that's "the ed show." you can listen to my radio show monday through friday, noon to 3:00, follow me on twitter @theed show. and like the ed show on facebook. have a good night. i'm rachel maddow, chris matthews, president obama will deliver his third official state of the union. chris, as we see the cabinet file in now, we see secretary clinton greeting john kerry, stands next to senator scott brown of massachusetts. i have been looking through some of the excerpts of not just the president's speech tonight but also the anticipated republican response from mitch daniels and it's pugnacious, we saw speaker boehner pre-butting the speech calling it pathetic, using very

sharp terms, going after it. what are you thinking -- what are you seeing tonight in terms of the republican attitude toward the president at this point in the presidency and this speech? >> rachel, an objective statement since the day he was inaugurated they sought to stymy his program. what an ironic position they took, they wanted to display the fact he couldn't cross party lines, he couldn't cross the aisle to make deals, because they believe from the beginning if he was successful in making deals with them, whether to have a compromise stimulus package, compromise on health care even, then he would succeed historically. i believe and i know the president believes that from the beginning they've sought to kill his place in history by refusing to let him be bipartisan. i think it's a damning criticism, you can't decide to be a member of congress if you take the oath of office and i

believe history will show mitch mcconnell led the way and they are showing it tonight, they want him to fail, they want it to be one-term, a pathetic one therm. they have been operating like this since the faced him opposition. >> lawrence, we saw the outgoing white house chief of staff bill daley followed by jack loo, wa is your opinion on how much the white house itself has changed in response to not only the mid-term election results but that kind of republican attitude chris was describing there. >> ryan liza has a great piece in the new yorker talking about that using white house memos, decision memos and he traces the president's evolution in understanding just how locked in the republicans were and ultimately how impossible bipartisanship became and one of the simple measures of that is the simple political fact that

the most conservative democrat in the senate is more liberal than the most liberal republican in the senate. and once you have that, you have completely divided parties. it was in the 90s during bill clinton's time you had at least half a dozen republicans in the senate who were always available for discussion of democratic ideas, and by the way, at least half a dozen democrats from the south. we had a democratic senators from alabama then, georgia, texas, oklahoma who were available to the republicans, and so that stuff i bipartisanship actually did not even exist when the president took office. >> i think part of that and i read that new yorker piece, is that i think the president had to deal with the reality of what -- how in flexible the republicans were. i don't think it was a matter of he or the white house staff

changing as much as they had to deal with the reality of a hardened partisan environment that no matter what they did, including angering his own base, was going to move the inflexibility of the republicans and i think that in the long run will backfire on the republicans. >> one of the things i think about the president, the white house talked about this, the vision, i read the same piece, he's tried to move forward with the vision and the big idea and the white house would say the ideas you will hear tonight you heard in kansas, you heard when he spoke at georgetown in 2009, you heard it frankly when he spoke to the democratic convention in boston in 2004 about a vision for america. what i read in that piece was also this president trying to move forward, little bit by little bit as much as he could within that political reality. >> i think to watch for in the speech they blame in part the effectiveness about strategies based upon congressional rules like the filibuster, hold up nominees, look for them to begin the unpopularity of congress and

why things aren't getting done. taking on some of the rules directly tonight. >> clinton had another peculiar advantage in bipartisanship. he did three big things, one was a big budget bill, with no republican votes because it involved a tax increase. other two were international trade bills --. >> hold on. >> mr. speaker, the president of the united states! [ applause ] >> president entering the house chamber, it will take him a long time to get up the aisle, sorry i interrupted you. carry on, lawrence. >> two out of the three big things clinton did in the first two years were republican-initiated ideas, republican-initiated international trade bills, he had to work with them on a daily basis in order to get the bills done and president obama has had no such initiative that actually had a republican base to it that

he could begin. >> of course president clinton attempted health care reform, one thing that separates the presidencies, and ryan's article is eloquent, obama using a partisan strategy got the health care bill down. president clinton had 57 democrats not 60, did not have reconciliation for his health care bill, was not able to pass it through congress. >> i think you will hear him talk about ideas which have been republican ideas that were good ideas when they introduced by president obama. >> payroll tax cuts. >> takes them on a little bit. >> magically became negative. >> even ideas in the tax code you had some of the republican members talking this summer about no welfare for millionaires, they had different versions what that meant i think the president will speak to that as well. >> various points in his evolution as a policy thinker, newt gingrich supported major

