Mr. Speaker, Vice President Cheney, Members of Congress, fellow citizens:

As a new Congress gathers, all of us in the elected branches of Government share
a great privilege: We've been placed in office by the votes of the people we
serve. And tonight that is a privilege we share with newly elected leaders of
Afghanistan, the Palestinian Territories, Ukraine, and a free and sovereign
Iraq.

Two weeks ago, I stood on the steps of this Capitol and renewed the commitment
of our Nation to the guiding ideal of liberty for all. This evening I will set
forth policies to advance that ideal at home and around the world.

Tonight, with a healthy, growing economy, with more Americans going back to
work, with our Nation an active force for good in the world, the state of our
Union is confident and strong.

Our generation has been blessed by the expansion of opportunity, by advances in
medicine, by the security purchased by our parents' sacrifice. Now, as we see a
little gray in the mirror--or a lot of gray--[laughter]--and we watch our
children moving into adulthood, we ask the question: What will be the state of
their Union? Members of Congress, the choices we make together will answer that
question. 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 our
grandchildren.

First, we must be good stewards of this economy and renew the great institutions
on which millions of our fellow citizens rely. America's economy is the fastest
growing of any major industrialized nation. In the past 4 years, we've provided
tax relief to every person who pays income taxes, overcome a recession, opened
up new markets abroad, prosecuted corporate criminals, raised homeownership to
its highest level in history. And in the last year alone, the United States has
added 2.3 million new jobs. When action was needed, the Congress delivered, and
the Nation is grateful.

Now we must add to these achievements. By making our economy more flexible, more
innovative, and more competitive, we will keep America the economic leader of
the world.

America's prosperity requires restraining the spending appetite of the Federal
Government. I welcome the bipartisan enthusiasm for spending discipline. I will
send you a budget that holds the growth of discretionary spending below
inflation, makes tax relief permanent, and stays on track to cut the deficit in
half by 2009. My budget substantially reduces or eliminates more than 150
Government programs that are not getting results or duplicate current efforts or
do not fulfill essential priorities. The principle here is clear: Taxpayer
dollars must be spent wisely or not at all.

To make our economy stronger and more dynamic, we must prepare a rising
generation to fill the jobs of the 21st century. Under the No Child Left Behind
Act, standards are higher, test scores are on the rise, and we're closing the
achievement gap for minority students. Now we must demand better results from
our high schools, so every high school diploma is a ticket to success. We will
help an additional 200,000 workers to get training for a better career by
reforming our job training system and strengthening America's community
colleges. And we'll make it easier for Americans to afford a college education
by increasing the size of Pell grants.

To make our economy stronger and more competitive, America must reward, not
punish, the efforts and dreams of entrepreneurs. Small business is the path of
advancement, especially for women and minorities, so we must free small
businesses from needless regulation and protect honest job-creators from junk
lawsuits. Justice is distorted and our economy is held back by irresponsible
class actions and frivolous asbestos claims, and I urge Congress to pass legal
reforms this year.

To make our economy stronger and more productive, we must make health care more
affordable and give families greater access to good coverage and more control
over their health decisions. I ask Congress to move forward on a comprehensive
health care agenda with tax credits to help low-income workers buy insurance, a
community health center in every poor county, improved information technology to
prevent medical error and needless costs, association health plans for small
businesses and their employees, expanded health savings accounts, and medical
liability reform that will reduce health care costs and make sure patients have
the doctors and care they need.

To keep our economy growing, we also need reliable supplies of affordable,
environmentally responsible energy. Nearly 4 years ago, I submitted a
comprehensive energy strategy that encourages conservation, alternative sources,
a modernized electricity grid, and more production here at home, including safe,
clean nuclear energy. My Clear Skies legislation will cut powerplant pollution
and improve the health of our citizens. And my budget provides strong funding
for leading-edge technology, from hydrogen-fueled cars to clean coal to
renewable sources such as ethanol. Four years of debate is enough. I urge
Congress to pass legislation that makes America more secure and less dependent
on foreign energy.

All these proposals are essential to expand this economy and add new jobs, but
they are just the beginning of our duty. To build the prosperity of future
generations, we must update institutions that were created to meet the needs of
an earlier time. Year after year, Americans are burdened by an archaic,
incoherent Federal Tax Code. I've appointed a bipartisan panel to examine the
Tax Code from top to bottom. And when their recommendations are delivered, you
and I will work together to give this Nation a Tax Code that is progrowth, easy
to understand, and fair to all.

