traffic early next year. >> commuters can not wait that. is all for now. abc live coverage of the state of the union address is next. >> and time permitting we'll be back with this is an abc special. the state of our union. we heard this just two years ago. >> starting today, we must pick ourselves up, dust ourselves off and begin again the work of remaking america. >> we heard this just two months ago -- >> i'm not recommending for every future president that they take a shellacking like i did last night. >> and we heard this just two weeks ago, when tragedy struck. >> we should do everything we can do to make sure this country lives up to our children's expectations. >> with so much at stake, what do americans want to hear tonight? we'll hear what some americans said to that, in three words.

>> and now, the question is, what will the president say to unite a country anxious to move beyond bitter debate and to a newly divided congress, looking for ways to unite. from abc news, in our nation's capital, the state of the union address and the republican response. now reporting, diane sawyer and george stephanopoulos. >> and good evening to all of you from washington, d.c. on this exciting night, a big night setting the stage for big decisions ahead for this nation. about jobs, your taxes, all of our future together and, of course, what do we do about the nation's overwhelming budget deficit? it is a crossroads kind of night, george. >> that is right, diane. and the big point of the obama presidency. what a two years it's been.

real fights about how to fix things. and now the president is going to face a republican majority in the house. and a country that's starting to feel better about the economy, but more worried than ever that over the long-term, we're falling behind. and that's why his theme tonight is going to be winning the future. >> but we're going to be examining the question of unity. before we go to the room, i want to show everybody something you'll see in this room tonight. this is the black and white ribbon for congresswoman gabrielle giffords. of course, her shooting in tucson caused everyone to stop, pause and think and created a new kind of unity that we're seeing. >> a very different congress for a state of the union. republicans and democrats across the hall are actually going to sit together. it came from the democrat of colorado. he's going to be sitting next to the conservative senator, jim demint of south carolina.

democrats and republicans sitting next to each other tonight, which will create a very different feel in that room. >> i want to show everyone mrs. obama arriving just a minute or two ago. she's going to go down and take her seat. of course, with dr. jill biden and the family of christina-taylor green. she's going to be sitting next to them. >> you see her kissing roxanna green there, and father john green, of course, the little girl that was lost in tucson just a few weeks ago. >> let's introduce you now to our political powerhouse team watching the speech with us and with you tonight. christiane amanpour, hello, great to have you here. george will, central voice of the conservative movement in america. matthew dowd, who has advised republicans and democrats, not only president bush but also president obama called him last month after the november

elections. and donna brazile, democratic analyst, you've seen her so often with us here. >> and our top correspondents on capitol hill, jake tapper. and inside the house chamber tonight, jon karl. he's going to be standing right behind the shoulder of the house speaker john boehner, right above him. so, he's going to be our eyes and ears inside that room tonight. >> jon, can you hear us now? tell us about what you're sensing and seeing. >> well, diane, i've never seen anything like it here. i mean, the chamber is completely mixed up, democrat and republican. you know, usually the democrats are solidly on one side, the republicans are solidly on the other side. and i've been noticing throughout the day, i've come in and out of the chamber, noticing people starting to reserve blocks of seats, hours and hours ago, for the various delegations. on one side, the democratic side, you have the arizona delegation, for example. you have an empty seat for gabrielle giffords.

on one side of it is remember jeff flake. but it's quite a scene, diane. and people seem a little bit unsure where they should sit as they came in. it looked kind of like a cafeteria during freshman orientation week. >> this is a bit of a surprise, the supreme court, remember, last year, there was a bit of a controversy when president 0 bam obama called out the supreme court. some talk that chief justin roberts would not come tonight. but he is there, along with anthony kennedy. six of the nine justices are there tonight. >> and the sergeant at arms will be announcing the president. >> mr. speaker, the president of the united states!

>> the president greeting members seated along the aisle. and as we know, these are highly prized seats. in the past, at least, one congressman who has been there since 8:00 a.m. in the morning to ensure he got a chance to be on that aisle. >> he is there every year. from cleveland, ohio. republican leader of the senate, mitch mcconnell and the democratic leader of the house, eric cantor. >> this is the second state of the union for the president. >> major speech also on health care in his first year, came and talked about the economy, but that was not formally a state of the union address.

president coming into this chamber much better shape than he was just two months ago when the republicans did win control of the house. most polls show nhim above 50% n popularity. and as i said earlier, the country starting to believe that the economy is coming back. the single most important issue for the president. >> it is still very moving to see a president entering this chamber, under the constitution, he is to report on this state of the union. the 216th time it has been done. >> but as george will, you pointed out, presidents for the longest times didn't actually come, they just sent it up in writing. >>jefferson didn't want to stand in front of the people and lecture them. he sent it up in writing, and every president did that until

1913, woodrow wilson changed it back to what washington and john adams had done, delivered it in person. >> you just saw the president hug one of his top opponents but best friends in the senate, tom coburn. >> for those of you planning ahead, usually the president's speech, some place between a half hour, an hour. he could go a little longer tonight. i think ronald reagan at 30 minutes was one of the shortest. bill clinton routinely spoke than more than an hour, george. >> this one could go over an hour, as well. the white house said it's about the length of last year's, which could be 60 to 65 minutes, depending on the place. and it's hard to know how the applause is going to shake out tonight with that chamber mixed, as we said. >> you see the cabinet members there. there's one member who is the designated survivor, they call him. does not come into the chamber, but sits awaiting in case of a

crisis, and it's ken salazar. we've heard different reports of what they do while they're waiting, as designated survivor. in the clinton administration, they said they ordered pizza. >> the president there with two kisses to his two appointees to the supreme court. >> members of the military, members of the court, have always had slightly mixed feelings about coming to what is in many ways, well, one of the members of the court called it a pep rally, they don't express emotion. they don't express opinions. it's a formal occasion for them. they watch what they do.