initiative of barack obama. >> only as a historian. >> there is a point to only as a historian, the one thing to be clear about, republicans and individual mandate, there is not a republican alive whoever voted for it. it never actually came to the point of a republican in the house or the senate voting for an individual mandate because the more they looked at it, the more they all turned away from it including under gingrich's leadership. >> they co-sponsored it, kept perkolating, it didn't go away until pretty much until 2009. in june, 2009, chuck grassley said the individual mandate was part of the bill that had bipartisan support. >> this i think you have to think about the strategy here. i have to say i miss michele bachmann crowding the line. there was a lot of michele

bachmann kissing the president. now she raised her public profile and been a candidate we get no more michele bachmann kissing on the aisle which is a drag. the president refusing to let go, there is scott brown of massachusetts. i think probably both as a gesture of kindness and strategic one upsman ship. we are expecting as the president greets the chief justice, john roberts, we're expecting to see the president able to talk, i believe one-on-one with gabrielle giffords coming in the chamber. >> there is only five justices i see justice thomas recused himself. >> justice thomas did recuse himself, that's right.

>> president greeting chairman of the joint chiefs, the army chief of staff. >> i can tell you having scheduled this for a president we never put enough time in for how long it will take to actually get, you would think a short distance, but you never can calculate how long a president will take to shake hands because it's totally at his discretion, you try to warn him you're on a schedule and deadline and the networks and they do what they want to do. >> here's the president approaching gabby giffords. >> wow. >> a very long embrace between the president and gabby giffords and oh emotion that thing to see.

seeing the president take this much time and speak to this many people, you can never tell how long it will take, it doesn't matter who the president is, this is about respecting the presidency and a constitutionally mandated event in any president's career and the reason we all watch this and pay attention and gets this much applause, this much pomp and circumstance is because we as americans believe the presidency deserves it. and there aren't very many moments like this on the american political calendar, this is unique, a privilege to cover. [ applause ] members of congress, i have

the high privilege and distinct honor of presenting to you the president of the united states. [ applause ] >> thank you. thank you. thank you so much. thank you very much. thank you. thank you. please be seated. mr. speaker, mr. vice president, members of congress, distinguished guests, and fellow americans, last month i went to andrews air force base and welcomed home some of our last troops to serve in iraq. together, we offered a final

proud salute to the colors under which more than a million of our fellow citizens fought. several thousand gave their lives. we gather tonight knowing that this generation of heros has made the united states safer and more respected around the world. [ applause ] for the first time in nine years, there are no americans fighting in iraq. [ applause ] for the first time in two decades, osama bin laden is not a threat to this country. [ applause ]

most of al qaeda's top lieutenants have been defeated. the taliban's momentum has been broken, some troops in afghanistan have begun to come home. these achievements are a testament to the courage, selflessness and team work of america's armed forces. at a time when too many of our institutions have let us down, they exceed all expectations. they are not consumed with personal ambition. they don't obsess over their differences. they focus on the mission at hand. they work together.

imagine what we could accomplish if we followed their example. [ applause ] think about the america within our reach. a country that leads the world in educating its people. an america that attracts a new generation of high tech manufacturing and high paying jobs. a future where we're in control of our own energy and our security and prosperity aren't so tied to unstable parts of the world. an economy built to last where hard work pays off and responsibility is rewarded. we can do this. i know we can because we've done it before. at the end of world war ii when another generation returned home from combat they built the

strongest economy and middle class the world has ever known. [ applause ] my grandfather, a veteran of patton's army got the chance to go to college on the g.i. bill. my grand, mother, who worked on a bomber assembly line was part of a workforce that turned out the best products on earth. the two of them shared the optimism of a nation that had triumphed over a depression and fascism. they understand they were part of something larger. they were contributing to a story of success that every american had a chance to share. the basic american promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college and put a little away for retirement.

the defining issue of our time is how to keep that promise alive. no challenge is more urgent, no debate is more important. we are not going to settle where a shrinking number of people do well where a growing number barely get by. where we can restore an economy where everyone gets a fair shot, and every one does their fair share and everyone plays by the same set of rules. [ applause ] what is at stake aren't democratic values or republican values but american values. we have to reclaim them.

let's remember how we got here. long before the recession, jobs and manufacturing began leaving our shores. technology made businesses more efficient but made some jobs obsolete. folks at the top saw incomes rise like never before. but most hard-working americans struggled with costs that were growing, paychecks that weren't. and personal debt that kept piling up. in 2008, the house of cards collapsed. we learned that mortgages had been sold to people who couldn't afford or understand them. banks made huge bets and bonuses with other people's money. regulators looked the other way. or didn't have the authority to stop the bad behavior. it was wrong. it was irresponsible. and it plunged our economy in a

crisis that put millions out of work, saddled us with more debt and left innocent, hard-working americans holding the bag. in the six months before i took office, we lost nearly four million jobs. we lost another four million before our policies were in full effect. those are the facts. but so are these. in the last 22 months, businesses have created more than three million jobs. [ applause ] last year they created the most jobs since 2005. american manufacturers are hiring again, creating jobs for the first time since the late 1990's.

