President Bush signaled yesterday that he would add personal investment accounts to the Social Security system, simplify the tax code without raising taxes and cut the budget deficit in half, all before he leaves office in 2009.

"It doesn't seem like we're going to see any tightness in U.S. budget policy anytime soon," said Rebecca Patterson, senior currency strategist at Wall Street giant JPMorgan Chase.

Bush pledged early this year to halve the deficit in five years, a promise he renewed yesterday. "I would suggest [deficit hawks] look at our budget that we've submitted to Congress, which does, in fact, get the deficit down, cut in half in five years," Bush said.

But in an independent analysis of that budget, the nonpartisan Congressional Budget Office concluded it would not fulfill that promise. The deficit in fiscal 2004, which ended Sept. 30, was $413 billion. Under Bush's plan for spending and taxes, the deficit would be $258 billion in 2009. If anything, that may understate the size of the deficit in coming years because it does not include any additional costs for the wars in Iraq and Afghanistan. The Pentagon is expected to seek an additional $70 billion early next year.

Moreover, the president's budget does not include the cost of a Social Security reform plan that includes the personal investment accounts Bush is demanding. Under such a plan, workers would be allowed to divert one-third or more of their share of Social Security taxes into stocks, bonds or other investments.

Because the diverted money would otherwise have gone to existing Social Security beneficiaries, the funds would have to be made up through additional government borrowing or spending cuts. A CBO analysis of one of the plans drafted by Bush's Social Security commission concluded the near-term cost would be $104.5 billion in 2005, rising to $146.6 billion in 2009.

"It's all nice to propose personal accounts, to say you're not going to cut benefits for retirees, but then you've got to make the tough choices," said Rep. Jim Kolbe (R-Ariz.), a proponent of overhauling Social Security. "You have to accept short-term transition costs that are going to hit the budget deficit. It's just a matter of being responsible."

Given the challenges of the president's Social Security plan amid record budget deficits, some budget analysts had hoped Bush's simultaneous call to simplify the tax code could be used to raise revenue. They reasoned that taxpayers may be willing to dig a little deeper in exchange for a tax system they see as simpler and fairer.

But Bush made it clear yesterday that was not his intention. Any tax code changes would have to bring in the same amount of revenue as the tax code they would replace, he said.

"If there was a need to raise taxes, I'd say, 'Let's have a tax bill that raises taxes,' as opposed to 'Let's simplify the tax code and sneak a tax increase on the people,' " he said. "It's just not my style. I don't believe we need to raise taxes."

To cope with the cost of his agenda, Bush said he would impose "spending discipline" on Congress and spur economic growth to boost tax revenue. But he has also made it clear he would not cut defense or homeland security spending, and he has promised more spending for education.

The remaining spending at Congress's discretion -- transportation, law enforcement, veterans, agriculture, housing, health research, space exploration and national parks -- totaled $346.5 billion in 2004, not much less than the budget deficit. Eliminating all nondefense, non-homeland security spending may not be enough to balance the budget and cover the cost of the president's Social Security plan.

Chad Kolton, a spokesman for the White House budget office, said the president can and will cut the deficit in half by 2009. But, he said, the deficit in 2009 would be half what the White House first projected it to be for 2004: $521 billion. That projection, made in January, proved to be inflated by $108 billion, in part because faster economic growth produced $82 billion in additional tax revenue and in part because spending was $27 billion less than anticipated.

But Kolton said that pledge never included the cost of Social Security reform, nor will the 2006 budget that Bush will unveil in early February.

"We need to wait and see what our specific proposal will be," he said.

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