A president's perspective.

The 2004 elections both nationally and in the states showed how competitive and evenly matched our two parties are.

While nationally the Republicans won a close presidential contest, and increased their margins in the House and the Senate, at the state legislative level the Democrats gained seats and nearly equaled the number of state legislative bodies that Republicans control. It is an amazing fact that division among the 7,382 state legislators in the country is nearly 50-50:3,660 Democrats to 3,657 Republicans.

The country wants our federal and state governments to actively seek sound policy solutions to the problems of the day and to avoid partisan deadlock and indecision. I believe the close election is evidence of that.

Unfortunately, conquering the federal deficit--which is critical to the states--will make the Iraq war look simple. And in this area of desirable "centrist" policies, the states have a significant role to play and a very sizable stake to protect.

On the size of the problem, the Concord Coalition put it best. "An expression used in golf is apt: you play the ball where it lies. In this case, the ball is in deep rough and the toughest holes are ahead." FY 2004 closed with a federal budget deficit of $413 billion. In 2003 it was $374 billion. These were the two largest, back-to-back deficits in our history. In 2008, before the end of the second Bush term, the long awaited retirement years of the baby-boomers will begin. The percentage of Americans age 65 and above will rise from 12 percent of the population to over 20 percent, and with it, the obligations under Social Security, Medicare and Medicaid. These programs will grow from 8 percent of the economy (GDP) to 16 percent.

If things do not change, these three programs will consume 81 percent of the federal budget and all of the available federal revenues. It is not surprising that the Congressional Budget Office has stated that "substantial reductions in the projected growth of spending or a sizable increase in taxes--or both--will be necessary to provide a significant likelihood of fiscal stability in the coming decades."

State leaders, who must struggle yearly to balance their budgets, are seriously disturbed by the fiscal irresponsibility of the federal government. And they are angered by the $30 billion "off federal budget" but "on state budget" unfunded mandates represent. But nothing is more frightening to state leaders, given the fiscal peril our federal...