversation, I just want to remind you the president's speech will get under way from the House chamber you're looking at now in just about 12 minutes or so.
So John, the president is under a lot of pressure tonight to deliver this speech at a time when his approval rating rests at 50 percent. What impact does that have on the calibration of his speech?
KING: Well, certainly, Paula, this speech is designed to boost that rating.
This president, make no mistake about it, has an enormous challenge tonight. He needs to get a bigger bounce in his step if he is to sell his ambitious second term agenda.
On the issue of Iraq, he has to reinvigorate support for the military mission there while convincing the American people this is not the time to talk about a timetable.
He also needs to make a generational appeal on Social Security, telling lawmakers don't think about the election in two years for Congress. Think about your children and grandchildren 20 and 40 years down the road.
And the president also wants to redefine his legacy. He himself knows he is wartime president now. He wants to be remembered as a compassionate conservative, too. A couple of initiatives on that front in there, Paula.
ZAHN: John King, thanks so much for the preview.
We wanted to thank you all for joining us tonight. President Bush, once again, just a few minutes away from entering the House chamber. And CNN's special coverage of the president's State of the Union address begins right now.
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