America's immigration system is also outdated, unsuited to the needs of our
economy and to the values of our country. We should not be content with laws
that punish hardworking people who want only to provide for their families and
deny businesses willing workers and invite chaos at our border. It is time for
an immigration policy that permits temporary guest workers to fill jobs
Americans will not take, that rejects amnesty, that tells us who is entering and
leaving our country, and that closes the border to drug dealers and terrorists.

One of America's most important institutions, a symbol of the trust between
generations, is also in need of wise and effective reform. Social Security was a
great moral success of the 20th century, and we must honor its great purposes in
this new century. The system, however, on its current path, is headed toward
bankruptcy. And so we must join together to strengthen and save Social Security.

Today, more than 45 million Americans receive Social Security benefits, and
millions more are nearing retirement. And for them the system is sound and
fiscally strong. I have a message for every American who is 55 or older: Do not
let anyone mislead you; for you, the Social Security system will not change in
any way.

For younger workers, the Social Security system has serious problems that will
grow worse with time. Social Security was created decades ago for a very
different era. In those days, people did not live as long. Benefits were much
lower than they are today. And a half century ago, about 16 workers paid into
the system for each person drawing benefits.

Our society has changed in ways the founders of Social Security could not have
foreseen. In today's world, people are living longer and, therefore, drawing
benefits longer. And those benefits are scheduled to rise dramatically over the
next few decades. And instead of 16 workers paying in for every beneficiary,
right now it's only about 3 workers. And over the next few decades, that number
will fall to just 2 workers per beneficiary. With each passing year, fewer
workers are paying ever- higher benefits to an ever-larger number of retirees.

So here is the result: Thirteen years from now, in 2018, Social Security will be
paying out more than it takes in. And every year afterward will bring a new
shortfall, bigger than the year before. For example, in the year 2027, the
Government will somehow have to come up with an extra $200 billion to keep the
system afloat, and by 2033, the annual shortfall would be more than $300
billion. By the year 2042, the entire system would be exhausted and bankrupt. If
steps are not taken to avert that outcome, the only solutions would be
dramatically higher taxes, massive new borrowing, or sudden and severe cuts in
Social Security benefits or other Government programs.

I recognize that 2018 and 2042 may seem a long way off. But those dates are not
so distant, as any parent will tell you. If you have a 5- year-old, you're
already concerned about how you'll pay for college tuition 13 years down the
road. If you've got children in their twenties, as some of us do, the idea of
Social Security collapsing before they retire does not seem like a small matter.
And it should not be a small matter to the United States Congress. You and I
share a responsibility. We must pass reforms that solve the financial problems
of Social Security once and for all.

Fixing Social Security permanently will require an open, candid review of the
options. Some have suggested limiting benefits for wealthy retirees. Former
Congressman Tim Penny has raised the possibility of indexing benefits to prices
rather than wages. During the 1990s, my predecessor, President Clinton, spoke of
increasing the retirement age. Former Senator John Breaux suggested discouraging
early collection of Social Security benefits. The late Senator Daniel Patrick
Moynihan recommended changing the way benefits are calculated. All these ideas
are on the table.

I know that none of these reforms would be easy. But we have to move ahead with
courage and honesty, because our children's retirement security is more
important than partisan politics. I will work with Members of Congress to find
the most effective combination of reforms. I will listen to anyone who has a
good idea to offer. We must, however, be guided by some basic principles. We
must make Social Security permanently sound, not leave that task for another
day. We must not jeopardize our economic strength by increasing payroll taxes.
We must ensure that lower income Americans get the help they need to have
dignity and peace of mind in their retirement. We must guarantee there is no
change for those now retired or nearing retirement. And we must take care that
any changes in the system are gradual, so younger workers have years to prepare
and plan for their future.

As we fix Social Security, we also have the responsibility to make the system a
better deal for younger workers. And the best way to reach that goal is through
voluntary personal retirement accounts. Here is how the idea works. Right now, a
set portion of the money you earn is taken out of your paycheck to pay for the
Social Security benefits of today's retirees. If you're a younger worker, I
believe you should be able to set aside part of that money in your own
retirement account, so you can build a nest egg for your own future.

Here's why the personal accounts are a better deal. Your money will grow over
time at a greater rate than anything the current system can deliver, and your
account will provide money for retirement over and above the check you will
receive from Social Security. In addition, you'll be able to pass along the
money that accumulates in your personal account, if you wish, to your children
and--or grandchildren. And best of all, the money in the account is yours, and
the Government can never take it away.