>> and this is the first. the president shaking the hand of a republican speaker, john boehner. >> handing a copy of his speech, which has been done in each state of the union, to the vice president and to the speaker. >> i have the high privilege and

distinct honor of presenting the president of the united states. [ applause ] >> thank you. thank you so much. thank you so much. thank you very much. thank you. everybody, please, have a seat. thank you. mr. speaker, mr. vice president, members of congress, distinguished guests and fellow americans, tonight, i want to begin by congratulating the men and women of the 112th congress, as well as your new speaker, john boehner. congratulations.

[ applause ] >> and as we mark this occasion, we're also mindful of the empty chair in this chamber, and we pray for the health of our colleague and our friend, gabby giffords. [ applause ] >> now, it's no secret that those of us here tonight have had our differences over the

last two years. the debates have been contentious. we have fought fiercely for our beliefs. and that's a good thing. that's what a robust democracy demands. that's what helps set us apart as a nation. but there's a reason the tragedy in tucson gave us pause. amid all the noise and passion a of our public debate, tucson reminded us that no matter who we are, or where we come from, each of us is apart of something greater. something more konls consequential than party or political preference. we are part of the american family. we believe that in a country where every race and faith and point of view can be found, we are still bound together as one people. and we share common hopes in a

common creed that the dreams of a little girl in tucson are not so different than those of our own children. that they all deserve the chance to be fulfilled. that, too, is what sets us apart as a nation. now, by itself, this simple recognition won't usher in a new era of cooperation. what comes of this moment is up to us. what comes of this moment will be determined not by whether we can sit together tonight, but whether we can work together tomorrow. [ applause ]

>> i believe we can, and i believe we must. that's what the people who sent us here expect of us. with their votes, they determined that governing will now be a shared responsibility between parties. new laws will only pass with support from democrats and republicans. we will move forward together or not at all, for the challenges we face are bigger than party and bigger than politics. at stake right now is not who wins the next election, after all, we just had an election. at stake is whether new jobs and industries take root in this country, or somewhere else. 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 the light to the world. now, we are poised for progress. two years after the worst recession most of us have ever known, the stock market has come roaring back. corporate profits are up. the economy is growing again. but we have never measured progress by these yardsticks alone. we measure progress by the success of our people, by the jobs they can find and the quality of life those jobs offer. that the prospect of a small business owner that dreams of turning a good idea into a thriving enterprise. for the opportunities for a better life that we pass onto our children. that's the project the american people want us to work on. together.

now, we did that in december, thanks to the tax cuts we passed. americans' paychecks are a little bigger today. every business can write off the full cost of new investments that they make this year. and these steps, taken by democrats and republicans, will grow the economy and add to the more than 1 million private sector jobs created last year. but we have to do more. these steps we've taken over the last two years may have broken the back of this recession, but to win the future, we'll need to take on challenges that have been decades in the making. many people watching tonight can probably remember a time when finding a good job meant showing up at a nearby factory or a business downtown. you didn't always need a degree.

and your competition was pretty much limited to your neighbors. if you worked hard, chances are, you'd have a job for life. with a decent paycheck and good benefits and the occasional promotion. maybe you'd even have the pride of seeing your kids work at the same company. that world has changed. and for many, the change has been painful. i've seen it in the shuttered windows of once booming factories. and the vacant storefronts on once busy main streets. i've heard it in the frustrations of americans who have seen their paychecks dwindle or their jobs disappear. proud men and women who feel like the rules have been changed in the middle of the game. they're right. the rules have changed. in a single generation, revolutions in technology have transformed the way we live,

work and do business. steel mills that once needed 1,000 workers can now do the same work with 100. today, just about any company can set up shop, hire workers and sell their products wherever there's an internet connection. meanwhile, nations like china and india realized that with some changes of their own, they could compete in this new world. and so they started educating their children earlier and longer, with greater emphasis on math and science. they're investing in research and new technologies. just recently, china became the home to the world's largest private solar research fa sr ca. and the world's fastest compu r computer. so, yes, the world has changed. the competition for jobs is real. but this shouldn't discourage us. it should challenge us.

remember, for all the hits we've taken these last few years, for all the nay sayers predicting our decline, america still has the largest, most prosperous economy in the world. no workers -- no workers are more productive than ours. no country has more successful companies or grants more patents to inventors and entrepreneurs. we're the home to the world's best colleges and universities, where more students come to study than any place on earth. once more, we are the first nation to be founded for the sake of an idea. the idea that each of us deserves the chance to shape our own destiny. that's why centuries of pioneers and immigrants have risked everything to come here. that's why our students don't just memorize equations, but

answer questions like, what do you think of that idea? what would you change about the world? what do you want to be when you grow up? the future is ours to win. but to get there, we can't just stand still. as robert kennedy told us, the future is not a gift, it is an achievement. sustaining the american dream has never been about standing pat. it has required each generation to sacrifice and struggle and meet the demands of a new age. and now, it's our turn. we know what it takes to compete for the jobs and industries of our time. we need to out-innovate and out-build the rest of the world. [ applause ]

