Obama: Restrain budget, but invest in infrastructure

Picking a fight with his own party, President Obama on Tuesday called for ending earmark spending and proposed a five-year partial budget freeze in his first State of the Union address before a Congress packed with newly ascendant Republicans eager to cut even more deeply.

In a broad 62-minute speech in which he called for rejuvenating America’s innovative spirit — what he called “our generation’s Sputnik moment” — Mr. Obama said the economy is beginning to bounce back, and said now is the time to push forward with a job-growing agenda.

But even as he promised to rein in spending, Mr. Obama vowed to invest in roads and infrastructure, to revamp education and to simplify the corporate and personal income-tax codes, calling the moves a down payment on longer-term fiscal moves to restore the country’s finances.

“Now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable,” Mr. Obama said. “Every day, families sacrifice to live within their means. They deserve a government that does the same.”

Still, the speech struck many of the same themes the president has pitched over the last year: His spending freeze is simply an extension of an earlier three-year pledge, and his call for an infrastructure bank is a reworking of a widely panned idea he proposed four months ago. And it comes at a time when Republicans, who now control the House, are in a position to scuttle those parts of his agenda they oppose, and to push for him to go further on spending cuts.

“A ’freeze’ is simply inadequate,” said House Speaker John A. Boehner, Ohio Republican, who led his party to giant victories in last year’s elections with promises of deep cuts and limited government.

Just hours before Mr. Obama took the podium in the packed House chamber, lawmakers there passed a resolution promising to cut spending to pre-Obama levels. The nonbinding measure passed 256-165, with 17 Democrats joining 239 Republicans — signaling at least some bipartisan support for the deep cuts Republicans are proposing.

Just over two weeks after a gunman killed six and injured more than a dozen, including Democratic Rep. Gabrielle Giffords of Arizona, at an event the congresswoman was holding in Tucson, Mr. Obama appealed for a new tone in the capital’s political debates, echoing the call he made at a memorial service the week after the shooting.

“There’s a reason the tragedy in Tucson gave us pause. Amid all the noise and passions and rancor of our public debate, Tucson reminded us that no matter who we are or where we come from, each of us is a part of something greater — something more consequential than party or political preference,” he said.

For their part, members of the House and Senate symbolized their support for more civility by forgoing the traditional partisan seating arrangements and pairing up with colleagues across the aisle. The entire Arizona delegation sat together but left an empty seat in honor of Mrs. Giffords, who was still recovering from her wounds.

Notably, Mr. Obama did not second calls by many of his fellow Democrats for new gun-control measures in the wake of the tragedy, making no mention of the issue in the address.

The president also went out of his way to offer a personal olive branch to Mr. Boehner, congratulating him on becoming speaker and later citing Mr. Boehner’s personal story and rise to prominence as an example of American possibility.

But in a stark challenge to leaders of his own party, the president said he’ll no longer sign bills that include earmarks, the targeted spending projects lawmakers attach to bills to direct money to their districts and states, which many fiscal critics see as pork.

“Both parties in Congress should know this: If a bill comes to my desk with earmarks inside, I will veto it,” the president vowed, drawing a firm line.

House and Senate Republicans have already adopted short-term moratoriums on earmarks, but Democrats have balked, with Senate Majority Leader Harry Reid saying Congress shouldn’t surrender its constitutional right to direct spending.

Still, Mr. Obama may have trouble following through. In both 2009 and 2010, he signaled he would sign pork-laden spending bills despite his misgivings about earmarks, saying the measures were too important to sink over the extra spending.

The last Congress saw the president pass a $814 billion stimulus program, sign a major overhaul of the country’s health insurance system and rewrite the rules governing Wall Street, all on the strength of overwhelming Democratic majorities.

But Mr. Obama’s party suffered a crushing defeat in last year’s congressional elections, losing 63 seats in the House and six seats in the Senate, and Republicans said he would have to adjust to the new political realities.