together, we've agreed to cut the deficit by more than $2 trillion. we put in place new rules to hold wall street accountable so a crisis like this never happens again. [ applause ] the state of our union is getting stronger. and we've come too far to turn back now. as honk as i'm president, i will work with anyone in this chamber to build on this momentum. but i intend to fight obstruction with action and i will oppose any effort to return to the very same policies that brought on this economic crisis in the first place. [ applause ]

no, we will not go back to an economy weakened by outsourcing, bad debt and phony financial profits. tonight, i want to speak about how we move forward. and layout a blueprint for an economy built to last. an economy built on american manufacturing. american energy. skills for american workers. and renewal of american values. this blueprint begins with american manufacturing. on the day i took office, our auto industry was on the verge of collapse. some even said we should let it die. with a million jobs at stake, i refused to let that happen. in exchange for help, we demanded response built. we got workers and auto workers to settle their differences. got the industry to retool and

restructure. today, general motors is back on top as the world's number one automaker. [ applause ] chrysler has grown faster in the u.s. than my major company. ford is investing millions in plants and factories. the entire industry added 160,000 jobs. we bet on american workers. we bet on american ingenuity, tonight the american auto industry is back! [ applause ]

what's happening in detroit can happen in other industries. it can happen in cleveland and pittsburgh and raleigh. we can't bring every job back that left our shore. but right now, it's getting more expensive to do business in places like china. meanwhile america is more productive. a few weeks ago, the ceo of masterlund said it makes business sense for him to bring jobs back home. [ applause ] today, for the first time in 15 years, masterlock's plant in milwaukee is running at full capacity. [ applause ] so, we have a huge opportunity at this moment to bring manufacturing back.

but we have to seize it. we can start with the tax code. we can start with the tax code. right now, companies get tax breaks for moving jobs and profits overseas. meanwhile, companies that choose to stay in america get hit with one of the highest tax rates in the world. it makes no sense. and everyone knows it. so let's change it. first, if you're a business that wants to outsource jobs, you shouldn't get a tax deduction for doing it. [ applause ]

that money should cover moving expenses for master lock that decided to bring jobs home. [ applause ] second, no american company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. [ applause ] from now on every multi-national company should have to pay a basic minimum tax and every penny should go toward lowering taxes for companies that choose to stay here and hire here in america. [ applause ] third, if you're an american manufacturer, you should get a bigger tax cut. if you're a high tech

manufacturer, we should double the tax duck shun you get for making your profits here. if you want to relocate in a community you should get help financing a new plant, equipment or training for new workers. so my message -- [ applause ] -- my message is simple. it's time to stop rewarding businesses that ship jobs overseas and start rewarding companies that create jobs right here in america. send me these tax reforms and i will sign them right away! [ applause ] we're also making it easier for american businesses to sell products all over the world. two years ago i set a goal of doubling us exports over five years. with the bipartisan trade agreements we signed in law,

we're on track to meet that goal ahead of schedule. [ applause ] soon there will be millions of new customers for american goods in panama, columbia and south korea. soon this will be new cars on the streets of seoul imported from detroit and toledo and chicago. [ applause ] i will go anywhere in the world to open new markets for american products. and i will not stand by when our competitors don't play by the rules. we've brought trade cases against china at nearly twice the rate as the last administration and it's made a difference. [ applause ] over 1000 americans are working to day because we stopped a surge in chinese tires. we need to do more. it's not right when another

country lets our movies, music and software be pirated. it's not fair when foreign manufacturers have a leg up on our's because they are heavily subsidized. tonight i'm announcing the creation of a trade enforcement unit that will be charged with investigating unfair trading practices in countries like china. there will be more inspections -- [ applause ] -- there will be more inspections to prevent counterfeit or unsafe goods from crossing our borders. and this congress should make sure that no foreign company has an advantage over american manufacturing when it comes to accessing financing or new markets like russia. our workers are the most productive on earth and if the playing field is level, i promise you, america will always win. [ applause ]

i also hear from many business leaders who want to hire in the united states, but can't find workers with the right skills. growing industries in science and technology have twice as many openings as we have workers who can do the job. think about that. openings at a time when millions of americans are looking for work. it's inexcusable. we know how to fix it. jackie is a single mom from north carolina, who was laid off from her job as a mechanic. then siemens opened a turbine factory in charlotte and formed a partnership with central piedmont community college. the company helped the college design courses in laser and robotics training, it paid jackie's tuition. then hired her to help operate their plant.