>> we have to make america the best place on earth to do business. we need to take responsibility for our deficit and reform our government. that's how our people will prosper. that's how we'll win the future. and tonight, i'd like to talk about how we get there. first step in winning the future is encouraging american innovation. none of us can predict with certainty what the next big industry will be or where the new jobs will come from. 30 years ago, we couldn't know that something called the internet would lead to an economic revolution. what we can do, what america does better than anyone else is spark the kraei icreativity and

imagination of our people. we're 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 is how we make our living. our free enterprise system is what drives innovation. but because it's not always profitable for companies to invest in basic research, throughout our history, our government has provided cutting edge scientists and inventors with the support they need. that's what planted the seeds for the internet. that's what helped make possible things like computer chips and gps. just think of all the good jobs from manufacturing to retail that have come from these breakthroughs. half a century ago, when the soviets beat us into space with

the launch of "sputnik," we had no idea how we would beat them to the moon. the science wasn't even there yet. nasa didn't exist. but 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. this is our generation's "sputnik" moment. two years ago, i said that we needed to reach a level and research and development we haven't seen since the height of the space race. and in a few weeks, i will be sending a budget to congress that helps us meet that goal. we'll invest in biomedical research, information technology and especially clean energy technology.

an investment that will strengthen our security, protect our planet and create countless new jobs for our people. already we're seeing the promise of renewable energy. robert and gary allen are brothers who run a small michigan roofing company. after september 11th, they volunteered their best roofers to help repair the pentagon. but half of their factory went unused and the recession hit them hard. today, with the help of a government loan, that empty space is being used to manufacture solar shingles that are being sold all across the country. in robert's words, we reinvented ourselves. that's what americans have done for over 200 years. reinvented ourselves. and to spur on more success stories like the allen brothers, we've begun to reinvent our energy policy. we're not just handing out money. we're issues a challenge.

we're telling america's scientists and engineers, if they assemble teams and focus on the hardest problems in clean energy, we'll fund those projects. at the california institute of technology, they're developing a way to turn sunlight and water into fuel for our cars. at oak ridge national laboratory, they're using super computers to get a lot more power out of our nuclear facilities. with more research and incentives, we can break our dependence on oil with bio-fuels and become the first country to have 1 million electric vehicles on the road by 2015. we need to get behind this innovation. and to help pay for it, i'm a asking congress to eliminate the billions in taxpayer dollars we currently give to oil companies.

i don't know if -- i don't know if you've noticed but they're doing just fine on their own. so instead of subsidizing yesterday's energy, let's invest in tomorrow's. now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they're selling. so, tonight, i challenge you to join me in setting a new goal. by 2035, 80% of america's electricity will come from clean energy sources. some folks want wind and solar. others want nuclear. clean coal and natural gas. to meet this goal, we will need them all. and i urge democrats and republicans to work together to

make it happen. maintaining our leadership in research and technology is crucial to america's success. but if we want to win the future, if we want innovation to produce jobs in america and not overseas, and we also have to win the race to educate our kids. think about it. over the next ten years, nearly half of all new jobs will require education that goes beyond a high school education. and yet, as many as a quarter of our students aren't even finishing high school. the quality of our math and science education lags behind many other nations. america's fallen to ninth in the proportion of young people with a college degree. and so the question is whether all of us, as citizens and as parents, are willing to do

what's necessary to give every child a chance to succeed. that responsibility begins not in our classrooms, but in our homes and communities. it's family that first instills the love of learns in a child. only parents can make sure the tv is turned off and homework gets done. we need to teach our kids that it's not just the winner of the super bowl who deserves to be celebrated, but the winner of the science fair. [ applause ] we need to teach them that success is not a function of fame or pr, but of hard work and

discipli discipline. our schools share this responsibili responsibility. when a child walks into a classroom, it should be a place of high expectations and high performance. but too many schools don't meet this test. that's why instead of just pouring money into a system that's not working, we launched a competition called "race to the top." to all 50 states, we said, if you show us the most innovative plans to improve teacher quality and student achievement, we'll show you the money. "race to the top" is the most meaningful reform of our public schools in a generation. for less than 1% of what we spend on education each year, it has led over 40 states to raise their standards for teaching and learning. and these standards were developed, by the way, not by washington, but by republican and democratic governors throughout the country. and "race to the top" should be

the approach we follow this year as we replace "no child left behind" with a law that's more flexible and focused on what's best for our kids. you see, we know what's possible from our children. when reform isn't just a top down mandate, but the work of local teachers and principals, schoolboards and communities. take a school like bruce randolph in denver. three years ago, it was rated one of the worst schools in colorado. located on turf between two rival gangs. but last may, 97% of the seniors received their diploma. most will be the first in their families to go to college. and after the first year of the school's transformation, the principal who made it possible wiped away tears when a student

said, "thank you, miss waters, for showing that we are smart and we can make it." that's what good schools can do. and we want good schools all across the country. let's also remember that after parents, the biggest impact on a child's success comes from the man or woman at the front of the classroom. in south korea, teachers are known as nation builders. here in america, it's time we treated the people who educate our children with the same level of respect. [ applause ] >> we want to reward good teachers and stop making excuses

