Obama promises jobs revival in first State of Union address (Second Lead)

WASHINGTON - US President Barack Obama vowed to make job creation the top priority this year during his first State of the Union address Wednesday night to a joint session of Congress, hoping to curb voter anger that eroded his popularity over the last year.

Obama called on Congress to adopt a mix of spending and tax-cutting measures to bring the US unemployment rate down from a quarter-century high of 10 percent.

He acknowledged the public’s frustrations over the country’s sluggish economic recovery from its worst recession in decades.

“One year later, the worst of the storm has passed. But the devastation remains,” Obama said during a speech of more than 70 minutes at the Capitol Building in Washington.

“Jobs must be our number-one focus in 2010, and that is why I am calling for a new jobs bill tonight.”

He acknowledged a “deficit of trust” toward Washington politics and appealed for greater bipartisanship after a first year in office that saw scant cooperation in Congress between his own left-leaning Democrats and conservative opposition Republicans.

Newly elected Virginia Governor Bob McDonnell, a rising star in the Republican Party who offered the opposition rebuttal of the speech, said he was “encouraged” by Obama’s renewed focus on jobs and said there were issues of common ground between the parties.

But McDonnell criticised the administration for “simply trying to do too much” in the first year, expanding government and raising the federal budget deficit to “unsustainable” levels.

Republicans are hoping to capitalise on voter anger over the economy in mid-term congressional elections in November. But Obama signalled he has not given up on other divisive domestic priorities including health-care reform, climate change, financial regulation and education, despite the changing political landscape.

In a speech dominated by the economy and domestic issues, Obama expressed confidence that his deployment of 30,000 additional troops to Afghanistan will successfully counter a resurgent Taliban movement.

“There will be difficult days ahead. But I am confident we will succeed,” he said.

Obama warned North Korea and Iran of further isolation unless they rein in their nuclear activities.

He cited UN Security Council sanctions imposed against Pyongyang in June after the Stalinist state detonated a nuclear device. The sanctions ban North Korea from exporting weapons and calls on nations to intercept suspected arms shipments.

“North Korea now faces increased isolation, and stronger sanctions - sanctions that are being vigorously enforced,” he said.

Obama said that Iran’s leaders must come clean about their nuclear goals, which the West suspects are designed to produce a weapon. Iran says its programme is limited to civilian energy.

“As Iran’s leaders continue to ignore their obligations, there should be no doubt: they, too, will face growing consequences,” he said.

The annual State of the Union address allows presidents to reflect on successes and failures of the last year and rally the country around an agenda for the next 12 months.

One year after Obama was catapulted into office on a promise of change, the president acknowledged that bipartisanship and trust in Washington remain elusive. He promised a renewed crackdown against the political influence of corporations.

“We have to recognise that we face more than a deficit of dollars right now. We face a deficit of trust - deep and corrosive doubts about how Washington works that have been growing for years,” Obama said.

Nearly two thirds of the speech was devoted to the struggling economy. Obama proposed eliminating capital gains taxes for small businesses and spending $30 billion to help community banks revive lending to consumers. He proposed a bipartisan commission to study ways of combating deficit spending.

Obama said reviving the US economy depends on boosting trade. He pledged to double US exports in five years and suggested lawmakers should approve long-stalled trade deals with South Korea, Colombia and Panama.

“We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores,” Obama said.

The sluggish economy and rising US jobless rate contributed to Obama’s waning popularity and set the stage for a stinging defeat dealt by voters to his Democratic Party last week.

The victory of Republican Scott Brown in a special election in left-leaning Massachusetts cost the Democrats their super-majority in the US Senate and will likely force both sides to work more closely to pass major legislation.

Obama said renewable energy was vital to US interests. But he offered some carrots to Republicans, telling lawmakers that nuclear energy and offshore oil drilling should be part of a comprehensive energy bill that faces an uphill battle in the US Senate.

“The nation that leads the clean-energy economy will be the nation that leads the global economy. And America must be that nation,” Obama said.