President Barack Obama took his State of the Union tax and job ideas on the road on Wednesday, striking a populist tone in the 2012 swing states Iowa and Arizona to make his case for a second White House term.

Starting a three-day tour that will also take him to Nevada, Colorado and Michigan, all crucial to his re-election chances, Obama amplified his proposals to help companies that keep jobs at home and eliminate tax breaks for those that outsource.

Let's stop rewarding businesses that ship jobs overseas, he said outside an Intel computer chip facility under construction in Arizona, standing in front of a giant crane.

What we should do is subsidize and give help and tax breaks to companies that are investing here, that are bringing jobs back to the United States, the president said, also pressing his argument for higher taxes on the rich as a way to heal the U.S. economy and reduce the deficit.

On Tuesday night, Obama used his last State of the Union speech before November's election to cast himself as a champion of the middle class. But with most Americans unhappy with his economic leadership, he faces a tough re-election challenge.

In Iowa, the president defended his record and sought to turn up the heat on Republicans in Congress he has accused of obstructing his economic recovery efforts, especially moves to close tax loopholes on big companies and the very wealthy.

There are people in Washington who seem to have collective amnesia. They seem to have forgotten how we got into this mess, Obama told workers at a conveyor belt factory there. They want to go back to the very same policies ... that have stacked the deck against middle-class Americans for years.

Republicans have accused Obama of promoting the politics of envy and pursuing policies that kill jobs and hinder growth. They argue tax hikes would hurt small businesses and suppress job creation, a top concern of voters this year.


In his Tuesday night address that afforded him one of his biggest political stages of the year, Obama set as a central campaign theme a populist call for greater economic fairness.

He mentioned taxes 34 times and jobs 32 times during his hourlong speech, emphasising the two issues at the heart of this year's presidential campaign. But Obama seemed to put no blame on himself for a fragile economic recovery and high unemployment that could trip up his re-election bid.

A highlight of the State of the Union was a call to set a 30 percent minimum tax on millionaires, known as the Buffet rule because it is favoured by billionaire investor Warren Buffett.

While the principal proposals in the speech were considered unlikely to gain traction in a divided Congress, the White House believes the ideas can appeal to voters who are frustrated with Wall Street excesses and dysfunction in Washington.

Obama's tax message got extra legs from the release of tax records by Mitt Romney, a Republican presidential contender who is one of the richest men ever to run for the White House. He pays a lower effective tax rate than many top wage-earners.

Romney, campaigning in Florida for next Tuesday's party primary, accused the Democratic president of being detached from reality in his appeals to voters who have suffered economic hardship under his tenure.

The U.S. unemployment rate was 8.5 percent in December, several percentage points higher than the normal rate for the United States. No president in the modern era has won re-election with the jobless rate that high.

(Additional reporting by Alister Bull and Steve Holland; Writing by Laura MacInnis and Matt Spetalnick; Editing by Doina Chiacu and Eric Walsh)