for bad ones. and over the next ten years, with so many baby boomers retiring from our classrooms, we want to prepare 100,000 new teachers in the fields of science and technology and engineering and math. in fact, to every young person listening tonight who is 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. [ applause ] >> of course, the education race

doesn't end with a high school diploma. to compete, higher education must be within the reach of every american. that's why we've ended the unwarranted taxpayer subsidies that went to banks and used the savings to make college affordable for millions of students. and this year, i ask congress to go further and make permanent our tuition tax credit worth $10,000 for four years of college. it's the right thing to do. because people need to be able to train for new jobs and careers in today's fast-changing economy. we're also revitalizing america's community colleges. last month i saw the promise of these schools at forsythe tech in north carolina. many of the students there used to work in the surrounding

factories that have sense left town. one mother of two, a woman named kathy proctor, had worked in the furniture industry since she was 18 years old. and she told me, she's earning her degree in biotechnology now, at 55 years old. not just because the furniture jobs are gone, but because she wants to inspire her children to pursue their dreams, too. as kathy said, i hope it tells them to never give up. if we take these steps, if we raise expectations for every child and give them the best possible chance at an education from the day they are born until the last job they take, we will reach the goal that i set two years ago. by the end of the decade, america will once again have the highest proportion of college graduates in the world.

[ applause ] >> one last point about education. today, there are hundreds of thousands of students excelling in our schools who are not american citizens. some of the children of undocumented workers who had nothing to do with the actions of their parents. they grew up as americans and pledge allegiance to our flag. and yet they live every day with the threat of deportation. others come here from abroad to study in our colleges and universities, but as soon as they obtain advanced degrees, we send them back home to compete against us. it makes no sense. now, i strongly believe that we should take on, once and for all, the issue of illegal immigration. and i am prepared to work with

republicans and democrats to protect our borders, enforce our laws and address the millions of undocumented workers who are now living in the shadows. [ applause ] >> i know that debate will be difficult. i know it will take time, but tonight, let's agree to make that effort. and let's stop expeopling talented, responsibility young people who could be starting a new business, who could be further enriching this nation. the third step in winning the future is rebuilding america. to attract new businesses to our shores, we need the fastest, most reliable ways to move people, goods and information,

from high speed rail to high speed internet. our infrastructure used to be the best. but our lead has slipped. south korean homes now have greater internet access than we do. countries in europe and russia invest more in their roads and railways than we do. china's building faster trains and newer airports. meanwhile, when our own engineers graded our nation's inf infrastructure, they gave us a "d." we have to do better. america's the nation that built the transcontinental railroad. constructed the interstate highway system. the jobs created by these projects didn't just come from laying down track or pavement. it came from businesses that opened near a town's new train station or the new off-ramp.

so, over the last two years, we've begun rebuilding for the 21st century. a project that has meant thousands of good jobs for the hard-hit construction industry. and tonight, i'm proposing that we re-double those efforts. we'll put more americans to work, repairing crumbling roads and bridges. we'll make sure this is fully paid for. attract private investment. and pick projects based on what's best for the economy, not politicians. within 25 years our goal is to give 80% of americans access to high speed rail. this could allow you to go places in half the time it takes to travel by car. for some trips it will be faster than flying. without the pat-down.

as we speak, routes in california and the midwest are already under way. within the next five years, we'll make it possible for businesses to deploy the next generation of high speed wireless coverage to 98% of all americans. this isn't just about -- this isn't about faster internet or fewer dropped calls. it's about connecting every part of america to the digitalage. it's about a rural community in iowa or alabama where farmers and small business owners will be able to sell their products all over the world. it's about a firefighter who can download the design of a burning building onto a handheld device. a student who can take classes with a digital textbook or a patient who can have face to face video chats with her doctor. all these investments in innovation, education and inf

infrastructure will make america a better place to do business and create jobs. but to help our companies compete, we also have to knock down barriers that stand in the way of their success. for example, over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. those with accountants to work the system can end up paying no taxes at all. but all the rest are hit with one of the highest corporate tax rates in the world. it makes no sense, and it has to change. so, tonight, i'm asking democrats and republicans to simplify the system. get rid of the loopholes. level the playing field. and use the savings to lower the corporate tax rate for the first

time in 25 years, without adding to our deficit. it can be done. [ applause ] to help businesses sell more products abroad, we set a goal of doubling our exports by 2014. because the more we export, the more jobs we create here at home. already our exports are up. recently we signed agreements with india and china that will support more than 250,000 jobs here in the united states. and last month, we finalized a trade agreement with south korea that will support at least 70,000 american jobs. this agreement has unprecedented support from business and labor. democrats and republicans. and i ask this congress to pass it as soon as possible.

now, before i took office, i made it clear that we would enforce our trade agreements and that i would only sign deals that keep faith with american workers and promote american jobs. that's what we did with korea and that's what i intend to do as we pursue agreements with panama and continue our asia pacific and global trade talks. to reduce barriers to growth and investment, i've ordered a review of government regulations. when we find rules that put an unnecessary burden on businesses, we will fix them. but i will not hesitate to create or enforce common sense

safeguards to protect the american people. that's what we've done in this country for more than a century. it's why our food is safe to eat. our water is safe to drink. and our air is safe to breathe. it's why we have speed limits and child labor laws. it's why last year we put in place consumer protections against hidden fees and penalties by credit card companies. and new rules to prevent another financial crisis. and it's why we passed reform that finally prevents the health insurance industry from exploiting patients. [ applause ]

>> now i have heard rumors that a few of you still have concerns about our new health care law. so let me be the first to say that anything can be improved. if you have ideas about how to improve this law by making care better or more affordable, i am eager to work with you. we can start right now, by correcting a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses. [ applause ] >> what i'm not willing to do -- what i'm not willing to do is go back to the days when insurance companies could deny coverage to someone with a pre-existing condition.

