The speech to a joint sitting of Congress is an annual evening of political pageantry, but the stakes are higher this year with Obama's re-election on the line in November.
Obama defended a long list of his trademark policies -- tax increases on the wealthy, Wall Street reform, health care reform, government stimulus spending -- to applause from Democrats while also offering some proposals of interest to Republicans, such as new corporate tax breaks.
Amid a festive atmosphere, with Rep. Gabrielle Giffords in attendence the night before she will resign due to her brain injury from last year's shooting attack in her native Arizona, Obama began and ended the speech that lasted longer than an hour by praising U.S. troops for unity and teamwork that can serve as a model for facing the country's problems.
With unemployment still above 8% amid a sluggish economic recovery, Obama framed the challenges facing the country as a choice between opportunity for some or giving everyone a chance to prosper.
"The defining issue of our time is how to keep that promise alive," the president said. "No challenge is more urgent. No debate is more important. We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules."
He continued by saying, "What's at stake aren't Democratic values or Republican values, but American values, and we have to reclaim them." "The state of our union is getting stronger, and we've come too far to turn back now," Obama said.
He offered a set of policy proposals for the final year of his first term intended to seek common ground with Republicans on some issues while pushing longstanding Democratic priorities that previously stalled in Congress.
At the same time, the address also was a political opportunity for Obama to present his re-election message as a choice between two different visions for the future of the country and the role of government.
He called for lowering corporate taxes and providing incentives for U.S. manufacturers to bring overseas jobs back to America, while ending tax breaks for businesses that continue to outsource. At the same time, Obama said, every multinational company should pay a basic minimum tax, while giving American manufacturers a tax cut.
"It's time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America," Obama said, adding a line that he repeated throughout the speech in a challenge to Congress. "Send me these tax reforms, and I'll sign them right away."
He also challenged Congress to act on comprehensive immigration reform, a major election-year issue for the important Hispanic-American vote. Short of a major overhaul, he called for legislation like the DREAM Act that provides children of illegal immigrants who go to college or serve in the military a path to possible citizenship.
Republicans, including candidates to take on Obama in November, already were panning the speech before its delivery, saying they expected few new ideas or sincere efforts by the president to end the partisan gridlock in Washington.