President Obama called on Congress to come together to help the nation “out-innovate, out-educate and out-build” the rest of the world, but the policy positions outlined to get there are sure to ignite legislative battles on issues including federal spending, tax, health care and energy policy.
“With their votes, the American people determined that governing will now be a shared responsibility,” Obama said during his State of the Union address before a joint session of Congress, where many lawmakers sat with members of the other party in a break with partisan tradition.
“New laws will only pass with support from Democrats and Republicans,” the president said. “We will move forward together, or not at all.”
The president’s call for cooperation included broad themes designed to appeal to Republicans in a newly divided government — fiscal restraint, a corporate tax code overhaul and limits on lawsuits.
But in laying them out, he also indicated that he was willing to go only so far. His call for a five-year freeze on domestic discretionary spending outside the security sphere — a two-year extension of a freeze proposed last year — showed he wouldn’t agree without a fight to deeper cuts being pushed by House Republicans.
The president’s offer to rewrite the corporate tax code came with a caveat — that it be deficit-neutral, a condition many Republicans don’t support. His proposal for a bipartisan effort to make changes in medical malpractice law at the state level runs counter to GOP calls for federal-level overhauls.
Republican leaders didn’t see the speech as an attempt to meet them halfway. The themes, they said, were recycled from last year, and they vowed to continue to challenge the president and Democrats, particularly on federal spending.
“Whether sold as ‘stimulus’ or repackaged as ‘investment,’ their actions show they want a federal government that controls too much, taxes too much, and spends too much in order to do too much,” Rep. Paul Ryan, R-Wis., said in a Republican response to the address.
Obama asked Congress to undertake five major legislative projects: rewriting the country’s corporate tax code, extending the solvency of Social Security, overhauling federal education policy, passing a six-year transportation authorization bill and tackling comprehensive immigration changes.
He offered two policy proposals sure to enjoy Republican support — speedy approval of a free trade agreement his administration brokered with South Korea, and a promise to veto every spending bill that includes earmarks — projects included in legislation at the request of lawmakers.
But with the 2012 elections fast approaching, the White House made clear it welcomed legislative fights with Republicans over issues such as taxes and spending.
“The American people will have to make a choice between which vision they support,” White House economic adviser Gene Sperling said.
The first big battle will come on federal spending because a stopgap measure (PL 111-322) funding the government expires March 4. House Republicans’ push for a return to fiscal 2008 spending levels would force cuts tens of billions of dollars below Obama’s proposed freeze. The president is betting that trimming back popular programs will backfire once Republicans outline them.
“Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine,” he said.
But Republican leaders are under pressure from rank-and-file members, particularly those elected with Tea Party support in November, to cut federal spending even further, to fiscal 2006 levels.
“My conviction is that we can do better,” said freshman Rep. Tim Scott, R-S.C.
On health care, Obama vowed to protect major provisions of the overhaul law (PL 111-148, PL 111-152). He offered to work with Republicans to revoke a minor provision imposing a tax reporting requirement on businesses, but that will do little to quell the partisan fight over the law.
“There are some things that both sides of the aisle can agree on with health care,” said Rep. Jason Chaffetz, R-Utah. “But we’ve shown repeatedly that we do not like the Obamacare that passed previously. We’re going to continue to fight to make sure that it’s fully repealed.”
On energy, Obama invited legislative tussles with both Republicans and Democrats. He once again proposed cutting tax benefits for oil and gas companies, an idea that Republicans largely oppose. His proposal to re-target some of those funds to nuclear energy is opposed by some liberals.
Obama’s push for a rewrite of the nation’s immigration policy, including the creation of a path to citizenship for illegal immigrants, was first backed by President George W. Bush but now is widely opposed by congressional Republicans.
He also vowed to send Congress a plan to reorganize the federal government, a plan that could include the elimination of Cabinet departments and the consolidation of programs now spread over multiple agencies.
The bulk of the speech — White House Press Secretary Robert Gibbs estimated 80 percent — was devoted to domestic policy, particularly economic issues, leaving the rest to foreign policy matters. Aside from calling for approval of the South Korea trade agreement and pledging future deals with Colombia and Panama, Obama outlined no new foreign policy initiatives.
Obama also avoided asking Congress for a broad deficit reduction package, despite the calls of some fiscal hawks for wide-ranging revisions mirroring those recommended in December by the president’s bipartisan fiscal commission. Instead he called for an effort to shore up Social Security’s finances.
The president suggested Congress could tackle the subject of rewriting the individual tax code, but did not specify a way for lawmakers to take up the matter.
Budget limits will be a recurring problem for the president’s proposals, including increased spending on education, a permanent tax break for college expenses, a six-year transportation authorization, new high-speed rail projects and a proposal to make high-speed wireless Internet access available to 98 percent of Americans.
Under Obama’s own requirements, spending on each of these programs must be offset by spending cuts or tax increases elsewhere.
“This is a budget where things will be paid for,” Sperling said. “Even something like the infrastructure initiative, we’re making very clear that goes forward only if there’s a bipartisan agreement on how to keep that deficit neutral.”
By serving notice of how far he will go to meet Republicans, Obama effectively provided a legislative battle plan for Democrats, establishing where he wants them to make a stand.
He coupled, for example, his call for a corporate tax overhaul with a promise to keep pressing for an increase in the individual tax rate for a family making more than $250,000 a year.
Several Democrats offered tepid support of some of his proposals, including the call for a five-year freeze on non-security discretionary spending.
“I don’t think it’s that bad, considering what the other side is doing,” said Rep. Norm Dicks, D-Wash., ranking member of the House Appropriations Committee.
Obama opened his address by acknowledging Speaker John A. Boehner, R-Ohio, and noting the absence of Rep. Gabrielle Giffords, D-Ariz., who was seriously injured in a Jan. 8 shooting in her hometown of Tucson. He said the test for civility following that tragedy would not be where members sat at the address, but how they conduct the debates to come.
“None of this is easy,” Obama said. “All of it will take time. And it will be harder because we will argue about everything. The cost. The details. The letter of every law.”
Brian Friel writes for CQ. Sam Goldfarb contributed to this story.