[ applause ] >> i'm not willing to tell james howard, a brain cancer patient from texas, that his treatment might not be covered. i'm not willing to tell jim houser, a small businessman from oregon that he has to go back to paying $5,000 more to cover his employees. as we speak, this law is making prescription drugs cheaper for seniors and giving uninsured students a chance to stay on their parents' coverage. so, i say to this chamber tonight, instead of refighting the battles of the last two years, let's fix what needs fixing and let's move forward. [ applause ]

>> now, the final critical step in winning the future is to make sure we aren't buried under a mountain of debt. we are living with a legacy of deficit spending that began almost a decade ago. and in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs and put money in people's pockets. but now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. that is not sustainable. every day, families sacrifice to live within their means. they deserve a government that does the same. [ applause ]

>> so, tonight, i am proposing that starting this year, we freeze annual domestic spending for the next five years. now, 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. this freeze will require painful cuts. already we've frozen the salaries of hard working federal employees for the next two years. i propose cuts to things i care deeply about, like community action programs. the secretary of defense has agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.

i recognize that some in this chamber will very proposed deeper cuts. and i'm willing to eliminate whatever we can honestly afford to do without. but let's make sure that we're not doing it on the backs of our most vulnerable citizens. and let's make sure that what we're cutting is really excess weight. cutting the deficit by gutting our investments in inknow say and education is like lightning and overloaded airplane by removing its engine. it may make you feel like you're flying high at first, but it won't take too long before you feel the impact. now, most of the cuts and savings i proposed only address annual domestic spending. which represents a little more than 12% of our budge. to make further progress, we have to stop pretending that

cutting this kind of spending alone will be enough. it won't. the bipartisan fiscal commission i made last year made this crystal clear. i don't agree with all their proposals, but they made important progress. and their conclusion is the only way to tackle our deficit is to cut excessive spending wherever we find it. domestic spending, health care spending and spending through tax breaks and loopholes. this means further reducing health care costs, including programs like medicare and medicaid, which are the biggest contributors to our deficit. the health insurance law we passed last year will slow the rising costs, which is part of the reason that nonpartisan economists have said that repealing the health care law

would add a quarter of a trillion dollars to our deficit. still, i'm willing to look at other ideas to bring down costs. including one that republicans suggested last year. medical mall practice reform to rei rein in frivolous lawsuits. [ applause ] >> to put us on solid ground, we should also find a bipartisan absolute to strengthen social security for future generations. we must do it without putting at risk current retirees. the most vulnerable, without slashing benefits for future generations. and without subjecting americans guaranteed retirement income to

the whims of the stock market. and if we truly care about our deficit, we simply can't afford a permanent extension of the tax breaks for the wealthiest 2% of americans. before we take money away from our schools or scholarships away from our students, we should ask millionaires to give up their tax break. it's not a matter of punishing their success. it's about promoting america's success. in fact, the best thing we could do on taxes for all americans is to simplify the individual tax code.

this will be a tough job but members of both parties have expressed an interest in doing this and i am prepared to join them. so, now is the time to act. now is the time for both sides and both houses of congress, democrats and republicans, to forge a principled compromise that gets the job done. if we make the hard choices now to rein in our deficits, we can make the investments we need to win the future. let me take this one step further. we shouldn't just give our people a government that's more affordable. we should give them a government that's more competent and more efficient. we can't win the future with a government of the past. we live and do business in the information age. but the last major

reorganization of the government happened in the age of black and white tv. there are 12 different agencies that deal with exports. there are at least five different agencies that deal with housing policy. then there's my favorite example. the interior department is in charge of salmon while they're in fresh water, but the commerce department handles them when they're in salt water. i hear it gets even more complicated once they're smoked. now -- we've made great strides over the last two years in using technology and getting rid of waste. veterans can now download their electronic medical records with a click of a mouse. we're selling acres of federal

office space that hasn't been used in years. and we'll cut through red tape to get rid of more. but we need to think bigger. in the coming months, my administration will develop a proposal to merge, consolidate and reorganize the federal government in a way that best serves the goal of a better america. i will submit it to congress for a vote and we will push to get it passed. in the coming year, we'll also work to rebuild people's faith in the institution of government. because you deserve to know exactly how and where your tax dollars are being spent, you'll be able to go to a website and get that information for the very first time in history. because you deserve to know when you're elected officials are meeting with lobbyists. i asked congress to do what the

white house has already done. put that information online. and because the american people deserve to know that special interests aren't larding up legislation with pet projects, both parties in congress should know this. if a bill comes to my desk with earmarks inside, i will veto it. i will veto it. the 21st century government that's open and competent, a government that lives within its means. and economy that's driven by new skills and new ideas. our success in this new and changing world will require reform, responsibility and innovation.

it will also require us to approach that world with a new level of engagement inaffairs. just as jobs and businesses can now race across borders, so can new threats and new challenges. no single wall separates east and west. no one rival superpower is aligned against us. and so we must defeat determined enemies wherever they are and build coalitions that cut across lines of region and race and religion. and america's moral example must always shine for those who yearn for freedom and justice and dignity. and because we've begun this work, tonight, we can say that american leadership has been renewed. and america's standing has been restored. look to iraq, where nearly 100,000 of our brave men and women have left with their heads held high.

