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In State of the Union address, Obama says ‘basic American promise’ is at risk

Holly Bailey, Yahoo News
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(Saul Loeb/Pool via Getty Images)

President Obama warned in his State of the Union address Tuesday that the nation's middle class is at risk because of growing economic inequality, and argued that the government must do more to preserve the basic American dream.

In a speech that is likely to set the theme of his 2012 re-election bid, Obama said "the basic American promise" that hard work can allow one to own a home and support a family are at risk if the government doesn't do more to balance the scale between the nation's rich and poor.

"The defining issue of our time is how to keep that promise alive. No challenge is more urgent. No debate is more important," Obama declared. "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.  What's at stake are not Democratic values or Republican values, but American values.  We have to reclaim them."

In his third such address to the Congress, Obama's focus was not just on the future—as he laid out broad proposals to boost an "economy built to last, where hard work pays off and responsibility is rewarded."

But in a message that was unmistakably aimed at voters in the upcoming presidential election, Obama reminded his audience that the nation's economic troubles began long before he arrived at the White House, starting with the collapse of the nation's leading banks in 2008 due to lax regulation and "bad behavior."

"In the six months before I took office, we lost nearly four million jobs.  And we lost another four million before our policies were in full effect," Obama said.

But he argued that the country is turning around under his policies, pointing to 3 million jobs created in the last 22 months. In a sign that Obama will campaign against the Republican-led Congress as much as a his eventual GOP presidential rival, the president indicated he will take a hard stand against lawmakers determined to block his economic agenda.

"The state of our union is getting stronger, and we've come too far to turn back now," Obama insisted. "As long as I'm president, I will work with anyone in this chamber to build on this momentum. 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."

The president argued that he's laying out a "blueprint for an economy that's built to last" based on four main themes: American manufacturing, American energy, skills for American workers and "a renewal of American values."

Among other things, Obama called for a rollback for tax breaks for American companies that outsource jobs overseas and proposed new tax cuts for manufacturers that build their products stateside--a proposal that generated muted applause among Republican lawmakers in the House chamber. He also announced the creation of a "trade enforcement unit" that would investigate unfair trade practices in counties including China--an issue that has been a big issue on the 2012 campaign trail.

"Our workers are the most productive on Earth, and if the playing field is level, I promise you--America will always win," Obama declared.

Tackling an issue that will be big in the general election, Obama called on Republicans to pass immigration reform, including the DREAM Act. "If election-year politics keeps Congress from acting on a comprehensive plan, let's at least agree to stop expelling responsible young people who want to staff our labs, start new businesses, and defend this country," Obama said. "Send me a law that gives them the chance to earn their citizenship. I will sign it right away."

Obama also called for aid to boost the nation's struggling housing market--proposing new tax incentives to help homeowners save $3,000 a year on their mortgages. He also announced the creation of a federal task force to monitor banks, mortgage lenders and credit card companies for fraud.

"Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same," Obama 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."

Obama sounded familiar themes on energy--calling for a rollback of tax cuts on oil companies in favor of investments in clean energy sources. He announced a federal incentive to build clean energy projects on government land.

On education, he called on states to pass laws to mandate that all minors stay in school until they graduate or turn 18. He also called on Congress to enact measures to ensure student aid--but he also warned higher education institutions to crack down on skyrocketing education costs.

"If you can't stop tuition from going up, the funding you get from taxpayers will go down," Obama said. "Higher education can't be a luxury--it's an economic imperative that every family in America should be able to afford."

He repeated a call for investment in the nation's crumbling infrastructure, announcing that he will sign an executive order to clear the "red tape" slowing federal construction projects. "But you need to fund these projects. Take the money we're no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home," Obama said.

The White House has been signaling for weeks that Obama would embrace populist themes about the economy, as a way of drawing a line in the sand between him and his Republican rivals ahead of his 2012 re-election push. Like other presidents before him, he was joined in the House chamber by individuals aimed at personifying elements of his speech, including Debbie Bosanek, the secretary to billionaire financier Warren Buffett, whose argument that he shouldn't be paying a lower tax rate than average workers has become a rallying cry for the White House.

"We don't begrudge financial success in this country. We admire it," Obama insisted. "When Americans talk about folks like me paying my fair share of taxes, it's not because they envy the rich. It's because they understand that when I get tax breaks I don't need and the country can't afford, it either adds to the deficit, or somebody else has to make up the difference."

But the larger message of Obama's remarks was obvious, as the president at one point returned to one of the major themes of his 2008 presidential bid: Rising above cynicism and partisan gridlock to enact real change in Washington. He noted that the "greatest blow to confidence in our economy" came during last year's combative debt ceiling talks.

"Who benefited from that fiasco?" Obama asked. "I've talked tonight about the deficit of trust between Main Street and Wall Street.  But the divide between this city and the rest of the country is at least as bad--and it seems to get worse every year."

He called for lawmakers to "lower the temperature" and "end the notion" that Democrats and Republicans must be locked in a "perpetual campaign of mutual destruction."

At the same time, he warned again that he wouldn't wait for Congress to enact major reforms in Washington. "With or without this Congress, I will keep taking actions that help the economy grow," Obama said. "But I can do a whole lot more with your help. Because when we act together, there is nothing the United States of America can't achieve."

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