The goal here is greater security in retirement, so we will set careful
guidelines for personal accounts. We'll make sure the money can only go into a
conservative mix of bonds and stock funds. We'll make sure that your earnings
are not eaten up by hidden Wall Street fees. We'll make sure there are good
options to protect your investments from sudden market swings on the eve of your
retirement. We'll make sure a personal account cannot be emptied out all at once
but rather paid out over time as an addition to traditional Social Security
benefits. And we'll make sure this plan is fiscally responsible by starting
personal retirement accounts gradually and raising the yearly limits on
contributions over time, eventually permitting all workers to set aside 4
percentage points of their payroll taxes in their accounts.

Personal retirement accounts should be familiar to Federal employees, because
you already have something similar called the Thrift Savings Plan, which lets
workers deposit a portion of their paychecks into any of five different broadly
based investment funds. It's time to extend the same security and choice and
ownership to young Americans.

Our second great responsibility to our children and grandchildren is to honor
and to pass along the values that sustain a free society. So many of my
generation, after a long journey, have come home to family and faith and are
determined to bring up responsible, moral children. Government is not the source
of these values, but Government should never undermine them.

Because marriage is a sacred institution and the foundation of society, it
should not be redefined by activist judges. For the good of families, children,
and society, I support a constitutional amendment to protect the institution of
marriage.

Because a society is measured by how it treats the weak and vulnerable, we must
strive to build a culture of life. Medical research can help us reach that goal
by developing treatments and cures that save lives and help people overcome
disabilities, and I thank the Congress for doubling the funding of the National
Institutes of Health.

To build a culture of life, we must also ensure that scientific advances always
serve human dignity, not take advantage of some lives for the benefit of others.
We should all be able to agree on some clear standards. I will work with
Congress to ensure that human embryos are not created for experimentation or
grown for body parts and that human life is never bought or sold as a commodity.
America will continue to lead the world in medical research that is ambitious,
aggressive, and always ethical.

Because courts must always deliver impartial justice, judges have a duty to
faithfully interpret the law, not legislate from the bench. As President, I have
a constitutional responsibility to nominate men and women who understand the
role of courts in our democracy and are well- qualified to serve on the bench,
and I have done so. The Constitution also gives the Senate a responsibility:
Every judicial nominee deserves an up-or-down vote.

Because one of the deepest values of our country is compassion, we must never
turn away from any citizen who feels isolated from the opportunities of America.
Our Government will continue to support faith-based and community groups that
bring hope to harsh places. Now we need to focus on giving young people,
especially young men in our cities, better options than apathy or gangs or jail.
Tonight I propose a 3-year initiative to help organizations keep young people
out of gangs and show young men an ideal of manhood that respects women and
rejects violence. Taking on gang life will be one part of a broader outreach to
at-risk youth, which involves parents and pastors, coaches and community leaders
in programs ranging from literacy to sports. And I am proud that the leader of
this nationwide effort will be our First Lady, Laura Bush.

Because HIV/AIDS brings suffering and fear into so many lives, I ask you to
reauthorize the Ryan White Act to encourage prevention and provide care and
treatment to the victims of that disease. And as we update this important law,
we must focus our efforts on fellow citizens with the highest rates of new
cases, African American men and women.

Because one of the main sources of our national unity is our belief in equal
justice, we need to make sure Americans of all races and backgrounds have
confidence in the system that provides justice. In America, we must make doubly
sure no person is held to account for a crime he or she did not commit, so we
are dramatically expanding the use of DNA evidence to prevent wrongful
conviction. Soon I will send to Congress a proposal to fund special training for
defense counsel in capital cases, because people on trial for their lives must
have competent lawyers by their side.

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.

In the 3\1/2\ years since September the 11th, 2001, we have taken unprecedented
actions to protect Americans. We've created a new Department of Government to
defend our homeland, focused the FBI on preventing terrorism, begun to reform
our intelligence agencies, broken up terror cells across the country, expanded
research on defenses against biological and chemical attack, improved border
security, and trained more than a half million first-responders. Police and
firefighters, air marshals, researchers, and so many others are working every
day to make our homeland safer, and we thank them all.

Our Nation, working with allies and friends, has also confronted the enemy
abroad with measures that are determined, successful, and continuing. The Al
Qaida terror network that attacked our country still has leaders, but many of
its top commanders have been removed. There are still governments that sponsor
and harbor terrorists, but their number has declined. There are still regimes
seeking weapons of mass destruction but no longer without attention and without
consequence. Our country is still the target of terrorists who want to kill many
and intimidate us all, and we will stay on the offensive against them until the
fight is won.

