World economic rules have changed, Obama warns US

by Stephen Collinson, Agence France-Presse

Posted at Jan 26 2011 12:22 PM | Updated as of Jan 27 2011 07:51 AM

US President Barack Obama gives the 2010 State of the Union Address at the US House of Representatives chamber at the US Capitol, Washington DC, January 25, 2011. White House Photo, Chuck Kennedy

WASHINGTON DC - A revitalized President Barack Obama Tuesday bluntly said America must reinvent itself and unite to survive in a fast-changing global economy powered by rising giants like India and China.

Obama's confident State of the Union address mixed straight talk with a patriotic call to action, as he rode a tide of improbable political momentum less than three months after a Republican mid-term election rout.

The president spoke to a television audience of millions from the House of Representatives, seeking to unleash a torrent of innovation to transform the economy after the most brutal meltdown in generations.

Obama conjured up a sepia-tinted vision of an America left behind after globalization changed the rules overnight, bemoaning the loss of a working class lifestyle bankrolled by a decent paycheck and benefits.

"The rules have changed. In a single generation, revolutions in technology have transformed the way we live, work and do business," Obama said, noting that rising powers like India and China were now highly competitive.

But he added Americans should not give up the fight.

"Yes, the world has changed. The competition for jobs is real. But this shouldn't discourage us. It should challenge us," the president said, citing US pathfinders from the Wright Brothers and Thomas Edison to Google and Facebook.

"We need to out-innovate, out-educate and out-build the rest of the world.

"We do big things. Our destiny remains our choice," Obama added in a speech punctuated by multiple ovations that sought to consign two years of economic gloom to the past, as his 2012 reelection race stirs.

Yet no new initiatives were unveiled for immediate job creation, with unemployment pegged at 9.4 percent.

With its offer to redo corporate tax rates, the address also seemed another tack to the political center ground where US presidential races are won.

But the speech was sparse on policy nuts and bolts, and the idealistic call for unity appeared at odds with ugly Washington politics.

Obama dealt only sparingly with one of the most divisive issues, the $1.3-trillion US deficit, though he said the budget gap needed to constrained, and partially embraced recommendations of a bipartisan fiscal commission.

The president also warned that Republican plans to cut investments in education or innovation were like "lightening an overloaded airplane by removing its engine."

Republicans rejected his prescriptions.

"Unfortunately, instead of restoring the fundamentals of economic growth, he engaged in a stimulus spending spree that not only failed to deliver on its promise to create jobs, but also plunged us even deeper into debt," said Republican House budget chief Paul Ryan in his party's official response to the speech.

"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."

Reflecting divisions among Republicans, Ryan's was not the only response by his party.

Congresswoman Michele Bachmann delivered an address tailored to the ultra-conservative "Tea Party" grass roots movement, which has challenged the authority of establishment party leaders in Washington.

Obama's address came with Congress chastened by the Arizona shooting rampage targeting a lawmaker that sparked calls to quell explosive rhetoric.

In a moving reminder of the tragedy, First Lady Michelle Obama sat next to the parents of a nine-year-old girl killed in the attack, and an aide who helped save Congresswoman Gabrielle Giffords, in her box in the House chamber.

Dozens of lawmakers meanwhile ditched the usual partisan seating plan to sit side by side, in a nod to Obama's call for civility after the shooting. They wore black and white ribbons to honor Giffords.

Obama called for a raft of measures to make America leaner, and more nimble in the global economy. His policy prescriptions included:

-- A plan to draw 80 percent of US electricity from clean energy by 2035,

-- A "Race to the Top" school reform program to promote science and learning,

-- A plan to give 98 percent of Americans high speed Wireless Internet and

-- Repairs to "crumbling" US infrastructure and a plan for high-speed rail.

Obama also defended his health reform program, which House Republicans have already voted to repeal, and offered to work with them to make it better, though he vowed not to return power to insurance giants.

On foreign policy, the president renewed his vow to start withdrawing US troops from Afghanistan in July but warned of "tough fighting ahead."

He reiterated that America would defeat Al-Qaeda and noted his vow to bring all troops out of Iraq would become a reality later this year.