President Barack Obama called for unity with newly empowered Republicans in a State of the Union policy speech that laid the foundation for the second half of his presidential term and next year’s fight for re-election.
Mr Obama staked out territory in America’s political centre.
He defended programmes dear to his Democratic base, including the federal Social Security pension programme and his health care overhaul.
But he also backed some top priorities of Republicans, who took control of the House of Representatives this month.
He called for cutting the corporate tax rate, freezing some federal spending, shaking up the federal bureaucracy and eliminating politicians’ pet projects.
He made a direct appeal for bipartisanship, saying: “We will move forward together or not at all.”
The nationally televised address before both chambers of Congress is always one of America’s most closely watched political events, but this year’s speech had extra drama.
For the first time in his two-year presidency, Mr Obama was appearing before a divided Congress.
After November elections that Mr Obama has described as a “shellacking”, Republicans narrowed the Democratic advantage in the Senate as well as taking control of the House of Representatives.
Mr Obama, who has rebounded in opinion polls in recent weeks, was looking to position himself above politics, even as both parties manoeuvre for advantage ahead of the 2012 presidential vote.
Mr Obama said the American people are counting on their leaders to create jobs in the United States.
“At stake right now is not who wins the next election,” Mr Obama said. “After all, we just had an election.”
Mr Obama focused on federal spending for education, innovation and infrastructure as ways the government can support America’s foundation and help businesses create jobs for a generation.
He was pairing that with a call to reduce the federal debt and to make the government leaner.
The speech comes less than three weeks after Democratic Congresswoman Gabrielle Giffords was seriously wounded in a shooting rampage in Tucson, Arizona, that killed six people.
A seat remained empty in honour of Ms Giffords. Many in both parties were to wear black-and-white lapel pins, signifying the deaths in Tucson and the hopes for the survivors. Family members of some victims sat with first lady Michelle Obama.
The shooting, though its motives remain unclear, prompted a debate about overheated political rhetoric and the need to tone down Washington’s fierce partisanship.
In an attempt at unity following the attack, many Democratic and Republican politicians decided to break with tradition and sit together.
But those gestures did not obscure the sharp political differences between the parties.
One of the most divisive issues is federal spending. Public concern about the growing federal deficit, now topping 14 trillion US dollars, was a defining force in the 2010 elections. Spending has become the central issue for Republicans.
Mr Obama was looking for the upper hand with a call for a five-year freeze on all discretionary government spending outside of national security, the White House said.
That would be almost identical to the freeze Mr Obama called for in his address last year. Ultimately it may have little effect, as Congress decides the budget on its own terms.
The US faces a crushing burden of debt and is on course for an economic disaster without dramatic action to wrestle the budget deficit under control, House Budget Committee Chairman Paul Ryan said in the Republican response to the State of the Union address.
And such spending cuts must start immediately as the price of getting conservative Republicans to cast a painful vote to increase the government’s ability to borrow to pay its bills this spring, Mr Ryan said.
“Our nation is approaching a tipping point. We are at a moment, where if government’s growth is left unchecked and unchallenged, America’s best century will be considered our past century,” Mr Ryan said in televised remarks.
“The days of business as usual must come to an end. We hold to a couple of simple convictions: Endless borrowing is not a strategy; spending cuts have to come first,” Mr Ryan added.
Mr Ryan is the point man in the new House Republicna majority’s drive to rein in spending and bring the budget closer to balance.
The speech was the highest profile assignment yet for a former congressional staff aide who has evolved into one of his party’s brightest stars.
Mr Ryan is best known for a controversial budget plan brimming with politically unpopular ideas like gradually turning Medicare, the government-run programme providing health care coverage to seniors, into a voucher programme to purchase private insurance, curbing Social Security pension benefits and allowing younger workers to divert Social Security taxes into private retirement accounts.
He says such tough steps are needed, given intractable budget deficits that threaten America’s prosperity.
Mr Ryan, who often peppers his speeches with straight talk about the need for painful spending cuts in entitlement programmes for the poor and elderly, did not offer such “tough love”.
In an unusual move, US Representative Michele Bachmann, a favourite of the ultra-conservative tea party movement, followed Mr Ryan’s response with a high profile speech of her own. It was originally aimed just at tea party activists but was also carried live by CNN.
“After the $700bn (€512bn) bailout, the trillion-dollar stimulus and the massive budget bill with over 9,000 earmarks, many of you implored Washington to please stop spending money we don’t have,” Ms Bachmann said. “But, instead of cutting, we saw an unprecedented explosion of government spending and debt. It was unlike anything we have seen before.”