Obama pledges new deal for US middle class in state of the union address

Barack Obama Still

Barack Obama has pledged in the annual state of the union address to use his second presidential term to restore "the basic bargain" which built the US into the world's greatest economic power by ensuring prosperity for the great bulk of Americans and not the privileged few.

The president made wide-ranging proposals for investments in schools and infrastructure, and a sharp increase in the minimum wage to ensure that "no one who works full-time should have to live in poverty" as he told Congress that it is this generation's task to return to a time when US governments represented all the people. But he also pledged that his proposals will not add to the US's burgeoning deficit.

"It is our unfinished task to restore the basic bargain that built this country – the idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, what you look like, or who you love," the president said. "It is our unfinished task to make sure that this government works on behalf of the many, and not just the few; that it encourages free enterprise, rewards individual initiative, and opens the doors of opportunity to every child across this great nation of ours."

Obama used the speech to call for fairness and decency in other areas of American political life – from immigration reform and gay rights to legislation to protect women from violence and to reduce the terrible toll in lives claimed by guns.

But it was jobs and the economy that the president built his speech around. He said that after a gruelling recession, the economy has turned around and job numbers are rising. "Together, we have cleared away the rubble of crisis, and can say with renewed confidence that the state of our union is stronger," he said.

But Obama said that many of those who have worked hard to pull America out of the economic crisis have been left behind. "Our economy is adding jobs – but too many people still can't find full-time employment. Corporate profits have rocketed to all-time highs – but for more than a decade, wages and incomes have barely budged," he said.

The president said it was wrong that in such a rich country working people should live hand-to-mouth.

"Tonight, let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9 an hour. This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets," he said.

The Republican speaker of the House of Representatives, John Boehner, and members of his party remained seated as Democrats rose to applaud.

In a speech that at times echoed the view of a foregone era that it is for the government to lead when capitalism cannot provide, Obama said he also recognised that there are parts of the US – "factory towns decimated from years of plants packing up, inescapable pockets of poverty, urban and rural" – where finding even a minimum wage job is hard. The president said he will direct money toward providing work "rebuilding vacant homes in run-down neighbourhoods", and targeting "resources at public safety, education, and housing".

He announced a "Fix-It-First" programme to address the most urgent repairs of the US's worn infrastructure "like the nearly 70,000 structurally deficient bridges across the country". But in a recognition of modern political realities, Obama said the private sector must have a role.

"To make sure taxpayers don't shoulder the whole burden, I'm also proposing a Partnership to Rebuild America that attracts private capital to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children," he said.

Recognising that many Americans and members of Congress are as worried about the US's rising debt as they are about falling earnings, the president pledged that his proposals would not add to the country's debt.

"Nothing I'm proposing tonight should increase our deficit by a single dime. It's not a bigger government we need, but a smarter government that sets priorities and invests in broad-based growth," he said.

Republicans are suspicious of that claim. Newt Gingrich, the former House speaker, said that commitment would sink the president's plans.

In the official Republican response to Obama by Florida senato, Marco Rubio – a Cuban immigrant chosen as his party attempts to reposition itself as more moderate after its defeat in the presidential election and to win back Latino voters driven away by Republican legislation and rhetoric on immigration – accused the president of wanting to further expand government with "tax, borrow and spend" policies. He said Obama was falsely blaming the rich not paying enough tax for the economic recession when it was a "housing crisis created by reckless government policies" that was to blame.

"I don't oppose your plans because I want to protect the rich. I oppose your plans because I want to protect my neighbours," Rubio said of the president. "This opportunity – to make it to the middle class or beyond no matter where you start out in life – it isn't bestowed on us from Washington. It comes from a vibrant free economy where people can risk their own money to open a business."

Obama warned of the devastating effect of about $1tn worth of budget cuts that will automatically kick in this year if no agreement is reached in Congress to reduce the deficit.

"These sudden, harsh, arbitrary cuts would jeopardise our military readiness. They'd devastate priorities like education, energy, and medical research. They would certainly slow our recovery, and cost us hundreds of thousands of jobs," he said.

But the president said that Republican proposals to protect defence spending by cutting education, job training and government health spending even deeper was an "even worse" idea.

Obama said he would agree to reform of Medicare and Medicaid, which provide healthcare to the elderly and very poor, but by changing how the government pays for services.