i want every american looking for work to have the same opportunity as jackie did. join me in a national commitment to train two million americans with skills that will lead directly to a job. [ applause ] my administration lined up more companies that want to help. model partnerships between businesses like siemens and community colleges in places like charlotte, orlando, louisville are up and running. now you need to give more community colleges the resources they need to become community career centers. places that teach people skills that businesses are looking for right now. from data management, high tech manufacturing. i want to cut through the maze of confusing training programs,

so that from now on people like jackie have one program, one website, and one place to go for all the information and help that they need. it's time to turn our unemployment system into a reemployment system that puts people to work. [ applause ] these reforms will help people get jobs that are open today. but to prepare for the jobs of tomorrow, our commitment to skills and education has to start earlier. for less than 1% of what our nation spends on education each year, we've convinced nearly every state in the country to raise their standards for teaching and learning. the first time that has happened in a generation. but challenges remain.

and we know how to solve them. at a time when other countries are doubling down on education, tight budgets forced states to layoff thousands of teachers. we know a good teacher can increase the life time income of a classroom by over $250,000. a great teacher can offer an escape from poverty. to the child who dreams beyond his circumstance. every person in this chamber can point to a teacher who changed the trajectory of their lives. most teachers work tirelessly with modest pay. sometimes digging in their own pocket for school supplies. just to make a difference. teachers matter. so instead of bashing them, or defending the status quo, let's offer schools a deal. give them the resources to keep good teachers on the job, and reward the best ones.

and in return -- grant schools flexibility. to teach with creativity and passion. to stop teaching to the test and to replace teachers who just aren't helping kids learn. [ applause ] that's a bargain worth making. [ applause ] we also know when students don't walk away from their education, more of them walk the stage to get their diploma. when students are not allowed to drop out, they do better. so tonight, i am proposing that every state, every state requires that all students stay in high school until they graduate or turn 18.

[ applause ] when kids do graduate the most daunting challenge can be the cost of college. at a time when americans owe more in tuition debt than credit card debt. this congress needs to stop the interest rates on student loans from doubling in july. [ applause ] extend the tuition tax credit we started that saves millions of middle class families thousands of dollars. and give more young people the chance to earn their way through college by doubling the number of work study jobs in the next five years.

[ applause ] of course, it's not enough for us to increase student aid. we can't just keep subsidizing skyrocketing tuition, we'll run out of money. states need to do their part by making higher education a higher priority in their budgets. colleges and universities have to do their part by working to keep costs down. recently i spoke with a group of college presidents who have done just that. some schools redesigned courses to help students finish more quickly. some used better technology. the point is, it's possible. so let me put colleges and universities on notice, if you can't stop tuition from going up, the funding you get from taxpayers will go down. higher education can't be a luxury, it is an economic imperative that every family in america should be able to afford.

let's also remember that hundreds of thousands of talented, hard-working students in this country face another challenge. the fact that they are not yet american citizens. many were brought here as small children. are american through and through. they live every day with the threat of deportation. others came more recently, to study business and science and engineering. but as soon as they get their degree, we send them home to invent new products and create new jobs somewhere else. that doesn't make sense. i believe as strongly as ever that we should take on illegal immigration. that is why my administration has put more boots on the border than ever before. that is why there are fewer illegal crossings than when i took office. the opponents of action are out of excuses. we should be working on comprehensive immigration reform

right now. [ applause ] but, if election year politics keeps congress from acting on a comprehensive plan, let's at least agree to stop expelling responsible young people who want to staff our labs, start new businesses, defend this country. send me a law that gives them the chance to earn their citizenship. i will sign it right away. [ applause ] you see, an economy built to last is one where we encourage the talent and ingenuity of every person in this country.

that means women should earn equal pay for equal work. [ applause ] it means we should support everyone who is willing to work. and every risk taker and entrepreneur who aspires to become the next steve jobs. after all, innovation is what america has always been about. most new jobs are are created in start-ups and small businesses. so let's pass an agenda that helps them succeed. tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow. expand tax relief to small businesses that are raising wages and creating good jobs. both parties agree on these

ideas. so put them in a bill and get it on my desk this year. [ applause ] innovation demands basic research. today, the discoveries taking place in the federally financed labs and universities could lead to new treatments that kill cancer cells but leave healthy ones untouched. new light weight vests for cops and soldiers that can stop any bullet. don't gut these investments in our budget. don't let other countries win the race for the future. support the same kind of research and innovation that led to the computer chip and the internet to new american jobs and new american industries. and no where is the promise of innovation greater than in american-made energy.