On Tuesday, he tried to strike a post-partisan note.

“At stake right now is not who wins the next election — after all, we just had an election. At stake is whether new jobs and industries take root in this country, or somewhere else,” he said.

Still, his solutions included many of the same proposals and fights he was unable to win when Democrats enjoyed full control of the Hill.

He renewed his push for a new round of major infrastructure investments, repeating a call he made just four months ago but which disappeared in the heat of the campaign amid Republican cries of overspending. He called for upgrades of the nation’s roads, bridges and transit systems, saying his budget next month will include a detailed six-year plan for repairing them and creating hundreds of thousands of jobs in the process. He also dusted off his proposal for an “infrastructure bank” that would seek to fund the projects through a mixture of federal dollars and private capital.

As part of the infrastructure overhaul, Mr. Obama pledged to help businesses extend wireless services to 98 percent of Americans through a “National Wireless Initiative” that would nearly double the amount of wireless spectrum available for mobile broadband.

He said he would push to move past President George W. Bush’s No Child Left Behind education law with a new education bill he said will raise expectations and offer schools greater flexibility, while setting a goal of hiring 100,000 new science and math teachers by the end of the decade.

“In fact, to every young person listening tonight who’s contemplating their career choice: If you want to make a difference in the life of our nation; if you want to make a difference in the life of a child - become a teacher,” he said. “Your country needs you.”

And the president also repeated his vow to work on clean-energy proposals, which he proposed to pay for by ending the $4 billion a year the government spends on subsidies paid to fossil-fuel producers.

Seeking to make headway on another of his 2008 campaign promises, Mr. Obama called for Congress to act on legalizing illegal immigrants, particularly those who would benefit from the Dream Act, which would grant legal status to illegal immigrant students and young adults.

“I am prepared to work with Republicans and Democrats to protect our borders, enforce our laws and address the millions of undocumented workers who are now living in the shadows,” Mr. Obama said. “I know that debate will be difficult and take time. But tonight, let’s agree to make that effort.”

But again, the president finds himself caught between his left flank, which wants to see him unilaterally halt deportations, and Republicans and conservative Democrats, who say they won’t accept legalization until the government proves it can better secure the border and can punish employers who hire illegal immigrants.

As in past years, the president promised to work with Republicans on some issues important to the GOP, such as limiting medical-liability lawsuits and working to advance free-trade agreements. And he proposed a deal for Republicans: Eliminate corporate tax breaks, and in exchange the White House will support using the money for an across-the-board corporate income-tax cut.

But his pledge to work on free trade drew scorn from Republicans, who said he made the same overture last year but failed to deliver.

Sen. Mitch McConnell, Kentucky Republican, said last year’s lame-duck Congress produced some signs for hope that this year Mr. Obama will try to work with the GOP.

“The president’s change in tone is an acknowledgement, at least, that something has to change, as was his willingness to work with Republicans last month on keeping taxes from going up on anyone,” he said.

Mr. Obama though, in his address Tuesday, made clear that he views the tax issue as an ongoing battle, vowing to fight for an increase in top-tier income-tax rates in two years.

The president did say he will support Republican efforts to undo a part of last year’s health care law that requires businesses to file tax forms on transactions amounting to as little as $600. All sides agree that provision, when it takes effect in a few years, will place a heavy burden on small businesses, but so far efforts to change the law have been rebuffed.

In last year’s address, Mr. Obama called for a bipartisan deficit commission, which he later established by executive order, and his budget proposal last February relied on the panel to close a long-term budget gap. Last year, the commission was unable to adopt a final recommendation to help curb the nation’s deficit and debt, although a majority of the panel voted in support of a blueprint that called for a mixture of tax increases and spending limits, including entitlement benefits.

Two months after it adjourned, Mr. Obama said he didn’t agree with all of the panel’s recommendations but “they made important progress.” The White House said to expect more specifics on Mr. Obama’s own proposals in his full 2012 budget, to be submitted next month.