Pursuing our enemies is a vital commitment of the war on terror, and I thank the
Congress for providing our service men and women with the resources they have
needed. During this time of war, we must continue to support our military and
give them the tools for victory.

Other nations around the globe have stood with us. In Afghanistan, an
international force is helping provide security. In Iraq, 28 countries have
troops on the ground, the United Nations and the European Union provided
technical assistance for the elections, and NATO is leading a mission to help
train Iraqi officers. We're cooperating with 60 governments in the Proliferation
Security Initiative to detect and stop the transit of dangerous materials. We're
working closely with the governments in Asia to convince North Korea to abandon
its nuclear ambitions. Pakistan, Saudi Arabia, and nine other countries have
captured or detained Al Qaida terrorists. In the next 4 years, my administration
will continue to build the coalitions that will defeat the dangers of our time.

In the long term, the peace we seek will only be achieved by eliminating the
conditions that feed radicalism and ideologies of murder. If whole regions of
the world remain in despair and grow in hatred, they will be the recruiting
grounds for terror, and that terror will stalk America and other free nations
for decades. The only force powerful enough to stop the rise of tyranny and
terror and replace hatred with hope is the force of human freedom. Our enemies
know this, and that is why the terrorist Zarqawi recently declared war on what
he called the "evil principle" of democracy. And we've declared our own
intention: America will stand with the allies of freedom to support democratic
movements in the Middle East and beyond, with the ultimate goal of ending
tyranny in our world.

The United States has no right, no desire, and no intention to impose our form
of government on anyone else. That is one of the main differences between us and
our enemies. They seek to impose and expand an empire of oppression in which a
tiny group of brutal, self-appointed rulers control every aspect of every life.
Our aim is to build and preserve a community of free and independent nations,
with governments that answer to their citizens and reflect their own cultures.
And because democracies respect their own people and their neighbors, the
advance of freedom will lead to peace.

That advance has great momentum in our time, shown by women voting in
Afghanistan and Palestinians choosing a new direction and the people of Ukraine
asserting their democratic rights and electing a President. We are witnessing
landmark events in the history of liberty, and in the coming years, we will add
to that story.

The beginnings of reform and democracy in the Palestinian territories are now
showing the power of freedom to break old patterns of violence and failure.
Tomorrow morning Secretary of State Rice departs on a trip that will take her to
Israel and the West Bank for meetings with Prime Minister Sharon and President
Abbas. She will discuss with them how we and our friends can help the
Palestinian people end terror and build the institutions of a peaceful,
independent, democratic state. To promote this democracy, I will ask Congress
for $350 million to support Palestinian political, economic, and security
reforms. The goal of two democratic states, Israel and Palestine, living side by
side in peace is within reach, and America will help them achieve that goal.

To promote peace and stability in the broader Middle East, the United States
will work with our friends in the region to fight the common threat of terror,
while we encourage a higher standard of freedom. Hopeful reform is already
taking hold in an arc from Morocco to Jordan to Bahrain. The Government of Saudi
Arabia can demonstrate its leadership in the region by expanding the role of its
people in determining their future. And the great and proud nation of Egypt,
which showed the way toward peace in the Middle East, can now show the way
toward democracy in the Middle East.

To promote peace in the broader Middle East, we must confront regimes that
continue to harbor terrorists and pursue weapons of mass murder. Syria still
allows its territory and parts of Lebanon to be used by terrorists who seek to
destroy every chance of peace in the region. You have passed and we are applying
the Syrian Accountability Act, and we expect the Syrian Government to end all
support for terror and open the door to freedom. 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. 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. And to
the Iranian people, I say tonight: As you stand for your own liberty, America
stands with you.

Our generational commitment to the advance of freedom, especially in the Middle
East, is now being tested and honored in Iraq. That country is a vital front in
the war on terror, which is why the terrorists have chosen to make a stand
there. Our men and women in uniform are fighting terrorists in Iraq so we do not
have to face them here at home. And the victory of freedom in Iraq will
strengthen a new ally in the war on terror, inspire democratic reformers from
Damascus to Tehran, bring more hope and progress to a troubled region, and
thereby lift a terrible threat from the lives of our children and grandchildren.

We will succeed because the Iraqi people value their own liberty, as they showed
the world last Sunday. Across Iraq, often at great risk, millions of citizens
went to the polls and elected 275 men and women to represent them in a new
Transitional National Assembly. A young woman in Baghdad told of waking to the
sound of mortar fire on election day and wondering if it might be too dangerous
to vote. She said, "Hearing those explosions, it occurred to me: The insurgents
are weak; they are afraid of democracy; they are losing. So I got my husband and
I got my parents, and we all came out and voted together." Americans recognize
that spirit of liberty, because we share it. In any nation, casting your vote is
an act of civic responsibility. For millions of Iraqis, it was also an act of
personal courage, and they have earned the respect of us all.

