Obama Shifts Priorities to Job Growth, While Calling for an End to Partisan Warfare

President Barack Obama resuscitated a theme that swept him into office a year ago – Hope and Change – in his first State of the Union address Wednesday night, vowing to create new jobs and work toward stifling the partisan warfare that continues to divide Democrats and Republicans.

Obama focused almost exclusively on the country’s economic woes during his 71-minute address and made just a passing reference to health care reform, the cornerstone of his domestic agenda and the catalyst for the deep divisions.

“Jobs must be our Number One focus in 2010,” Obama said. “That’s why I am calling for a new jobs bill tonight … People are out of work. They are hurting. They need our help. And I want a jobs bill on my desk without delay.”

Obama said he would tap into $30 billion in bailout funds Wall Street banks paid back to the federal government and would use the money to create small business loans. He also proposed a new small business tax credit, one that he said would be directed to more than a million small businesses that hires new employees or raise wages.

“While we’re at it, let’s also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment,” Obama said.

As he had done several times over the past year, Obama reminded Americans that when he was sworn in as president he inherited “two wars,” an “economy rocked by severe recession, and “a government deeply in debt.”

“By the time I took office, we had a one year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade,” Obama said. “Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. On top of that, the effects of the recession put a $3 trillion hole in our budget. All this was before I walked in the door.”

Sen. John McCain (R-Arizona), Obama’s challenger during the 2008 presidential election, appears to have taken exception to the comments and could be seen on camera whispering to Sen. Lindsey Graham (R-South Carolina) saying “blame it on [George W.] Bush.”

But those are the facts. And as such, Obama said, his administration was forced to make the unpopular move of bailing out faltering Wall Street banks in an effort to keep the economy from cratering even further.

“If we had allowed the meltdown of the financial system, unemployment might be double what it is today,” Obama said. “More businesses would certainly have closed. More homes would have surely been lost. So I supported the last administration’s efforts to create the financial rescue program.”

Obama said his administration’s aggressive efforts stabilized the markets and most of the taxpayer dollars used to rescue the largest financial institutions has been recovered.

“To recover the rest, I have proposed a fee on the biggest banks,” he said. “I know Wall Street isn’t keen on this idea, but if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need.”

Still, “if there’s one thing that has unified Democrats and Republicans, it’s that we all hated the bank bailout,” Obama said. “I hated it. You hated it. It was about as popular as a root canal.”

On health care, Obama admitted the difficulties in getting Congress to pass legislation, but he indicated that those setbacks were due in large part to Republican efforts to thwart efforts to overhaul the health insurance industry.

The issue has divided lawmakers on both sides of the aisle and has outraged many Obama loyalists, who have accused the president and Congressional Democrats of capitulating to Republicans and moderates by declaring dead a proposal to have a government-run plan compete with private insurers. Republicans see the health care bill as an expansion of government, while progressive Democrats say it doesn’t go far enough in providing individuals with affordable coverage.

But Obama is intent on having a final bill cross his desk, even if it means signing legislation that barely contains any of the reform provisions he had initially pushed for.

Democrats, however, said they are proceeding with caution, especially after the devastating loss in Massachusetts last week, where Republican Scott Brown won the senate seat held by Ted Kennedy for more than four decades. Brown’s victory ended the Democrats’ filibuster-proof majority in the Senate, and temporarily delaying debate on a final health care bill until Brown is seated.

Some Democratic leaders have said publicly that the loss of their super majority means the health care bill is dead. Obama had something to say about that:

“To Democrats, I would remind you that we still have the largest majority in decades, and the people expect us to solve some problems, not run for the hills,” Obama said. “And if the Republican leadership is going to insist that 60 votes in the Senate are required to do any business at all in this town, then the responsibility to govern is now yours as well. Just saying no to everything may be good short-term politics, but it’s not leadership.”

Obama said he would not abandon his goal to revamp health care and he urged Congress to “act.”

“Do not walk away from reform. Not now,” Obama said. “Not when we are so close. Let’s find a way to come together and finish the job for the American people.”

But Obama has still not said what he thinks the health care bill should look like even after accepting his “share of the blame for not explaining it more clearly to the American people.

Turning his attention to civil liberties, Obama said he would repeal the Clinton-era “Don’t ask, don’t tell” policy that prohibits gays and lesbians from serving openly in the US military.

“This year, I will work with Congress and our military to finally repeal the law that denies gay Americans the right to serve the country they love because of who they are,” Obama said.

Obama acknowledged that it would be tough sledding getting Congress to implement many of the initiatives he has proposed given that this is an election season, one that could shift the balance of power to Republicans.

“I am not naïve,” Obama said. “I never thought the mere fact of my election would usher in peace, harmony, and some post-partisan era. I knew that both parties have fed divisions that are deeply entrenched. And on some issues, there are simply philosophical differences that will always cause us to part ways.

“But what frustrates the American people is a Washington where every day is Election Day. We cannot wage a perpetual campaign where the only goal is to see who can get the most embarrassing headlines about their opponent – a belief that if you lose, I win. Neither party should delay or obstruct every single bill just because they can.

“The confirmation of well-qualified public servants should not be held hostage to the pet projects or grudges of a few individual Senators. Washington may think that saying anything about the other side, no matter how false, is just part of the game. But it is precisely such politics that has stopped either party from helping the American people. Worse yet, it is sowing further division among our citizens and further distrust in our government.”

Obama also took aim at last week’s sweeping 5-4 Supreme Court ruling, which struck down several longstanding prohibitions on corporate political contributions.

Obama said the High Court’s decision in the case of Citizens United v. Federal Election Commission will “open the floodgates for special interests – including foreign corporations – to spend without limit in our elections.”

“Well I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities. They should be decided by the American people, and that’s why I’m urging Democrats and Republicans to pass a bill that helps to right this wrong.”

According to The New York Times, Justice Samuel Alito “shook his head and appeared to mouth the words, ‘No, its not true.'”

Alito’s reaction, a “break from decorum at such events,” as the Times noted, was reminiscent of the “You lie” outburst Rep. Joe Wilson (R-South Carolina) made during Obama’s address before a joint session of Congress where the president denied that his health care reform proposal would provide illegal immigrants with free coverage.

Obama closed out his State of the Union address by being upfront about the “political setbacks” his administration faced last year, some of which he said were “deserved.”