Obama proposes ways to 'reignite' economic growth

WASHINGTON -- President Barack Obama last night laid out several government proposals costing billions of dollars that he said would "reignite" the middle-class engine of economic growth without raising the deficit.

In his first State of the Union address of his second term, amid continued clashes with Republicans over taxes and the nation's debt, Obama called for federal spending on manufacturing, infrastructure, energy and education -- and said they shouldn't "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," Obama told a packed U.S. House chamber and millions of people watching at home.

Buoyed by his re-election, strong approval ratings and positive signs for the economy, Obama said, "Together we have cleared away the rubble of crisis, and can say with renewed confidence that the state of our union is stronger."

Beyond the economy, Obama heralded the end of the Afghan War, and urged passage of immigration reform and bills aimed at curbing gun violence.

And Obama proposed to raise the minimum wage to $9 an hour by 2015 and tying it to the cost of living, and to work with the nation's 20 hardest hit communities to improve schools and public housing.

"It is our generation's task, then, to reignite the true engine of America's economic engine -- a rising, thriving middle class," Obama said.

"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," he said.

To skeptical Republicans in the audience who argue for austerity and deficit reduction, Obama offered a deal to cut $1.5 trillion over a decade by trimming Medicare costs in return for revenue from closing tax loopholes for the rich.

"Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit," he said.

In a wide-ranging address, Obama offered the priorities that he always has stressed but also listed several new initiatives, whose total cost carries no price tag.

But those initiatives include $1 billion to create 15 manufacturing institutes; $50 billion in infrastructure repair; and $15 billion to rebuild crumbling buildings in hard-hit communities; and expanding preschool education to every child.

He also touched on popular issues for Democrats: fair pay for women, equality for gays and lesbians in the military, a commission to address long lines at voting booths, and dealing with climate change.

"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," Obama said. "Or we can choose to believe in the overwhelming judgment of science -- and act before it's too late."

On foreign affairs, Obama won big applause for his plan to draw down 34,000 U.S. troops from Afghanistan: "At the end of next year, our war in Afghanistan will be over."

But he also vowed to work with other countries to fight al-Qaida and warned North Korea that it would only isolate itself further with nuclear weapon tests.

Obama closed by noting victims of gun violence in the audience, particularly the parents of a 15-year-old Chicago girl who was shot to death a week after performing at the president's inauguration. He insisted that Congress give gun violence bills a chance to pass.

"They deserve a vote," he said. "Gabby Giffords deserves a vote. The families of Newtown deserve a vote."