[ applause ] >> american combat patrols have ended. violence is down. and a new government has been formed. this year, our civilians will forge a lasting partnership with the iraqi people, while we finish the job of bringing our troops out of iraq. america's commitment has been kept. the iraq war is coming to an end. of course, as we speak, al qaeda and their affiliates continue to

plan attacks against us. thanks to our intelligence and law enforcement professionals, we're disrupting plots and securing our cities and skies. and as extremists try to inspire sakts of violence within our borders, we are responding with the strength of our communities. with respect for the rule of law. and with the conviction that american muslims are apart of our american family. [ applause ] >> we've also taken the fight to al qaeda and their allies abroad. in afghanistan, our troops have taken taliban strongholds and trained afghan security forces. our purpose is clear. by preventing the taliban from re-establishing a stranglehold

over the afghan people, we will deny al qaeda the safe haven that served as a launching pad for 9/11. thanks to our heroic troops and civilians, fewer afghans are under the control of the insurgency. there will be tough fighting ahead. and the afghan government will need to deliver better governance. but we are strengthening the capacity of the afghan people and building an enduring partnership with them. this year, we will work with nearly 50 countries to begin a transition to an afghan lead. and this july, we will begin to bring our troops home. [ applause ] >> in pakistan, al qaeda's leadership is under more pressure than at any point since 2001. their leaders and operatives are

being removed from the battlefield. their safe havens are shrinking. and we have sent a message from the afghan border to all parts of the globe, we will not relent. we will not waiver. and we will defeat you. [ applause ] >> american leadership can also be seen in the effort to secure the worst weapons of war. because republicans and democrats approved the new s.t.a.r.t. treaty, far fewer nuclear weapons and launchers will be deployed. because we rallied the world, nuclear materials are being locked down on every continent so they never fall into the hands of terrorists. because of a diplomatic effort to insist that iran meet its

obligations, the iranian government now faces tougher sanctions, tighter sanctions than ever before. and on the korean peninsula, we stand with our ally south korea and insist north korea keeps its commitment to abandon nuclear weapons. this is just a part of how we're shaping a world that favors peace and prosperity. with our european allies, we revitalized nato and increased our cooperation from everything from counter-terrorism to missile defense. we've reset our relationship with russia. strengthened asian alliances. built new partnerships with nations like india. this march i will travel to brazil, chile and el salvador to mortgage new alliances across the americas. around the globe, we're standing with those who take

responsibility. helping farmers grow more food. supporting doctors who care for the sick. and combatting the corruption that can rot a society and rob people of opportunity. recent events have shown us that what sets us apart must not just be our power. it must also be the purpose behind it. in south sudan, with our assistance, the people were finally able to vote for independence after years of war. thousands lined up before dawn -- people danced in the streets. one man who lost four of his brothers at war summed up the scene around him. this was a battlefield for most of my life, he said. now, we want to be free. we saw that same desire to be

free in tunisia, where the will of the people proved more powerful than the writ of a dictator. and tonight, let us be clear. the united states of america stands with the people of tunisia and supports the democratic aspirations of all people. [ applause ] >> we must never forget that the things we've struggled for and fought for live in the hearts of people everywhere. and we must always remember that the americans who have borne the greatest burden in this struggle are the men and women who serve our country. [ applause ]

[ applause ] >> tonight, let us speak with one voice in reaffirming that our nation is united in support of our troops and their families. let us serve them as well as they've served us, by giving them the equipment they need. by providing them with the care and benefits that they have earned. and by enlisting our veterans in the great task of building our own nation. our troops come from every corner of this country.

they're black, white, latino, asian, native american. they are christian and hindu, jewish and muslim. and yes, we know that some of them are gay. starting this year, no american will be forbidden from serving the country they love because of who they love. [ applause ] >> and with that change, i call on all our college campuses to open their doors to our military recruiters and rotc. it is time to leave behind the divisive battles of the past. it is time to move forward as one nation.

we should have no illusions about the work ahead of us. reforming our schools, changing the way we use energy, reducing our deficit. none of this will be easy. all of it will take time. and it will be harder because we will argue about everything. the costs, the details, the letter of every law. of course, some countries don't have this problem. if the central government wants a railroad, they build a railroad, no many how many homes get bulldozed. if they don't want a bad story in the newspaper, it doesn't get written. and yet, as contentious and

frustrating and messy as our democracy can sometimes be, i know there isn't a person here that would trade places with any other nation on earth. [ applause ] >> we may have differences in policy, but we all believe in the rights enshrined in our constitution. we may have different opinions, but we believe in the same promise that says, this is a place where you can make it if you try. we may have different backgrounds, but we believe in the same dream that says, this

is a country where anything is possible, no matter who you are. no matter where you come from. that dream is why i can stand here before you tonight. that dream is why a working class kid from scranton can sit behind me. that dream is why someone who began by sweeping the floors of his father's cincinnati bar can preside as speaker of the house in the greatest nation on earth. [ applause ] >> that dream, that american dream, is what drove the allen