over the last three years we opened millions of new acres for oil and gas exploration. and tonight i'm directing my administration to open more than 75% of our potential offshore oil and gas resources. [ applause ] right now, right now american oil production is the highest that it's been in eight years. that's right. eight years. not only that, last year relied less on foreign oil than in any of the past 16 years. [ applause ] but, with only 2% of the world's oil reserves, oil isn't enough. this country needs an all-out all of the above strategy that develops every available source

of american energy. [ applause ] a strategy that is cleaner, cheaper, and full of new jobs. we have a supply of natural gas that can last america nearly 100 years. [ applause ] and my administration will take every possible action to safely develop this energy. the experts believe this will support more than 600,000 jobs by the end of the decade. and i'm requiring all companies that drill for gas on public lands to disclose the chemicals they use. because america will develop the resource without putting the health and safety of our citizens at risk. the development of natural gas will create jobs and power trucks and factories that are

cleaner and cheaper, proving we don't have to choose between our environment and our economy. and by the way, it was public research dollars over the course of 30 years that helped develop the technologies to extract all this natural gas, reminding us government support is critical in helping businesses get new energy ideas off the ground. [ applause ] now, what's true for natural gas is just as true for clean energy. in three years, our partnership with the private sector has already positioned america to be the world's leading manufacturer of high tech batteries. because of the federal investments, renewable energy use has nearly doubled and thousands of americans have jobs because of it. when brian ritterby was laid off

from his job making furniture, he worried at 55, no one would give him a second chance. but he found work at a wind turbine manufacturer in michigan. before the recession the factory only made luxury yachts. today it's hiring workers like bryan who said i'm proud to be working in the industry of the future. our experience with shell gas, our experience with natural gas shows us the payoffs on the public investments don't always come right away. some technologies don't pan out. some companies fail. but i will not walk away from the promise of clean energy. [ applause ] i will not walk away from workers like bryan. [ applause ]

i will not seed the wind or solar or battery industry to china or germany because we refuse to make the same commitment here. we subsidized oil companies for a century. that is long enough. it's time to end the taxpayer give aways to an industry that rarely has been more profitable and double down on clean energy industry that never has been more promising. pass clean energy tax credits, create these jobs. [ applause ] we can also spur energy innovation with new incentives. the differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change. there is no reason why congress shouldn't at least set a clean energy standard that creates a market for innovation.

so far, you haven't acted. well, tonight i will. i'm directing my administration to allow the development of clean energy on enough public land to power three million homes. and i'm proud to announce that the department of defense working with us, the world's largest consumer of energy, will make one of the largest commitments to clean energy in history with the navy purchasing enough capacity to power a quarter million homes a year. [ applause ] of course the easiest way to save money is to waste less energy. help manufacturers eliminate energy waste in their factories

and give businesses incentives to upgrade their buildings. their energy bills will be $100 billion lower over the next decade. america will have less pollution, more manufacturing, more jobs for construction workers who need them. send me a bill that creates these jobs. [ applause ] building this new energy future should be just one part of a broader agenda to repair america's infrastructure. so much of america needs to be rebuilt. we've got crumbling roads and bridges. a power grid that wastes too much energy. an incomplete high speed broadband network that prevents a small business owner in rural america from selling products all over the world. during the great depression america built the hoover dam and

the golden gate bridge. after world war ii we connected our states with a system of highways. democratic and republican administrations invested in great projects that benefited everybody, from the workers who built them, to the businesses that still use them today. in the next few weeks i will sign an executive order clearing away the red tape that slows down too many construction projects. but you need to fund these projects. take the money we're no longer spending at war, use half of it to pay down our debt and use the rest to do some nation building right here at home. [ applause ] there has never been a better time to build.

especially since the construction industry was one of the hardest hit when the housing bubble burst. of course construction workers weren't the only ones who were hurt. so were millions of innocent americans who have seen their home values decline. while government can't fix the problem on its own, responsible homeowners shouldn't have to sit and wait for the housing market to hit bottom to get some relief. that's why i'm sending this congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates. no more red tape, no more run around from the banks. a small fee on the largest financial institutions will insure that it won't add to the def i fit and will give the banks a chance to repay a deficit of trust. [ applause ]

