Obama speech emphasizes jobs, and the job he’s done

Warning that the nation had developed a “deficit of trust” in government, President Obama on Wednesday promised to put the public’s top concerns -- jobs and the economy -- at the center of his second year in office while continuing to press for the rest of his stalled agenda.

In his first State of the Union address, Obama acknowledged that for many Americans, the change he promised as a candidate had seemed slow in coming.

“Some are frustrated, some are angry,” he told a joint session of Congress. “They don’t understand why it seems like bad behavior on Wall Street is rewarded but hard work on Main Street isn’t. Or why Washington has been unable or unwilling to solve any of our problems.”

But the president also offered a feisty defense of his ambitions during his first year in office, saying that passage of a healthcare overhaul, “cap and trade” legislation, tougher bank regulations and a new jobs bill were top priorities. Those proposals have started their journey through Congress, but their prospects are far from clear.

Though many of those goals were echoes of Obama’s first joint speech to Congress nearly a year ago, the context was radically changed.

Shortly after his inauguration, the president went to Capitol Hill and spoke of moving forward with a progressive agenda on a scale akin to that of Franklin D. Roosevelt. On Wednesday, he spoke as a politician battered by opponents and with his signature healthcare effort in jeopardy after the stunning loss last week of a Democratic-held Senate seat in Massachusetts.

In a moment that spoke volumes about the president’s state of mind after a bruising year, he declared at the close of his speech: “We don’t quit. I don’t quit.”

While the ideas Obama outlined were big, some of the solutions were fine-pointed. He called, for example, on lawmakers to establish a single website for disclosing all special-funding requests before they come to a vote. That information already is on the Web, but Obama wants it all in one place.

To boost the economy, he proposed taking $30 billion of the money Wall Street banks have repaid from their bailouts and using it to help community banks give credit to small businesses. He also proposed a new tax credit for small businesses that hire new workers or raise wages.

Mark Zandi, chief economist at Moody’s Economy.com, said that proposal was one that might make a difference. That “could be a substantial game-changer,” Zandi said.

Obama called for an end to tax breaks for companies that shipped jobs overseas and said the money raised should reward those who did otherwise. Obama’s budget proposal, to be unveiled Monday, will include new investments in technology to diversify energy sources and reduce dependence on foreign oil.

In addition, the president touted his plan to help middle-class families by doubling the child-care tax credit. Vowing that the federal government would tighten its belt, he pledged to freeze discretionary spending on non-security items, which amount to about an eighth of the federal budget.

Even experts with an affinity for Obama’s views suggested that his economic agenda had been diminished by the battles of the last year.

“I wouldn’t say the economic challenges have changed much,” said Dean Baker, an economist at the progressive Center for Economic and Policy Research. “What has changed is the ambitions. The big ambitions are gone.”

Delivering the Republican response to the address, Gov. Bob McDonnell of Virginia called for a smaller and more limited government. “Today, the federal government is simply trying to do too much,” he said.

He said Obama’s call to freeze discretionary spending was “a laudable step, but a small one,” and he faulted Congress for spending too much money.

Though there was no moment in Obama’s speech akin to an outburst in September, when a Republican yelled “You lie!” as the president delivered a healthcare address to Congress, there were signs of a coolness between the two parties. Most Republicans remained stone-faced even when Obama recited a list of tax cuts he enacted -- which is usually a GOP crowd-pleaser.

House Minority Leader John A. Boehner (R-Ohio) conspicuously raised his hand when Obama told the joint session that he would welcome a healthcare proposal from anyone who had a plan to control costs and expand coverage.

The most unusual display of the night may have come from a justice of the Supreme Court, whose members customarily sit impassively during State of the Union addresses.

As Obama asserted that the court’s recent decision on campaign finance law could open the gates to more corporate influence, Justice Samuel A. Alito Jr., a member of the 5-4 majority in the case, mouthed the words “that’s not true” from his seat in the second row of the chamber.

Unlike with most State of the Union addresses in the last decade, the topic of national security was relegated to a few moments near the end.

Instead, the president’s focus was on domestic policy, and a new edge to the Obama persona emerged when he admonished GOP leaders to stop voting as a group against major pieces of business. “The responsibility to govern is now yours as well,” he said.

At several points, Obama seemed like a beleaguered, misunderstood president struggling to explain himself -- a surprising tone for a young leader who stood on the podium a year ago with soaring popularity and deep reservoirs of goodwill.

Obama spent much of the speech “setting the record straight” by saying he had cut taxes and that the budget deficit had been built up “before I even walked in the door.”

He said he had been forced by events to support a bank bailout. “If there’s one thing that has unified Democrats and Republicans, it’s that we all hated the bank bailout. I hated it. You hated it. It was about as popular as a root canal,” Obama said to laughter.

He was candid about the rocky waters his healthcare initiative has faced -- “It should be fairly obvious that I didn’t take on healthcare because it was good politics” -- and did not raise the issue until 25 minutes into the speech.

“I take my share of the blame for not explaining it more clearly to the American people,” he said.

But he urged Democrats not to give in to those who would abandon the enterprise as a politically risky lost cause.

“Do not walk away from reform,” he said. “Not now. Not when we are so close.”

House Democrats, increasingly impatient with Senate delays in finishing bills they have enacted on healthcare, energy and financial reform, welcomed Obama’s prodding.

“He was a big challenge to the Congress; he took the Senate to the woodshed for not being able to act,” said Rep. George Miller (D-Martinez), citing the energy, healthcare and financial service bills that have passed the House but not the Senate.

“We’ve got legislation in the Senate backed up like planes over O’Hare.”

cparsons@latimes.com

janet.hook@latimes.com

Times staff writers Noam N. Levey, Jim Tankersley and Kim Geiger contributed to this report.