brothers to reinvent their ro roofiroo roofing company for a new era. it's what drove those students at forsythe tech to learn a new skill and work towards the future. and that dream is the story of a small business owner named brandon fish er. brandon started a company in burr lynn, pennsylvania, that specializes in a new kind of drilling technology. and one day last summer, he saw the news that halfway across the world, 33 men were trapped in a chilean mine. and no one knew how to save them. but brandon thought his company could help, and so he designed a rescue that would become known as plan b. his employees worked around the clock to manufacture the necessary drilling equipment, and brandon left for chile. along with others, he began

drilling a 2,000-foot hole into the ground, working three or four days at a time without any sleep. 37 days later, plan b succeeded, and the miners were rescued. but because he didn't want all the attention, brandon wasn't there when the miners emerged. he had already gone back home, back to work on his next project. and later, one of his employees said of the rescue, we proved that center rock is a little company but we do big things. 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. we're a nation that says, i might not have a lot of money, but i have this great idea for a new company. i might not come from a family of college graduates, but i will be the first to get my degree. i might not know those people in trouble, but i think i can help them. and i need to try. i'm not sure how we'll reach that better place beyond the horizon, but i know we'll get there. i know we will. we do big things. the idea of america endures. our destiny remains our choice. and tonight, more than two centuries later, it's because of our people that our future is hopeful, our journey goes forward and the state of our

union is strong. thank you. god bless you. and may god bless the united states of america. >> and after 1:01, president barack obama with the test launch of this new bipartisan two years. calling for "sputnik" moment for our generation, and bringing tears to the eyes of the republican speaker, talking about the american dream and how he swept the bar of his father's cincinnati establishment. >> and he brought both parties to their feet, diane, at least 45 times from our count. 45 instances of bipartisan applause. i think that sets a record. what a different feel it was in that room tonight by having those members of congress, republicans and democrats

sitting together. overall, more subdued. less of a circus quality. they tended to applaud for the president's aspirations, when he said, we will outbuild the rest of the world. we will defeat al qaeda. not for how he would get there. i was really struck, diane, when the president said it was time to act, time to get down to the hard work of forging a principled compromise on the deficit, dead silence. >> well, as we know, as we know, a lot of the republicans are watching and we'll hear the republican response in a moment. but i want to bring in jon karl, because he was sitting right behind the speaker, speaker boehner, just to get a sense of the room at this moment. jon? >> reporter: really, quite a scene in here, diane. you know, as george mentioned, a lot of applause, more than we've seen in most state of the unions that i've witnessed, but less of the one side jumping up, the other side sitting down. more applause while seated here and, you know, you saw, i mean,

the room was incredibly divided here, i mean, looking across, it was hard to see, clearly, there were more republicans on the republican side, more democrats on the other side, but it was -- it was quite mixed, and, you saw, you know, a lot of kind of nudging back and forth with democrats and republicans sitting next to each other, making comments during the speech. and some seemed a little bit confused when to applaud. if you are not quite fully paying attention for a moment and somebody jumps up next to you, you tend to start applauding just by instinct. so, there was some confusion on the floor. but quite a scene here and now we see the mingling on the floor going on right now, and it still continues to be democrats and republicans talking together. >> i want to go quickly to our colleagues here. george, you've criticized that circus atmosphere a lot in the past. you think this atmosphere worked for the president? >> i do. i think what he wanted to do is

say we're in this together. he was speaking in the 20th month of a recovery that's been very disappointing so far. the most he could say is what he did say is last year they created a million jobs. that's not enough even to keep track. >> donna? >> this speech will be remembered not simply because of the worlds that he spoke, but because of the spirit of civility that really was in the room tonight. >> christiane amanpour, your take? >> well, full of sunny optimism, very reagan-esque, on and on about american exceptionalism and full of kennedy-esque encouragement to break a new frontier. that "sputnik" moment was remarkable. harking back to the start of the space race and really started a new era. and the president calling for more of that here. >> but matt dowd, who has

advised on both sides of the aisle, the word investment. is he going to be able to roll investment at a time when mitch mcconnell, senator mitch mcconnell said investment is latin for more spending. >> they're going to have to work out the details. much of the speeches are worked out in the long run. this speech began 60 days ago, and to quote, paraphrase a commercial, when he took a licking, he started clicking. and along the way, he's step by step proceeded to build the idea that he is governing differently and he's succeeding at it. >> and jake tapper, in some ways, the president going back to the future here, going back to themes that he was sounding even before he became president as a senator. >> reporter: that's right. he first versed on the national scene in the 2004 democratic national convention by posing, receiving himself as a unifier, somebody who would bring both countries -- well, saying that

there aren't two countries, we're all one united states of america. and that is the theme he's returned to since the so-called shellacking of the mid-term elections and more so since the tucson tragedy. one other point i wanted to make, which is, the president was hoping that this would be an opportunity for him to lay out to the american people a grand vision for where he wants to take the country. that he hasn't had a chance yet to really provide a narrative, a story as to what his leadership is all about and they did not want this to be a typical laundry list. i'm not sure that he achieved that. it seemed like there were a lot of proposals, spending themes, if not specific spending programs that he laid out, though, of course, he did also talk about a spending freeze and tackling the deficit in a cooperative way. >> and, again, everyone in the room thinking of congresswoman gabrielle giffords. want to show you a picture that we received during the

