'We Do Big Things' Obama says in Face of Global Challenge

President Barack Obama said on Tuesday that we do big things in his State of the Union Address, challenging Americans and Congress to take on the global competition for jobs, and tackle the nation's huge debt and deficit.

We do big things. From the earliest days of our founding, America has been the story of ordinary people who dare to dream. That's how we win the future, Obama said at the U.S. Capitol in Washington.

The President's plan for adding new jobs in a globally competitive marketplace and getting the U.S. economy on a stronger footing involved spending on infrastructure such as roads and high speed rail, incentivizing new ideas in improving K-12 education and spending for higher education, as well as innovation in such fields as new basic science research on clean energy.

The President said those priorities on spending would have to be balanced by cuts elsewhere, taking into account the nation's high debt and annual deficits.

To rein in the deficit, he proposed a spending freeze on annual domestic spending for the next five years, also called discretionary non-military spending, saying it would reduce the deficit by more than $400 billion over the next decade.

However Obama said the major cuts would come cuts to domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes, although he didn't give specifics. He noted his specific proposals only dealt with little more than 12 percent of our budget.

The speech was encouraging in that the President sounded like someone ready to get serious about fixing the deficit. But if he is going to get serious, he is going to need to get specific, and if not now, when? said Maya MacGuineas, President of the Committee for a Responsible Federal Budget. The longer we wait, the greater the risk we don't get it done in time.

Obama said discretionary spending cuts would be painful. Obama noted federal employee salaries had already been frozen for the next two years and he has proposed cuts to things I care deeply about, like community action programs. He also endorsed cutting the rate of growth of the Defense budget.

He said that cuts needed to be made [b]ut let's make sure that we're not doing it on the backs of our most vulnerable citizens, he said.

Liberals will be dismayed at the president's proposal to freeze discretionary domestic spending for the next five years, said Wendy Schiller, an associate professor of political science at Brown University.

Given that inflation is so low now it is not that big a cut, but if inflation rises at all, this freeze will have a more significant impact, she said.