WASHINGTON — President Barack Obama used an election-year State of the Union address Tuesday night to frame the national debate not as a referendum on him but as a pivotal decision on how to save the American dream.
He boasted that the nation's economy has improved, albeit slowly, from the depths of the Great Recession. "The state of our Union is getting stronger," he said.
But he said the middle class has been losing ground for decades, and he urged a new agenda of taxes and government spending to tilt the playing field away from the rich and powerful and more toward the rest of the citizenry.
Once, he said, Americans believed "the basic American promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement. The defining issue of our time is how to keep that promise alive."
"No challenge is more urgent. No debate is more important," he said. "We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules."
The speech fleshed out a broad vision Obama laid out in December in a speech in Osawatomie, Kan., one modeled after a 1910 speech that Theodore Roosevelt gave in the same town laying out themes for what would become the Progressive Era.
Among his proposals: a 30 percent minimum tax on millionaires, a minimum tax on companies that ship jobs overseas coupled with tax cuts for those that keep factory jobs at home, and a $200 billion, six-year plan to build roads, bridges and railways with money saved from bringing U.S. troops home from Afghanistan and Iraq.
Obama opened his speech declaring victory in bringing U.S. troops home from Iraq, eliminating Osama bin Laden, and beginning to withdraw troops from Afghanistan. That enables the country, he said, to "think about the America within our reach."
Republicans countered with a similar vision of a more prosperous America where everyone shares the bounty. But they offered a far different agenda, and castigated Obama for policies they said have made things worse.
"As Republicans our first concern is for those waiting tonight to begin or resume the climb up life's ladder," said Gov. Mitch Daniels of Indiana, giving the official Republican response. "We do not accept that ours will ever be a nation of haves and have nots. We must always be a nation of haves and soon to haves."
He said that Obama hurt the economy with over-regulation of business, a refusal to allow domestic energy production, and proposals to raise taxes on the rich that amount to dividing the country.
Obama insisted that his agenda is what's needed to put the country back on track.
"Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that does the same," he said. "It's time to apply the same rules from top to bottom: No bailouts, no handouts and no copouts. An America built to last insists on responsibility from everybody."
Under the broad theme of helping build a fairer economy, Obama laid out proposals in four categories: helping restore U.S. manufacturing, improving U.S. energy independence, teaching workers new skills for a changing economy, and tax increases he called "a renewal of American values."
He proposed that millionaires pay a minimum tax of 30 percent, putting a precise number to the idea he proposed last year. The proposal comes as Republicans vying for his job all have proposed cutting taxes for the wealthy, arguing they are the ones who create jobs.
Obama's proposed tax rate would double the income taxes paid by one of those candidates: Mitt Romney revealed Monday that he made $20.9 million last year and expects to pay $3.2 million in taxes, a 15.4 percent tax rate. Senior administration officials said the proposed 30 percent rate was in the works for several weeks and had nothing to do with Romney.
Obama also vowed ever more oversight of Wall Street, saying he'd directed Attorney General Eric Holder to create a Financial Crimes Unit to investigate and prosecute large-scale financial fraud.
He boasted that manufacturing — for a century the stepping stone of upward mobility — is adding jobs again for the first time in more than a decade.
To help more, he proposed tilting the tax code to push companies to open factories here rather than overseas. He urged lowering the corporate tax rate for businesses that manufacture and create jobs in the United States. He also proposed higher taxes for companies that export jobs overseas.
To help the working class, he proposed:
— Partnerships with community colleges and businesses to train and place 2 million workers;
— Overhauling the unemployment compensation program that provides checks to laid-off workers, linking the aid to training;
— Getting all states to require students to stay in school until they graduate or reach 18, as 20 states do now.
To ease the enduring housing crisis, Obama said he'll send Congress a new plan that would help responsible homeowners who are current on their payments save $3,000 a year by refinancing their mortgage. The program would be paid for with a new bank fee he's proposed.
To improve the country's energy picture, he lauded the fact that the United States in 2009 became the world's top producer of natural gas.
He said his administration will prepare "common sense" new rules to ensure safe drilling of shale natural gas on public lands, drilling he said will create 600,000 new jobs by the end of the decade. He said he'll also require disclosure of the chemicals used in "fracking" operations on public lands. Fracking is the use of water and chemicals under high pressure to extract oil from shale.
Obama spent most of the hour-plus speech on domestic issues, which dominate the public's priority list. Late in his oration, he noted the "wave of change" sweeping across the Middle East and North Africa. Of Syria, wracked now by violent repression, he said "I have no doubt that the Assad regime will soon discover that the force of change can't be reversed, and that human dignity can't be denied."
Turning to Iran, he said the world has unified in opposition to the regime's work toward a nuclear weapon. "Let there be no doubt," he added: "America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal."
Obama looked out on a Congress where Republicans control the House of Representatives and have ruled out most of his proposals, particularly tax increases for the wealthy.
"As long as I'm president, I will work with anyone in this chamber," Obama said. "But I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place.
"We will not go back to an economy weakened by outsourcing, bad debt and phony financial profits," he added.
In the Republican response, Daniels rejected the criticism of his party as obstructionist.
"It's not fair and it's not true for the president to attack Republicans in Congress as obstacles on these questions," he said. "They and they alone have passed bills to reduce borrowing, reform entitlements and encourage new job creation, only to be shot down nearly time and again by the president and his Democrat Senate allies."
Daniels lamented criticism of the wealthy as not paying their "fair share," calling it needlessly divisive.
"No feature of the Obama presidency has been sadder than its constant efforts to divide us, to curry favor with some Americans by castigating others," said Daniels, who considered but passed on a run for the Republican presidential nomination to oppose Obama.
"As in previous moments of national danger, we Americans are all in the same boat. If we drift, quarreling and paralyzed, over a Niagara of debt, we will all suffer, regardless of income, race, gender or other category. If we fail to shift to a pro-jobs, pro-growth economic policy, there will never be enough public revenue to pay for our safety net, national security, or whatever size government we decide to have," Daniels said.
Congressional Republicans universally panned Obama's speech.
"This White House has shown an arrogance of power and a belief that Washington knows best since the president took office three years ago," said Sen. Orrin Hatch, R-Utah, the ranking Republican on the Senate Finance Committee.
"The American people appreciate a good speech — but they want results," said Sen. John Barrasso of Wyoming, the Senate Republican Conference vice chair. "The president's rhetoric sounds admirable, but his record has been awful."
House Majority Leader Eric Cantor of Virginia called Obama's speech more of the same on the economy.
"Rather than pushing for equality of outcomes, we need to make sure that everyone has the opportunity to succeed," Cantor said. "So, instead of talking about a fair share or spending time trying to push those at the top down, elected leaders in Washington should be trying to ensure that everyone has a fair shot and the opportunity to earn success up the ladder rather than meeting in the middle."
(William Douglas of the Washington Bureau contributed.)
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