To a TV audience in the millions, Obama addressed a Congress sobered by the assassination attempt against Rep. Gabrielle Giffords. Her seat in the House Chamber was left vacant, and many lawmakers of competing parties sat together in a show of support and civility.
In his hour-long speech, Obama called on Congress to rally behind an economic agenda of federal spending on core areas and to simplify the tax system, announcing that he would support using the saved money to lower the corporate tax rate for the first time in 25 years without adding to the deficit.
The president established political goals: A burst of spending on education, research, technology and transportation to make the nation more competitive. He also pledged to cut the deficit and smack down spending deemed wasteful to America.
He called for freezing discretionary government spending for the next five years, outside of national security. He said it would save $400 billion and help reduce the country's staggering debt.
The president said the budget discipline would require "painful cuts" in cherished programs, though he did not identify any of them.
Obama faced an emboldened Republican party, one that is skeptical of his plans to boost the economy.
"The facts are clear: Since taking office, President Obama has signed into law spending increases of nearly 25 percent for domestic government agencies - an 84 percent increase when you include the failed stimulus," said Republican Rep. Paul Ryan, chairman of the Budget Committee, in response to the president's speech.
Obama outlined five key areas that he calls pillars: innovation, education, infrastructure, tackling the national debt and government reform.
In the overarching theme of his speech, the president told the lawmakers: "The future is ours to win."
Obama said the challenges facing the U.S. were bigger than either party. He said the nation was facing a new "Sputnik" moment, and urged efforts to create a wave of innovation, reinvention and investment in technology to create jobs and a vibrant economic future, just as the nation vigorously responded to the Soviets beating the U.S. into space a half century ago.
Continuing a tradition that began under President Ronald Reagan, the White House invited special guests to sit with first lady Michelle Obama. Guests include Daniel Hernandez, the intern credited with saving Rep. Gabrielle Giffords' life in Tucson, and the family of 9-year-old /*Christina Taylor Green*/, who was killed during the Tucson shooting.
ABC News and the Associated Press contributed to this story.