let's never forget millions of americans who work hard and played by the rules every day deserve a government and a financial system that do the same. it's time to apply the same rules from top to bottom. no bail-outs, no hand-outs, and no cop-outs. an america built to last insists on responsibility from everybody. we've all paid the price for lenders who sold mortgages to people who couldn't afford them. and buyers who knew they couldn't afford them. that's why we need smart regulations to prevent irresponsible behavior. [ applause ] rules to prevent financial fraud, or toxic dumping or

faulty medical devices. these don't destroy the free market. they make the free market work better. there is no question that some regulations are outdated, unnecessary or too costly. in fact, i have approved fewer regulations in the first three years of my presidency than my republican predecessor did in his. [ applause ] i ordered every federal agency to eliminate rules that don't make sense. we've already announced over 500 reforms and just a fraction of them will save business and citizens more than $10 billion over the neck five -- next five year. we got rid of one rule from 40 years ago that could have forced dairy farmers to spend $10,000 a year proving they could contain a spill because milk was somehow classified as an oil.

with a rule like that i guess it was worth crying over spilled milk. [ laughter ] i'm confident a farmer can contain a milk spill without a federal agency looking over his shoulder. [ applause ] but i will not back down from making sure an oil company can contain the kind of oil spill we saw in the gulf two years ago. [ applause ] i will not back down from protecting our kids from mercury poisoning, or making sure that

our food is safe and our water is clean. i will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny your coverage, or charge women differently than men. [ applause ] and i will not go back to the days when wall street was allowed to play by its own set of rules. the new rules we passed restore what should be any financial system's core purpose, getting funding to entrepreneurs with the best ideas and getting loans to responsible families who want to buy a home or start a business or send their kids to college. so, if you are a big bank or financial institution, you're no longer allowed to make risky bets with your customers' deposits.

you're required to write out a living will that details exactly how you'll pay the bills if you fail. because the rest of us are not bailing you out ever again. [ applause ] and if you're a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can't afford with confusing forms and deceptive practices, those days are over! today, american consumers finally have a watchdog in richard cordray, with one job, to look out for them. [ applause ] we'll also establish a financial crimes unit of highly trained investigators to crack down on large scale fraud and protect people's investments.

some financial firms violate major anti-fraud laws because there's no real penalty for being a repeat offender. that's bad for consumers and it's bad for the vast majority of bankers and financial service professionals who do the right thing. so pass legislation that makes the penalties for fraud count. and tonight i'm asking my attorney general to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abuse of lending and packaging and risky mortgages that led to the housing crisis. this new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many americans. now, a return to the american values of fair play and shared responsibility will help protect our people and our economy.

but it should also guide us as we look to pay down our debt and invest in our future. right now our most immediate priority is stopping a tax hike on 160 million working americans while the recovery is still fragile. [ applause ] people can not afford losing $40 out of each paycheck this year. there are plenty of ways to get this done. so let's agree right here, right now, no side issues, no drama, pass the payroll tax cut without delay! let's get it done! [ applause ]

when it cometo the deficit, we've already agreed to more than $2 trillion in cuts and savings. but we need to do more. and that means making choices. right now we're poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2% of americans. right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle class households. right now warren buffett pays a lower tax rate than his secretary. do we want to keep these tax cuts for the wealthiest americans or do we want to keep our investments in everything else? like education and medical research, a strong military, and care for our veterans. because if we're serious about

paying down our debt, we can't do both. the american people know what the right choice is. so do i. as i told the speaker this summer, i'm prepared to make more reforms that rein in the long-term costs of medicare and medicaid and strengthen social security as long as those programs remain a guarantee of security for seniors. but in return, we need to change our tax code so that people like me and an awful lot of members of congress pay our fair share of taxes. [ applause ] tax reform should follow the buffett rule. if you make more than $1 million a year, you should not pay less

than 30% in taxes. and my republican friend tom coburn is right. washington should stop subsidizing millionaires. in fact, if you're earning $1 million a year, you shouldn't get special tax subsidies or deductions. on the other hand, if you make under $250,000 a year, like 98% of american families, your taxes shouldn't go up. you are the ones struggling with rising costs and staggering wages. you are the ones who need relief. now, you can call this class warfare all you want, but asking a billionaire to pay at least as much as his secretary in taxes, most americans would call that common sense. we don't begrudge financial success in this country. we admire it.

