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U.S. President Barack Obama is applauded by House Speaker John Boehner and Vice-President Joe Biden while delivering his address on Capitol Hill in Washington. Obama challenged Republicans on Tuesday to adopt limited spending cuts and invest in new research and education. ((Pablo Martinez Monsivais/Reuters))

U.S. President Barack Obama challenged Congress Tuesday in his second annual state of the union speech to help cut the country's deficit, revive its spirit of innovation, and rally its education system for a brighter future.

Obama's wordplay

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Obama mentioned the word "jobs" 25 times in his address Tuesday night; that's two more times than in last year's address and 11 more times than in his speech before Congress in 2009

View a visual comparison of Obama's favourite words

In a speech that began shortly after 9 p.m. ET, Obama called for a five-year freeze on non-security spending, including asking lawmakers to back a five-year plan put forth by Defence Secretary Robert Gates to save $78 billion US in defence spending.

"I am proposing that starting this year, we freeze annual domestic spending for the next five years," he said in the prepared speech. "This would reduce the deficit by more than $400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was president."

A written version of the speech was released an hour before he began to speak.

The speech — Obama's first to a divided Congress — came as Republicans increased pressure to cut government spending and lower taxes in the wake of unprecedented stimulus spending that began in the last days of the Bush administration

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Obama's wife, Michelle, waves Tuesday before the start of her husband's speech to the nation. ((Charles Dharapak/Associated Press))

With an audience expected to number as many as 50 million people, the president also challenged the country to rise to its economic troubles in the same way Americans went to the moon after being beaten into space by the Soviet Union.

"After investing in better research and education, we didn’t just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs," Obama said.

"This is our generation’s Sputnik moment."

He also admitted that a newly Republican-controlled House of Representatives means "governing will now be a shared responsibility" between Democrats and Republicans.

After the last election, the Republican Party holds 242 of the 435 House seats, while the Democrat caucus still controls the 100-seat Senate with 53 members.

The Republican response

Republican Representative Paul Ryan of Wisconsin, who gave his party's response to the address, stressed the importance of reining in spending to curb the growing U.S. debt.

"Our debt is out of control. What was a fiscal challenge is now a fiscal crisis," Ryan said.

He said the debt is not the fault of one person or party and the president came into power facing a "severe fiscal and economic situation."

"Unfortunately, instead of restoring the fundamentals of economic growth, he engaged in a stimulus spending spree that not only failed to deliver on its promise to create jobs, but also plunged us even deeper into debt."

Ryan said the nation is approaching a "tipping point" and that if government growth is left unchecked, "America's best century will be considered our past century."

"The days of business as usual must come to an end. We hold to a couple of simple convictions: Endless borrowing is not a strategy; spending cuts have to come first," Ryan said.

Republican House Speaker John Boehner said Obama's plan to freeze non-security spending for five years did not go far enough.

"At a time when the treasury secretary is begging Congress to raise the debt limit, a 'freeze' is simply inadequate,"  Boehner said.

But Senate Republican leader Mitch McConnell said the president had gotten the message from the November midterm elections and "changed the tone and the rhetoric from the first two years."

"New laws will only pass with support from Democrats and Republicans," the president said. "We will move forward together, or not at all — for the challenges we face are bigger than party, and bigger than politics."

The president told legislators that American workers now compete with rivals such as China and India, largely thanks to the internet.

"But this shouldn't discourage us," he said. "It should challenge us. Remember — for all the hits we've taken these last few years, for all the naysayers predicting our decline, America still has the largest, most prosperous economy in the world.

"No workers are more productive than ours. No country has more successful companies, or grants more patents to inventors and entrepreneurs. We are home to the world's best colleges and universities, where more students come to study than any other place on Earth."

Obama proposed that the U.S. government eliminate subsidies to domestic oil companies — "I don’t know if you’ve noticed, but they’re doing just fine on their own" — and spend the money instead on scientific projects that will find ways to replace oil as a source of energy.

"I challenge you to join me in setting a new goal: by 2035, 80 per cent of America's electricity will come from clean energy sources," he said.

Those clean energy sources could include wind and solar, he said, but also versions of nuclear, clean coal, and — of potential interest to Canada — natural gas.

"To meet this goal, we will need them all."

While the president called for spending cuts, he also proposed improvements to the U.S. education system.

"Think about it. Over the next 10 years, nearly half of all new jobs will require education that goes beyond a high school degree. And yet, as many as a quarter of our students aren’t even finishing high school."

With so many baby boomers retiring from the country's classrooms over the next 10 years, the U.S. needs to prepare 100,000 new teachers in the fields of science, technology, engineering, and math, the president said.

He urged young Americans to enter teaching. "To every young person listening tonight who’s contemplating their career choice: if you want to make a difference in the life of our nation, if you want to make a difference in the life of a child — become a teacher. Your country needs you."

Light on details

The president's speech was light on details, as state of the union messages usually are, but long on hope and challenges. The conciliatory accent on spending cuts — aimed at fostering co-operation from the Republicans — was bolstered with ringing statements of what the U.S. must do to maintain its economic leadership role in the face of Chinese and Indian growth.

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Senator John McCain, Republican-Arizona, right, and Senator John Kerry, Democrat-Massachusetts, appear on Capitol Hill Tuesday before the state of the union message. ((Evan Vucci/Associated Press))

"At stake is whether new jobs and industries take root in this country, or somewhere else," Obama said. "It's whether the hard work and industry of our people is rewarded. It's whether we sustain the leadership that has made America not just a place on a map, but a light to the world."

The first step in winning the future, Obama said, is encouraging innovation in the U.S.

"We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In America, innovation doesn't just change our lives. It's how we make a living."

He said his goal is to give 80 per cent of Americans access to high-speed rail service within 25 years.

As well, within the next five years, "we will make it possible for business to deploy the next generation of high-speed wireless coverage to 98 per cent of all Americans. This isn't just about a faster internet and fewer dropped calls. It's about connecting every part of America to the digital age."

With files from The Associated Press