Obama focuses on economy in key speech
Washington - US President Barack Obama on Tuesday used his annual State of the Union policy address to denounce America's economic inequality, drawing a battle line with Republicans ahead of what is expected to be a tough fight for re-election.
The nationally televised speech before a joint session of Congress, one of America's grandest political events, put Obama back in the spotlight after months of being overshadowed by the fierce race among Republicans vying to be his opponent in the November election.
At the core of Obama's address was the improving but deeply wounded economy - the matter driving Americans' anxiety and the one likely to determine the next president.
With little hope of getting a divided Congress to approve much of his legislative agenda, Obama spoke with voters in mind.
He outlined a vastly different vision for fixing the country than the one pressed by the Republicans. He pleaded for an active government that ensures economic fairness for everyone, as his opponents demand that the government back off and let the free market rule.
He called for higher taxes on millionaires and a flurry of aid for the middle class. Restoring a fair shot for all is "the defining issue of our time", he said.
"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," he said.
Republicans applauded infrequently. In the party's formal response, Indiana governor Mitch Daniels denounced the speech as "pro-poverty" and Obama's tactics as divisive.
"No feature of the Obama presidency has been sadder than its constant efforts to divide us, to curry favour with some Americans by castigating others," Daniels said.
Even before Obama spoke, the two top contenders for the Republican presidential nomination offered criticism. Newt Gingrich, a former speaker of the House of Representatives, questioned whether Obama would "show a willingness to put aside the extreme ideology of the far left". Mitt Romney, a former Massachusetts governor, said Obama was proposing "more taxes, more spending, and more regulation".
Tax rate for millionaires
But Obama's timing could not have been better for a message about income inequality. Earlier on Tuesday, Romney released his federal tax returns under political pressure, revealing that he earned nearly $22m in 2010 and paid an effective tax rate of about 14%. That is a lower rate than many Americans pay because of how investment income is taxed in the United States.
In his speech, Obama proposed a minimum tax rate of at least 30% for those earning $1m or more a year.
"Now you can call this class warfare all you want," Obama said, responding to a frequent criticism from Republicans. "But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense."
Obama calls this the "Buffett rule," named for billionaire Warren Buffett, who has said it's unfair that his secretary pays a higher tax rate than he does.
Emphasising the point, Buffett's secretary, Debbie Bosanek, attended the address in first lady Michelle Obama's box.
Obama also proposed more help for college students, relief for homeowners and eliminating tax incentives that make it more attractive for companies to ship jobs overseas.
Though domestic issues dominated his speech, Obama talked about extending new ties and influence toward Asia, while claiming that old alliances in Europe and elsewhere are stronger than ever.
He said that while all options are on the table to prevent Iran from acquiring a nuclear weapon - an implied threat to use military force if necessary - "a peaceful resolution of this issue is still possible".
Regarding Syria, where more than 5 000 people have been killed in a crackdown on protesters, he said the government of President Bashar Assad "will soon discover that the forces of change can't be reversed, and that human dignity can't be denied".
Obama also called for the creation of a new trade enforcement unit that would go after unfair trade practices around the world. Obama said the US would provide financing to put its companies on even footing when the Chinese or other competitors use unfair export financing to help their businesses.
Obama faces considerable challenges three years into his term. Polling shows Americans are divided about the president's overall job performance but unsatisfied with his handling of the economy.
The economy is improving, but unemployment still stands at the high rate of 8.5%. Government debt stands at a record $15.2 trillion.
Partisanship has become so intense in Washington that last year the government neared both a shutdown and, even worse, a first-ever default on its obligations.
A rare wave of unity splashed over the House chamber at the start. Congresswoman Gabrielle Giffords, survivor of an assassination attempt one year ago, received sustained applause from her peers and cheers of "Gabby, Gabby, Gabby". She blew a kiss to the podium. Obama warmly embraced her.
Lawmakers also leapt to their feet when Obama said near the start of his speech that terrorist leader Osama bin Laden, killed by a raid in Pakistan authorised by the president, will no longer threaten America.