when americans talk about folks like me paying my fair share of taxes, it's not because they envy the rich, it's because they understand that when i get a tax break i don't need and the country can't afford, it either adds to the deficit or somebody else has to make up the difference, like a senior on a fixed income or a student trying to get through school or a family trying to make ends meet. that's not right. americans know that's not right. they know that this generation's success is only possible because past generations felt a responsibility to each other, and to the future of their country. and they know our way of life will only endure if we feel that same sense of shared responsibility. that's how we'll reduce our deficit. that's an american built to last. [ applause ]

now, i recognize the people watching tonight have differing views about taxes and debt and energy and health care. but no matter what party they belong to, i bet most americans are thinking the same thing right about now. nothing will get done in washington this year. or next year. or maybe even the year after that. because washington is broken. can you blame them for feeling a little cynical? the greatest blow to our confidence in our economy last year didn't come from events beyond our control. it came from a debate in washington over whether the united states would pay its bills or not.

who benefited from that fiasco? i've talked tonight about the deficit of trust between main street and wall street, but the divide between this city and the rest of the country is at least as bad. and it seems to get worse every year. and some of this has to do with the corrosive influence of money in politics. so, together, let's take some steps to fix that. send me a bill that bans insider trading by members of congress. i will sign it tomorrow! [ applause ] >> let's limit any elected official from owning stocks in industries they impact. let's make sure people who bundle campaign contributions for congress can't lobby congress and vice versa.

an idea that has bipartisan support, at least outside of washington. some of what's broken has to do with the way congress does its business these days. a simple majority is no longer enough to get anything, even routine business, passed through the senate. neither party has been blameless in these tactics. now both parties should put an end to it. for starters, i asked the senate to pass a simple rule, that all judicial and public servants nominations receive a simple up or down vote within 90 days. [ applause ]

the executive branch also needs to change. too often it's inefficient, outdated, and remote. that's why i've asked this congress to grant me the authority to consolidate the federal bureaucracy, so that our government is leaner, quicker, and more responsive to the needs of the american people. [ applause ] finally, none of this can happen unless we also lower the temperature in this town. we need end to the notion that the two parties must be locked in a perpetual campaign of mutual destruction, that politics is about clinging to rigid ideologies instead of building consensus around common sense ideas. i'm a democrat. but i believe what republican

abraham lincoln believed. the government should do for people only what they cannot do better by themselves and no more. [ applause ] that's why my education reform offers more competition and more control for schools and states. that's why we're getting rid of regulations that don't work. that's why our health care law relies on a reformed private market, not a government program. on the other hand, even my republican friends, who complain the most about government spending have supported federally financed roads and clean energy projects and federal offices for the folks back home. the point is, we should all want

a smarter, more effective government. and while we may not be able to bridge our biggest philosophical differences this year, we can make real progress. with or without this congress, i will keep taking actions that help the economy grow. but i can do a whole lot more with your help. because when we act together, there's nothing the united states of america can't achieve. [ applause ] that's the lesson we've learned from our actions abroad over the last few years. ending the the iraq war has allowed us to strike decisive blows against our enemies. from pakistan to yemen, the al

qaeda operatives who remain are scrambling, knowing that they can't escape the reach of the united states of america. [ applause ] from this position of strength, we've begun to wind down the war in afghanistan. 10,000 of our troops have come home. 23,000 more will leave by the end of this summer. this transition to afghan lead will continue, and we will build an enduring partnership with afghanistan, so that it is never again a source of attacks against america. [ applause ] as the tide of war recedes, a wave of change has washed across the middle east and north africa, from tunis to cairo to tripoli. a year ago, gadhafi was one of the world's longest-serving dictators.

a murderer with american blood on his hands. today he is gone. and in syria, i have no doubt that the assad regime will soon discover that the forces of change cannot be reversed, and that human dignity cannot be denied. [ applause ] how this incredible transformation will end remains uncertain. but we have a huge stake in the outcome. and while it's ultimately up to the people to reach it, to decide their fate, we will advocate for those values that have served our own country so well. we will stand against violence and intimidation. we will stand for the rights and

dignity of all human beings, men and women, christians, muslims, and jews. we will support policies that lead to strong and stable democracies and open markets, because tyranny is no match for liberty. and we will safeguard america's own security against those who threaten our citizens, our friends, and our interests. look at iran. through the power of our diplomacy, a world that was once divided about how to deal with iran's nuclear program now stands as one. the regime is more isolated than ever before. its leaders are faced with crippling sanctions, and as long as they shirk their responsibilities, this pressure will not relent. let there be no doubt, america is determined to prevent iran from getting a nuclear weapon and i will take no options off the table to achieve that goal. [ applause ]

but a peaceful resolution of this issue is still possible, and far better. and if iran changes course and meets its obligations, it can rejoin the community of nations. the renewal of american leadership can be felt across the globe. our oldest alliances in europe and asia are stronger than ever. our ties to the americas are deeper. our ironclad commitment, and i mean ironclad to israel security has meant the closest military cooperation between our two countries in history. [ applause ]

