By Julianna Goldman and Nicholas Johnston
Jan. 28 (Bloomberg) -- President Barack Obama used his first State of the Union address to affirm his plan for new jobs, health care and cleaner energy and to castigate banker bonuses and lobbyists for failing to end Washington’s “tired battles” of partisanship.
The president defended his decision to support taxpayer bailouts to save companies like Citigroup Inc. and General Motors Co. even as he vowed to fight for the middle class and not bank executives, in his address to a joint session of the U.S. Congress.
While Obama pledged to push for the broad programs he offered in a speech to Congress a year ago, his new proposals were smaller in scale, a recognition of the more than $1 trillion he said his administration spent to staunch the financial crisis.
“We have finished a difficult year, we have come through a difficult decade, but a new year has come,” Obama said. “We don’t quit. I don’t quit.”
With an emphasis on the middle class -- a term he used five times in the 69-minute address of more than 7,000 words --Obama proposed tax credits for small businesses and called on Congress to eliminate capital gains levies on small business investment. He also offered proposals to tackle the federal budget deficit, forecast to be $1.35 trillion this year.
Republicans pounced on the president’s agenda.
“The American people were looking for President Obama to change course tonight, and they got more of the same job-killing policies instead,” said House Minority Leader John Boehner.
Jobs Over Health
Obama needs to do more to broaden the appeal of his policies, said Senator Tom Coburn, an Oklahoma Republican.
“If the President brought the political center of the country together, he may not always get my vote but the country would be better off,” he said in a statement.
With his approval ratings hovering around 50 percent, the president stood before Congress with the hopes of moving past a bruising political year where his top domestic priority -- overhauling a health-care system that accounts for about 17 percent of the economy -- absorbed his attention and dominated lawmakers’ time in the last six months.
While he promised to press forward on the stalled debate, he set no deadlines for Congress and said job creation will be the “number one focus in 2010.” He called on Congress to deliver a new jobs bill to his desk.
‘Don’t Ask, Don’t Tell’
Polls conducted immediately after the president’s remarks ended show viewers largely approve of his proposals. According to the CBS News Web site, 70 percent said Obama shares the same priorities for the country, up from 57 percent who thought so before the speech. Almost 60 percent said he outlined a clear plan for creating jobs, up from 40 percent.
Referring to policy positions he staked out last year, Obama said U.S. troops will begin to come home from Afghanistan in July 2011 as Afghan security forces take control of the country, and that all U.S. combat troops would be out of Iraq by the end of this August.
He also reiterated his campaign pledge to work with Congress to repeal the military’s “Don’t Ask, Don’t Tell” policy that forbids openly gay men and women from serving in the armed forces.
His largely recycled agenda reflected the realities of diminished legislative power, with the loss of the Democratic supermajority in the Senate, and what he called a “deficit of trust” among Americans. Obama framed his domestic priorities including health care and clean energy in terms of the jobs that could be produced.
‘Some Are Angry’
He spoke to a new political environment heading into midterm elections, with voters, especially independents, angry that the government has bailed out now profitable bankers while Americans grapple with 10 percent unemployment.
“Some are frustrated; some are angry,” he said. “They don’t understand why it seems like bad behavior on Wall Street is rewarded but hard work on Main Street isn’t.”
Obama said the government should use $30 billion of the money paid back by banks bailed out by the Troubled Asset Relief Program to assist community banks that lend to small businesses.
He said he wasn’t interested in “punishing banks,” though he derided “big bonuses” and touted recent proposals, including a fee on banks to recoup TARP funds, that build on existing plans to overhaul financial regulations. He applauded the U.S. House passage of new financial rules, called on the Senate to act and threatened to veto a bill that didn’t include strong measures.
“The lobbyists are trying to kill it, but we cannot let them win this fight,” Obama said. “And if the bill that ends up on my desk does not meet the test of real reform, I will send it back until we get it right.”
Stoking Skepticism
He conceded that the health-care fight in Congress had further soured the public mood.
“The longer it was debated, the more skeptical people became,” Obama said. “I take my share of the blame for not explaining it more clearly to the American people. And I know that with all the lobbying and horse-trading, this process left most Americans wondering what’s in it for me?”
Obama also sought to appeal to independents and Republicans, emphasizing tax cuts, the budget freeze and opening the door to offshore oil drilling.
He struck chords of economic nationalism, reiterating the need for “a new foundation for long-term economic growth” and warning that without such steps, the country risks losing its competitive edge to China and India. He said the country can’t wait to address some of the more contentious policy issues.
No ‘Second Place’
“Washington has been telling us to wait for decades, even as the problems have grown worse,” he said. “I do not accept second place for the United States of America.”
The president said his administration’s economic-stimulus program has already created or saved roughly 2 million jobs and is on pace to meet its goal of 3.5 million by the end of this year. He called attention to what he said were 25 tax cuts his administration implemented, including those for 95 percent of working families and for first-time homebuyers.
Obama joked when Republicans didn’t greet these policies with cheers: “I thought I’d get some applause on that one.”
He called for an extension of tax breaks worth $38 billion over this year and next to encourage businesses to accelerate equipment purchases. For individuals and middle-income families, Obama proposed an increased tax credit for child care and an expansion of tax credits to match retirement savings.
Doubling Exports
He said jobs also depend on the country’s ability to boost overseas sales and set a goal for the U.S. to double exports over the next five years. He didn’t push Congress to move forward on free trade agreements with Panama, South Korea and Colombia. Instead, he said the U.S. “will strengthen” trade relations with those countries.
To rein in the deficit, Obama outlined plans such as a freeze on discretionary spending in the federal budget over three years. Defense and other national security-related agencies won’t be affected and some programs, such as education, will get increases. To take further action, he said he would set up a commission to recommend steps to cut the deficit.
Not all Democrats voiced support for the spending freeze.
“A cap on discretionary spending is a relatively modest amount in the context of the federal budget,” said Representative Gerald Connolly, a Virginia Democrat. “It will always be difficult to achieve because there are always going to be pressing demands on the federal budget.”
Obama said years of partisan battles over issues important to the public and the growing influence of lobbyists have sown “deep and corrosive doubts” about the federal government.
“We have more than a deficit of dollars right now,” Obama said. “We face a deficit of trust.”
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