Obama to Push Congress to Curb Debt, Boost Competitiveness

President Barack Obama plans to mark the beginning of a politically divided Congress with a State of the Union speech stressing shared responsibility for reining in the deficit and boosting the country’s capacity to compete with foreign economic rivals, according to two Democratic officials.

Obama will seek to use the nationally televised Jan. 25 address to pivot from the response to the financial crisis that occupied much of the first two years of his presidency to a vision of how to meet longer-range economic challenges, the White House has told congressional allies.

As a preview, White House press secretary Robert Gibbs pointed to a Dec. 6 speech Obama gave in Winston-Salem, North Carolina, in which the president called the competition from rising economies such as China, South Korea and India “our generation’s Sputnik moment” -- a reference to the Soviet Union’s launch of the first satellite in 1957, ahead of the U.S.

“The most important contest we face is not between Democrats and Republicans,” Obama said in that speech. “It’s between America and our economic competitors all around the world.”

White House allies have been told not to expect a detailed budget plan in the speech, though the president will call for tough choices and may offer examples. Building on the competitiveness theme, he will call for investment in “innovation, education and infrastructure” and is likely to cite funding for high-speed rail that was included in the $814 billion economic-stimulus package, allies have been told.

Education Focus

A call to promote greater accountability in the educational system, a policy goal shared by some in the Republican Party that now controls the U.S. House, also will be featured in the speech. The administration is pressing for a revision of the Elementary and Secondary Education Act, the law that President George W. Bush cast as “No Child Left Behind,” to encourage higher student achievement and additional teacher training.

Obama has “been laser-like focused on education from Day One,” Secretary of Education Arne Duncan said in an interview. “I think you’ll see that reflected in the State of the Union.”

The themes build on the recent agenda of the president, who this week hosted a state visit by Chinese President Hu Jintao, leader of a nation viewed as both an economic rival and a promising export market. During the visit, the administration announced export deals to China worth $45 billion, including final approval of a $19 billion purchase of 200 Boeing Co. aircraft, all previously announced.

Olive Branch

Since the election losses his Democratic Party sustained in November, Obama also has reached out to business leaders. Among the overtures have been a trade deal with South Korea, an extension of Bush-era tax cuts for high-income families, the appointment of former JPMorgan Chase & Co. executive William Daley as chief of staff, and a planned Feb. 7 speech before the U.S. Chamber of Commerce to discuss job creation.

Obama has expressed interest in overhauling the tax system, though there has been conflict among his advisers over how much emphasis to put on it in the speech, said a top administration official. Another question is how the president will address recommendations from his bipartisan deficit commission, including calls to cut Social Security benefits.

The competitiveness theme provides a framework that incorporates those issues as well as other favorite causes of the president, such as developing clean-energy technology.

The ideas Obama plans to highlight meet a political imperative for a president who is gearing up for re-election at a time of 9.4 percent unemployment, said Tad Devine, a Democratic strategist who worked on the presidential campaigns of Vice President Al Gore in 2000 and Senator John Kerry of Massachusetts in 2004.

Opportunity for ‘Vision’

“Obama has to convince people he got the country out of a deep ditch, and now he knows where he wants to take us,” Devine said. “I don’t think he has supplied that short, coherent economic vision for the future yet, and I think the State of the Union is an opportunity for him to do it.”

It is especially important to present an economic strategy the public can easily grasp if, as most forecasters expect, Obama faces re-election with continuing high unemployment, Devine said. Unemployment in 2012 will average 8.5 percent, according to the median forecast of 53 economists surveyed by Bloomberg News this month.

“He’s got to lay out an economic vision for the future that has a runway longer than two years,” Devine said. “He’s got to say if we stay on this course we can get back to prosperity, and there’s only one way to get there.”

Companies Prospering

Despite the longest stretch of unemployment rates above 9 percent since monthly records began in 1948, American businesses and investors have prospered since Obama took office. The Standard & Poor’s 500 Index has risen more than 50 percent since his inauguration, and U.S. corporate profits reached a record in the third quarter of 2010.

The theme of overcoming partisan divisions resonates with independent voters and women, both large constituencies that Obama won in 2008 yet Democrats lost in 2010, Devine said. Among independents, 52 percent supported Obama in 2008 versus 37 percent who backed Democratic House candidates in 2010. Among women, 56 percent supported Obama in 2008 versus 48 percent who voted for Democratic House candidates in 2010, exit polls show.

Obama’s job-approval ratings have been climbing since the November election. In a Wall Street Journal/NBC News poll taken Jan. 13-17, after his speech at a memorial service in Tucson, Arizona, urging a more civil political discourse, his job approval reached 53 percent. Among independents, positive views of his performance surpassed negative views for the first time since August 2009.

To contact the reporter on this story: Mike Dorning in Washington at mdorning@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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