President Barack Obama and Republicans are headed for a fight over deficit reduction and spending cuts despite a conciliatory State of the Union speech that set the tone for a looming budget debate.
Mr Obama, with an eye on his 2012 re-election bid, used his speech yesterday to further a move to the political centre that he was forced to make after Republicans routed Democrats in congressional elections in November.
He offered some potentially appealing proposals to Republicans - a corporate tax cut, a retooling of the tax code and an end to pet spending projects relied on by many lawmakers.
He also proposed a five-year freeze in some domestic spending, which he said would cut $400 billion from budget deficits over a decade, a move applauded by US debt and stock traders.
To Republican calls for even deeper cuts, Obama said, "Let's make sure what we're cutting is really excess weight."
Republicans seeking $100 billion in cuts this year called Obama's plan too little, too late.
"A partial freeze is inadequate at a time when we're borrowing 41 cents of every dollar we spend, and the administration is begging for another increase in the debt limit," said House of Representatives Speaker John Boehner.
The president sought in his speech to reassure Americans weary of stubbornly high 9.4 pe rcent unemployment, fearful of rising debt, dismayed at vicious political rhetoric and worried that their country is falling behind economic powers like China and India.
"At stake is whether new jobs and industries take root in this country, or somewhere else. It's whether the hard work and industry of our people is rewarded. It's whether we sustain the leadership that has made America not just a place on a map but a light to the world," he said.
He called for a job-creating "Sputnik moment" fed by new spending in research and education like the 1950s space race unleashed when the Soviets launched the Sputnik satellite.
"Yes, the world has changed," he said. "The competition for jobs is real. But this shouldn't discourage us. It should challenge us."
Agencies