President Barack Obama delivers the annual State of the Union...

President Barack Obama delivers the annual State of the Union address Tuesday in Congress. Credit: Getty Images

President Barack Obama gave the nation a pep talk Tuesday, recounting past triumphs to rouse us for the challenges ahead. We needed that. After years of recession, gloom and doom, it's time to "step up our game" in the global competition for future economic advantage.

Few would argue with his assertion that "we need to out-innovate, out-educate and out-rebuild the rest of the world." But times are tough, and that complicates things. We're burdened by unemployment, deficits and debt. We need a game plan. That's not what State of the Union speeches are for. So Obama's budget, due next month, needs to set a clear course.

When the president calls for investments to build our future, Republicans hear wasteful spending. Their approach to Obama's goal of "winning the future" is to cut taxes and shrink government. Do that, they insist, and everything else will take care of itself. It won't, because not everything that needs doing returns an immediate profit. But that's a bitter fight sure to go on despite calls for civility and cooperation.

To create the conditions for job growth in the decades ahead, we should heed Obama's call to improve the education our schools and colleges deliver, invest in basic scientific research, innovate in clean energy, extend the reach of information technology, and rebuild our roads and bridges. We'll also have to find ways to keep jobs at home. That includes reforming immigration laws so the world's best and brightest will innovate here.

But investment takes money and Washington is living on credit. So spending will have to be cut. Obama's bid for parsimony - freeze domestic discretionary spending, eliminate earmarks and redirect billions of dollars in subsidies flowing to big oil companies - is a start. But it's not enough, as Republicans correctly insist. Still, the deeper cuts in discretionary spending the GOP wants won't balance the books either.

Domestic discretionary spending is a tiny sliver of the federal budget. To reap real savings, we'll have to go where the real money is. That's the military, Medicare and Medicaid, and the $1.1 trillion in "tax expenditures," also known as everybody's favorite tax deductions, credits and loopholes. So Obama's call to simplify the tax code for corporations and individuals was a nod in the right direction.

But in the hard days ahead, he should embrace more of the particulars of his deficit commission's plan, which called for cuts in entitlements and military spending, and hiking taxes while also eliminating loopholes and lowering rates. The nation needs Obama to lead on this critical issue.

Spending less without stalling the recovery will be a delicate balance. One in 10 Americans is out of work, and state and local government spending cuts will idle even more. Washington must not make a bad situation worse.

Our problems are daunting, and no one speech can cover them all. But Obama reminded us that as a nation, "we do big things." Now he has to lead us to do it again. hN