president's speech of astronaut mark kelly, in her hospital room in houston, holding her hand and watching the president's speech, and, of course, wearing that ribbon that they were wearing in the room tonight. all of her colleagues. >> and every member of the congressional women's softball team tonight in the chamber, as well. >> that's right. the team that raised money for breast cancer research and her friends said, we don't think she would mind if we told you that she wasn't so much of a softball player. but she sure loved to join them the there. >> one thing you didn't hear from the president tonight was any call for gun control, which would have divided the claimer will, as well. wouldn't necessarily be all that popular with democrats, either. >> they say that in this context of gabrielle giffords' shooting, it would have had a very

specific context and they would rather do it at a later time. >> want to let you know, again, that the president exits, we will be hearing from congressman paul ryan of wisconsin, chairman of the house budget committee, who is going to be responding to the president. >> and we'll be right back. [ male announcer ] it's 2011 and everything is different. different jobs... ♪ ...different challenges. ♪ different opportunities.

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live from washington, the state of the union address and the republican response. once again, diane sawyer and george stephanopoulos. >> and, as we await the republican response to the president's state of the union, let's go out to elkhart, indiana, and deborah roberts is there. a year ago, with many of the same people, she watched the president's state of the union. i know it's a prism from which to see the reactions of a lot of

people, deborah. >> reporter: diane, we watched here at the keystone rv plant, which is one of the few bright spots here in elkheaart. it's retired a lot of the workers they had to let go a number of years ago. people here are unemploymented are working three jobs just to make ends meet. some said they felt encouraged by the president's comments, they felt inspired. that he had a blueprint for the country. others said they felt like he different go far enough in talking about cuts in this economy. and the economy is what they're really worried about here, because, as you say, the unemployment is really high, and a lot of these folks are really looking for something to hold onto, to feel optimistic and they didn't feel completely oment mystic tonight after listening to the president, is what we heard. >> white house knew that was going to happen. they knew because they couldn't offer any new job creation programs in this environment it would be difficult to speak to nose people who are still

unemployed. we are going to hear now from the republican side of the aisle, republican congressman paul ryan of wisconsin, about to give that response, as you said. he's the chairman of the house budget committee. he laid out a blueprint for the budget last year, his colleagues having some difficulty fully embracing it. we're going to hear from congressman ryan right now. >> good evening. i'm congressman paul ryan from wisconsin and chairman here at the house budget committee. president obama just addressed a congressional chamber filled with many new faces. one face we did not see tonight was that of our friend and colleague congresswoman gabrielle giffords of arizona. we all miss gabby and her cheerful spirit and praying for her to return to the house claimer will. earlier this month, president obama spoke movingly at a memorial event for the six people who died on that violent morning in tucson. still, there are no words that can lift the sorrow that now engulfs the families and frenls of the fallen. what we can do is assure them

that the nation is praying for them, that in the world words, lord teams the broken hearted, and over time, grace will replace grief. as gabby makes progress, we must keep her and the others in our thoughts as we attend to the work before us. tonight, the president focused a lot of attention on our economy in general. and our deficit and debt in particular. he was right to do so. and some of his words were reassuring. as chairman of the house budget committee, i assure you that we want to work with the president to restrain federal spending. in one of our first acts in the new majority, we voted to cut congress' own budget and the house voted to restore the spending discipline that washington needs. the reason is simple. a few years ago, reducing spending wugz important. today, it's imperative. here's why. we face a crushing burden of

debt. the debt will soon eclipse our entire economy. on this current path, when my three children, who are now 6, 7 and 8 years old, are raising their our children, the federal government will double in size and so will the taxes they pay. no economy can sustain such high levels of debt and taxization. frankly, it's one of my greatest concerns as a parent. and i know many of you feel the same way. our debt is the product of acts by many presidents and many congresses over many years. no one person or party is responsible for it. there is no doubt the president came into office facing a severe fiscal and economic situation. unfortunately, instead of restoring the fundment ams of economic growth, he engaged in a stimulus spending spree that not only failed to deliver on his promise to create jobs, but

plunged us even deeper into debt. the facts are clear. since taking office, president obama has signed into law spending increases of nearly 25% for domestic government agencies. and 84% increase when you include the failed stimulus. all of his new government spending with us sold as investment. yet, after two years, the unemployment rate remains above 9% and government has had over $3 trillion to our debt. then, the president and his party made matters even worse by creating a new open-ended health care entitlement. what we already know about the president's health care law is this. costs are going up. premiums are rising. and millions of people will lose the coverage they currently have. job creation is being stifled by all of its taxes, penalties, mandates and fees. businesses and unions from around the country are asking the obama administration for waivers from the mandates.

washington should not be in the business of picking winners and losers. the president mentioned the need for regulatory reform to ease the burden on american businesses. we agree. and we think the health care law would be a great place to start. last week, house republicans voted for a full repeal of this law as we pledged to do. and we will work to replace it with fiscally responsible, patient-centered reforms that actually reduce costs and expand coverage. health care spending is driving the explosive growth of our debt. and the president's law is accelerating our country toward bankruptcy. our debt is out of control. what was a fiscal challenge is now a fiscal crisis. we cannot deny it. instead, we must, as americans, confront it responsibly. and that is exactly what republicans pledge to do. americans are skeptical of both political parties. and that skepticism is justif