Obama seeks to reignite economic agenda in speech

WASHINGTON — In the first State of the Union address of his second term, President Obama tried to breathe new life into his economic agenda, offering measures to spur growth and urging Congress to revive stalled talks over deficit reduction.

Entering his fifth year presiding over a flagging economy, the president declared the restoration of a strong middle class “our unfinished task” and called on a deeply divided Congress to find “reasonable compromise” to solve the nation’s lingering fiscal ills.

Obama renewed a series of proposals to boost U.S. manufacturing, aid struggling homeowners and invest in infrastructure. He proposed raising the minimum wage, issued a call for tax reform and vowed to seek a deficit reduction deal that balances tax increases with changes to entitlement programs.

“It is our generation’s task, then, to reignite the true engine of America’s economic growth — a rising, thriving middle class,” Obama told lawmakers gathered in the House chamber.

The hourlong speech largely abandoned the high, hopeful tone and delivery of the president’s inaugural address last month, taking instead a wonkier and aggressive turn toward the next fight facing Washington — a standoff over the budget.

Obama and Republicans in Congress are hurtling toward another clash over deep spending cuts scheduled to take effect on March 1. The cuts, which economists think could stall economic growth, were passed as a way to force lawmakers to compromise on a less arbitrary approach to reducing the nation’s $16-trillion debt. Obama suggested he would go further than he has in the past toward making changes to Medicare to curb spending, although he was not specific.

“I am open to additional reforms from both parties, so long as they don’t violate the guarantee of a secure retirement,” Obama said. “Our government shouldn’t make promises we cannot keep — but we must keep the promises we’ve already made.”

He touted progress on many fronts since he took office near the height of the recession and amid two wars. “We have cleared away the rubble of crisis,” Obama said, pointing to job growth and improvements in the housing market.

He also announced plans to cut the number of troops in Afghanistan in half over the next year, a significant acceleration of his original timetable. “This drawdown will continue. And by the end of next year, our war in Afghanistan will be over,” Obama said.

In the Republican response, Sen. Marco Rubio of Florida complained of what he called Obama’s “obsession” with raising taxes and urged him to work with Republicans to encourage economic expansion.

“Mr. President, I don’t oppose your plans because I want to protect the rich,” Rubio said. “I oppose your plans because I want to protect my neighbors, hard-working, middle-class Americans who don’t need us to come up with a plan to grow the government. They want a plan to grow the middle class.”

Obama’s annual addresses to Congress chronicle the way he has scaled back his legislative ambitions. In 2009, the newly elected president outlined a raft of government responses to the economic “reckoning” facing the country. By 2012, after a year of lurching from one fight to another with a GOP-led House of Representatives and with a reelection on the horizon, he offered only piecemeal executive orders and tougher talk, vowing to “fight obstruction with action.”

His speech Tuesday continued in that realpolitik mode. Obama pledged to take executive action on climate change if Congress did not act “soon,” and he announced plans to create a commission to review irregularities at polling places, an issue Congress was unlikely to address.

With an eye on his legacy, Obama appeared careful not to trip up negotiations on matters that appear to be moving through Congress. Last month, he laid out his markers on two of his top priorities — gun control measures and immigration reform — and lawmakers are working on legislation behind the scenes. On Tuesday, he avoided heated rhetoric, making emotional, but brief, references to both.

Still, as he stepped into the House chamber, Obama was surrounded by reminders of the human element — and the political difficulties — behind his legislative agenda.

Democratic lawmakers brought victims of gun violence, including some of those affected by the December mass shooting at Sandy Hook Elementary School in Newtown, Conn., the impetus for the president’s gun control push. Citing his call for a ban on assault weapons and high-capacity magazines, as well as expanded background checks, Obama said Congress owed the victims and their families action on the measures.

“They deserve a vote,” Obama said, as Democrats in the chamber chanted, “Vote!”

Republicans, too, issued invitations that underscored their positions. Natalie Hammond, a Sandy Hook teacher who was injured in the shooting, found herself in the same audience as Ted Nugent, the aging rocker and gun enthusiast who declared he’d be “dead or in jail” if Obama won a second term.

In line with recent tradition, First Lady Michelle Obama was accompanied by guests meant to underscore her husband’s message. She sat with a Louisville, Ky., man retrained as a machinist, Apple Chief Executive Tim Cook and a Wisconsin brewing entrepreneur. She was also joined by the parents of Hadiya Pendleton, a Chicago teenager who was shot and killed just days after she traveled to Washington to perform in the president’s inauguration parade and has become a symbol of the need for tougher gun laws.

Although the speech was largely focused on domestic issues, Obama defended the secretive CIA drone program, which targets suspected militants overseas, including Americans, in foreign countries. He aimed to answer critics, largely from within his own party, who have complained about its secrecy and questioned its legality.

“I recognize that in our democracy, no one should just take my word that we’re doing things the right way,” Obama said. “So, in the months ahead, I will continue to engage Congress to ensure not only that our targeting, detention and prosecution of terrorists remains consistent with our laws and system of checks and balances, but that our efforts are even more transparent to the American people and to the world.”

But for the most part, Obama went to the House chamber — the burial ground for most of his economic agenda — to try to revive those plans. Arguing that his plans would not increase the deficit “by a single dime,” Obama said, “It’s not a bigger government we need, but a smarter government that sets priorities and invests in broad-based growth.”

The president called for $50 billion for infrastructure spending — an expenditure he tried and failed to win as part of his 2011 American Jobs Act. He also recycled his proposals aimed at American manufacturing, seeking $1 billion for the creation of new “innovation institutes” that would develop new technology for U.S. manufacturers. Obama said he would take executive action and use existing funding to create three.

He repeated his call for corporate tax reform, an area in which he shares some common ground with Republicans, to make U.S. business more competitive overseas.

He also asked Congress to devote more money to preschool programs for low- and moderate-income children.

As the housing market continues to limp back from crisis, Obama renewed his past proposal to boost the recovery by helping more homeowners refinance their mortgages at current low rates. He suggested waiving transaction costs for homeowners with government-backed loans, a housing subsidy that congressional Republicans have viewed skeptically in the past.

He renewed his call for government investment in summer and year-round jobs for low-income youths and to put long-term unemployed and low-income adults back to work.

Obama proposed raising the minimum wage to $9 an hour, in stages, by the end of 2015. The proposal was another example of his curbed ambitions. During the 2008 campaign, he pledged to raise the minimum to $9.50 per hour by 2011, but he has spoken little of the proposal since then.

kathleen.hennessey@latimes.com

christi.parsons@latimes.com