Instead of cuts to services, the president said that what is required is to make the rich and big business pay their fair share. "To hit the rest of our deficit reduction target, we should do what leaders in both parties have already suggested, and save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and well-connected. After all, why would we choose to make deeper cuts to education and Medicare just to protect special interest tax breaks? How is that fair? How does that promote growth?" he said.

Obama used the prospect of better educated and better trained workers to press for immigration reform.

"Our economy is stronger when we harness the talents and ingenuity of striving, hopeful immigrants," he said. "Real reform means establishing a responsible pathway to earned citizenship – a path that includes passing a background check, paying taxes and a meaningful penalty, learning English, and going to the back of the line behind the folks trying to come here legally."

But in a gesture to Republicans who want tighter controls to stem the inflow of undocumented aliens, Obama promised tighter control of borders.

Still, Rubio responded by saying that existing laws need to be better applied before the door is opened to more immigrants to remain legally.

Obama made an emotional appeal for a measure of gun control following the massacre of children at an elementary school in Newtown two months ago.

"I know this is not the first time this country has debated how to reduce gun violence. But this time is different. Overwhelming majorities of Americans … have come together around common-sense reforms like background checks that will make it harder for criminals to get their hands on a gun. Senators of both parties are working together on tough new laws to prevent anyone from buying guns for resale to criminals. Police chiefs are asking our help to get weapons of war and massive ammunition magazines off our streets, because they are tired of being outgunned," he said drawing shouts of support from members of Congress wearing a green ribbon in memory of the Newtown victims. "Each of these proposals deserves a vote in Congress. If you want to vote no, that's your choice. But these proposals deserve a vote. Because in the two months since Newtown, more than a thousand birthdays, graduations, and anniversaries have been stolen from our lives by a bullet from a gun."

The president went on to name some of the victims of gun violence, including 15-year-old Hadiya Pendleton who performed at Obama's inauguration last month and was then shot dead in a Chicago park. The girl's parents attended the speech as guests of Michelle Obama.

The president also invoked the protection of children's futures in calling for for Congress to act on bipartisan "market-based solutions" to climate change. But he warned that if it does not then he will use his powers to force the issue.

"For the sake of our children and our future, we must do more to combat climate change. Yes, it's true that no single event makes a trend. But the fact is, the 12 hottest years on record have all come in the last 15. Heat waves, droughts, wildfires, and floods – all are now more frequent and intense. We can choose to believe that superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence. Or we can choose to believe in the overwhelming judgement of science – and act before it's too late," he said. "If Congress won't act soon to protect future generations, I will. I will direct my cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.

Obama ranged across a number of other issues. He announced his intention to bring home a little more than the 66,000 troops remaining in Afghanistan within a year in preparation for the final pull out of US combat troops by the end of 2014. He said the US remains committed to continuing to support the Afghan government and that he is confident the US can "achieve our objective of defeating the core of al-Qaida".

The president defended the use of drones without mentioning them by name, saying it is better to use them than put US soldiers on the ground in confronting the threat posed by al-Qaida-linked groups from the Arabian Peninsula to Africa.

"The threat these groups pose is evolving. But to meet this threat, we don't need to send tens of thousands of our sons and daughters abroad, or occupy other nations. Instead, we will need to help countries like Yemen, Libya, and Somalia provide for their own security, and help allies who take the fight to terrorists, as we have in Mali. And, where necessary, through a range of capabilities, we will continue to take direct action against those terrorists who pose the gravest threat to Americans," he said.

But the president, in the face of criticism of the powers he has accorded himself to order the killing by drone of US citizens as well as foreigners, said his administration "has worked tirelessly to forge a durable legal and policy framework to guide our counter-terrorism operations".

Obama called on Iran's leaders to "recognise that now is the time for a diplomatic solution" over Tehran's nuclear programme, but added "we will do what is necessary to prevent them from getting a nuclear weapon". He said the transitions to democracy amid the Arab revolutions in the Middle East "will be messy".

"We cannot presume to dictate the course of change in countries like Egypt. But we can and will insist on respect for the fundamental rights of all people. We will keep the pressure on a Syrian regime that has murdered its own people, and support opposition leaders that respect the rights of every Syrian," he said.

Obama made a fleeting reference to Israel ahead of his first visit there as president next month saying he will "stand steadfast" with the Jewish state in pursuit of security and a lasting peace. He made no mention of the Palestinians.

Powered by Guardian.co.ukThis article was written by Chris McGreal in Washington, for guardian.co.uk on Wednesday 13th February 2013 04.56 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010