The economy was the central theme for the president, who was introduced by newly elected House Speaker John Boehner.
Obama called for unity in making the difficult choices ahead and there were some signs both parties were at least willing to treat each other civilly.
Some Democrats and Republicans sat next to each other during the speech instead of sitting with members of their own party.
Still, they didn't always applaud together when the president called for more spending on things like education and transportation and cuts to lawmaker favorites like earmarks.
"I am proposing that starting this year, we freeze annual domestic spending for the next five years. This would reduce the deficit by more than $400 billion over the next decade," the president said.
Republicans in general support the cuts but not the new spending.
Also, members of Congress from both parties wanted to hear more specifics about what the president wants to cut.
"We need to look at things like the health care plan, the stimulus bill and some of the cap and trade and other policies that went into place in the last few years or are going into place now that are killing jobs in California and in the country," said Rep. John Campbell (R-Orange County).
"Those things that would reduce the deficit were across the board and vague and lacked specificity whereas many of the programs that would increase the deficit were tangible and specific promises," said Rep. Brad Sherman (D-West San Fernando Valley).
The official Republican response was delivered by Congressman Paul Ryan, chairman of the Budget Committee. He told the American people the country must start making serious cuts in spending or risk dire consequences.
Also, in an unusual move, tea party favorite Rep. Michelle Bachmann (R-Minnesota) delivered another response calling the president's proposals empty promises.