One of Iraq's leading democracy and human rights advocates is Safia Taleb
al-Suhail. She says of her country, "We were occupied for 35 years by Saddam
Hussein. That was the real occupation. Thank you to the American people who paid
the cost but, most of all, to the soldiers." Eleven years ago, Safia's father
was assassinated by Saddam's intelligence service. Three days ago in Baghdad,
Safia was finally able to vote for the leaders of her country, and we are
honored that she is with us tonight.

The terrorists and insurgents are violently opposed to democracy and will
continue to attack it. Yet, the terrorists' most powerful myth is being
destroyed. The whole world is seeing that the car bombers and assassins are not
only fighting coalition forces; they are trying to destroy the hopes of Iraqis,
expressed in free elections. And the whole world now knows that a small group of
extremists will not overturn the will of the Iraqi people.

We will succeed in Iraq because Iraqis are determined to fight for their own
freedom and to write their own history. As Prime Minister Allawi said in his
speech to Congress last September, "Ordinary Iraqis are anxious to shoulder all
the security burdens of our country as quickly as possible." That is the
natural desire of an independent nation, and it is also the stated mission of
our coalition in Iraq. The new political situation in Iraq opens a new phase of
our work in that country.

At the recommendation of our commanders on the ground and in consultation with
the Iraqi Government, we will increasingly focus our efforts on helping prepare
more capable Iraqi security forces, forces with skilled officers and an
effective command structure. As those forces become more self-reliant and take
on greater security responsibilities, America and its coalition partners will
increasingly be in a supporting role. In the end, Iraqis must be able to defend
their own country, and we will help that proud new nation secure its liberty.

Recently an Iraqi interpreter said to a reporter, "Tell America not to abandon
us." He and all Iraqis can be certain: While our military strategy is adapting
to circumstances, our commitment remains firm and unchanging. We are standing
for the freedom of our Iraqi friends, and freedom in Iraq will make America
safer for generations to come. We will not set an artificial timetable for
leaving Iraq, because that would embolden the terrorists and make them believe
they can wait us out. We are in Iraq to achieve a result, a country that is
democratic, representative of all its people, at peace with its neighbors, and
able to defend itself. And when that result is achieved, our men and women
serving in Iraq will return home with the honor they have earned.

Right now, Americans in uniform are serving at posts across the world, often
taking great risks on my orders. We have given them training and equipment, and
they have given us an example of idealism and character that makes every
American proud. The volunteers of our military are unrelenting in battle,
unwavering in loyalty, unmatched in honor and decency, and every day they're
making our Nation more secure. Some of our service men and women have survived
terrible injuries, and this grateful country will do everything we can to help
them recover. And we have said farewell to some very good men and women who died
for our freedom and whose memory this Nation will honor forever.

One name we honor is Marine Corps Sergeant Byron Norwood of Pflugerville, Texas,
who was killed during the assault on Fallujah. His mom, Janet, sent me a letter
and told me how much Byron loved being a marine and how proud he was to be on
the frontline against terror. She wrote, "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 is my turn to protect you.' "
Ladies and gentlemen, with grateful hearts we honor freedom's defenders and our
military families, represented here this evening by Sergeant Norwood's mom and
dad, Janet and Bill Norwood.

[At this point, in the First Lady's box, guest Safia Taleb al-Suhail embraced
guest Janet Norwood.]

In these 4 years, Americans have seen the unfolding of large events. We have
known times of sorrow and hours of uncertainty and days of victory. In all this
history, even when we have disagreed, we have seen threads of purpose that unite
us. The attack on freedom in our world has reaffirmed our confidence in
freedom's power to change the world. We are all part of a great venture: To
extend the promise of freedom in our country, to renew the values that sustain
our liberty, and to spread the peace that freedom brings.

As Franklin Roosevelt once reminded Americans, "Each age is a dream that is
dying, or one that is coming to birth." And we live in the country where the
biggest dreams are born. The abolition of slavery was only a dream until it was
fulfilled. The liberation of Europe from fascism was only a dream until it was
achieved. The fall of imperial communism was only a dream until, one day, it was
accomplished. Our generation has dreams of its own, and we also go forward with
confidence. The road of providence is uneven and unpredictable, yet we know
where it leads: It leads to freedom.

Thank you, and may God bless America.