Obama Seeks Bipartisan Effort to Curb Debt, Invest in Education, Internet

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U.S. President Barack Obama addresses a Joint Session of Congress while delivering his State of the Union speech.

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Photographer: Brendan Smialowski/Getty Images

U.S. President Barack Obama addresses a Joint Session of Congress while delivering his State of the Union speech. Close

U.S. President Barack Obama addresses a Joint Session of Congress while delivering his State of the Union speech.

Photographer: Pablo Martinez Monsivais/Pool via Getty Images

President Barack Obama focused on investments for growth during the State of the Union address in Washington, D.C. Close

President Barack Obama focused on investments for growth during the State of the Union address in Washington, D.C.

Photographer: Jim Watson/AFP/Getty Images

Vice President Joe Biden and Speaker of the House John Boehner wear black and white ribbons in honor of the lost and wounded in the recent Tucson, Arizona tragedy prior to the State of the Union address at the U.S. Capitol. Close

Vice President Joe Biden and Speaker of the House John Boehner wear black and white ribbons in honor of the lost and... Read More

Photographer: Brendan Smialowski/Getty Images

Democratic Senator Chuck Schumer stands with Republican Senator Tom Coburn before the State of the Union address in Washington, D.C. Close

Democratic Senator Chuck Schumer stands with Republican Senator Tom Coburn before the State of the Union address in Washington, D.C.

Photographer: Brendan Smialowski/Getty Images

President Barack Obama addresses a Joint Session of Congress while delivering his State of the Union speech in Washington, D.C. Close

President Barack Obama addresses a Joint Session of Congress while delivering his State of the Union speech in Washington, D.C.

President Barack Obama, saying “the future is ours to win,” urged Congress to invest in education, high-speed rail and Internet access while warning that the nation risks being buried under a mountain of debt.

In his annual State of the Union address, Obama stressed that Americans are turning a corner on the worst recession since the Great Depression and bringing troops home from wars on two fronts. He challenged a divided Congress to put partisanship and divisiveness behind and “do big things.”

“Sustaining the American dream has never been about standing pat,” Obama said in his 62-minute speech to a joint session of Congress. “It has required each generation to sacrifice, and struggle, and meet the demands of a new age.”

Obama called on lawmakers to make government more responsive and efficient. He proposed a freeze on non-defense discretionary spending that would save $400 billion from the budget over the next decade and endorsed additional cuts of $78 billion in the defense budget.

“We have to confront the fact that our government spends more than it takes in,” he said. “That is not sustainable.”

Shifting Money

While cutting spending levels, Obama called for shifting money to improve schools, encourage innovation, and build roads, railways and telecommunications networks.

“At stake is whether new jobs and industries take root in this country, or somewhere else,” he said.

In an address that will set up Obama’s agenda leading up to the 2012 elections, the president focused on measures he said are necessary to accelerate the economy. He said Democrats and Republicans also must step up to their “shared responsibility” to govern, including taking steps to cut the budget deficit, which last year was a near-record $1.3 trillion.

Republicans, who took control of the House of Representatives in last November’s congressional elections, have already criticized Obama’s proposed budget freeze as falling short of what is needed to bring federal spending under control.

“Our debt is out of control,” Representative Paul Ryan of Wisconsin, the chairman of the House Budget Committee, said in the text of the Republican response. “What was a fiscal challenge is now a fiscal crisis.”

Republican Plans

Republicans have proposed cutting non-security spending to roll back this year’s budget to 2008 levels, before the government took steps to respond to the financial crisis. That would require slashing $100 billion from the $3.8 trillion budget Obama proposed last year, though Republican leaders have shrunk their target to $60 billion because the fiscal year is already under way.

The Republicans haven’t released details about where the cuts would fall, spending levels for later years or specifics on taxes. The party’s campaign “Pledge to America” doesn’t give figures on saving beyond 2011 or the impact on the deficit.

Obama warned against steep across-the-board cuts.

“Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine,” he said. “It may make you feel like you’re flying high at first, but it won’t take long you’ll feel the impact.”

Clash Over Spending

Obama’s advisers said the speech was intended to set the tone for the coming clash over spending, while avoiding a line- by-line debate about where to trim federal budget. The administration will release more details about its spending plans the week of Feb. 14 when president submits his budget blueprint for fiscal year 2012.

Gene Sperling, director of the National Economic Council, told reporters earlier today that Obama will avoid a “meat-axe approach” in deciding which federal programs to cut because he wants to consider the impact they have on job creation.

Obama’s spending freeze wouldn’t apply to spending for Social Security, Medicare, Medicaid, Homeland Security, the Defense Department or interest payments on the national debt. Discretionary spending outside security accounts for about 14 percent of Obama’s budget.

The president again said he was opposed to extending further tax cuts for married couples with incomes of more than $250,000 a year. Those tax cuts are set to expire in 2012.

Millionaires’ Taxes

“Before we take money away from our schools, or scholarships away from our students, we should ask millionaires to give up their tax break,” he said.

Addressing a point of contention between Democrats and Republicans, Obama said he was open to changes in the health- care overhaul law passed last year. He said he wasn’t willing to repeal the law, as many Republicans have said they want to do.

Obama said the corporate tax rate could be lowered and the tax system simplified by closing loopholes. He restated his goal of doubling the nation’s exports by 2014, and called for expanded high-speed rail and wireless networks nationwide, and a permanent tax credit for college tuition.

The U.S. should produce 80 percent of its electricity from “clean” energy sources by the year 2035 as part of a plan to cut reliance on fuels such as oil and coal, he said, while expanding the use of nuclear energy and natural gas. He also set a goal of putting 1 million electric vehicles on the road by 2015.

“We know what it takes to compete for the jobs and industries of our time,” he said. “We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business.”

Even as the economy has recovered, leading to a “roaring” market and rising corporate profits, Obama said more needs to be done to lower the nation’s unemployment rate, which has been over 9 percent for more than 18 months.

‘Sputnik Moment’

He compared the challenges now faced by the nation to those confronted when the Soviet Union launched the satellite Sputnik, sparking a space race.

“Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik, we had no idea how we’d beat them to the moon,” Obama will say. “This is our generation’s Sputnik moment.”

Throughout the speech, Obama appealed for bipartisan cooperation on issues from taxes to energy. America will now “move forward together, or not at all,” he said.

Bipartisan Seating

Breaking with tradition, many Democratic and Republican lawmakers sat with members of the opposition party for the speech instead of segregating themselves by party on each side of the chamber. The move was proposed following the Jan. 8 mass shooting in Arizona that killed six and wounded 13, including Democratic Representative Gabrielle Giffords.

Obama opened his remarks by asking lawmakers to pray for the recovery of Giffords, who suffered a gunshot wound to the head.

Obama invited an aide to Giffords, Daniel Hernandez, to sit in the House gallery with First Lady Michelle Obama during the speech. Hernandez has been credited with helping to save the life of Giffords at the scene. Also attending was the family of 9-year-old girl Christina Green, the youngest person killed in the attack, and the leader of the hospital trauma team that treated Giffords.

“Tucson reminded us that no matter who we are or where we come from, each of us is a part of something greater, something more consequential than party or political preference,” Obama said at the start of his remarks. “We are part of the American family.”

To contact the reporter on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net; Hans Nichols in Washington at hnichols2@bloomberg.net

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

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