we've made it clear that america is a pacific power and a new beginning in burma has lit a new hope. from the coalitions we've built to secure nuclear materials to the missions we've led against hunger and disease, from the blows we've dealt our enemies to the enduring power of our moral example, america is back. anyone who tells you otherwise, anyone who tells you that america is in decline or that our influence has waned doesn't know what they're talking about! [ applause ] that's not the message we get from leaders around the world who are eager to work with us. that's not how people feel from tokyo to berlin, from capetown to rio, where opinions of

america are higher than they've been in years. yes, the world is changing. no, we can't control every event, but america remains the one indispensable nation in world affairs and as long as i'm president, i intend to keep it that way. [ applause ] that's why working with our military leaders, i've proposed a new defense strategy that ensures we maintain the finest military in the world while saving nearly $500 billion in our budget. to stay one step ahead of our adversaries, i've already sent this congress legislation that will secure our country from the growing dangers of cyberthreats. above all, our freedom endures

because of the men and women in uniform who defend it. [ applause ] [ applause ] as they come home, we must serve them as well as they've served us. that includes giving them the care and the benefits they have earned, which is why we've increased annual va spending every year i've been president.

and it means enlisting our veterans in the work of rebuilding our nation. with the bipartisan support of this congress, we're providing new tax credits to companies that hire vets. michelle and jill biden have worked with american businesses to secure a pledge of 135,000 jobs for veterans and their families. and tonight i'm proposing a veterans jobs corps that will help our communities hire veterans as cops and firefighters, so that america is as strong as those who defend her. [ applause ] which brings me back to where i began. those of us who have been sent here to serve can learn a thing

or two from the service of our troops. when you put on that uniform, it doesn't matter if you're black or white, asian, latino, native american, conservative, liberal, rich, poor, gay, straight. when you're marching into battle, you look out for the person next to you or the mission fails. when you're in the thick of the fight, you rise or fall as one unit, serving one nation, leaving no one behind. you know, one of my proudest possessions is the flag that the s.e.a.l. team took with them on the mission to get bin laden. on it are each of their names. some may be democrats.

some may be republicans. but that doesn't matter. just like it didn't matter that day in the situation room when i sat next to bob gates, a man who was george bush's defense secretary, and hillary clinton, a woman who ran against me for president. all that mattered that day was the mission. no one thought about politics. no one thought about themselves. one of the young men involved in the raid later told me that he didn't deserve credit for the mission. it only succeeded, he said, because every single member of that unit did their job. the pilot who landed the helicopter that spun out of control, the translator who kept others from entering the compound, the troops who separated women and children from the fight, the s.e.a.l.s

who charged up the stairs. more than that, the mission only succeeded because every member of that unit trusted each other. because you can't charge up those stairs into darkness and danger unless you know that there's somebody behind you watching your back. so it is with america. each time i look at that flag, i'm reminded that our destiny is stitched together like those 50 stars and those 13 stripes. no one built this country on their own. this nation is great because we built it together. this nation is great because we worked as a team. this nation is great because we get each other's backs. and if we hold fast to that truth in this moment of trial, there is no challenge too great,

no mission too hard. as long as we are joined in common purpose, as long as we maintain our common resolve, our journey moves forward and our future is hopeful. and the state of our union will always be strong. thank you. god bless you. and god bless the united states of america. [ applause ] >> president obama concluding the state of the union address for a joint session of congress tonight. the president saying that the state of the union is getting stronger. echoing there the words of ronald reagan in 1986, who said the state of the union was stronger than a year ago and growing stronger each day. president obama, in an assertive speech, with a lot of policy specifics. also taking on a lot of the issues on which he has been most criticized, both by people within his own party and by those across the aisle.

the president addressing everything from the solyndra issue, the energy department's funding of a solar panel manufacturer to his pledges as a candidate and in the early days of his presidency to change the tone, in tonight's words, to change the temperature in washington. joining us once again from washington is my colleague, chris matthews at "hardball." chris, what's your reaction to the speech? >> well, everything you said, and just to add, i thought it had a real grab for the high ground in terms of optimism. he wants the republicans to be what he calls declinists. he wants to be the optimist. that's a very powerful thing in american politics. secondly, it was a clinton-esque speech. very detailed. long enough to make the point that he was strong on all the policy questions, thereby knocking down mitt romney's constant harangue that he's never run a company, never run a state. this guy's run a country! and he's trumped him on that. and he's made it clear that he's running the country.

cooperative. talking about, i will do the stuff that's tough for me as a democrat in medicare and medicaid. even social security. you do your stuff in taxes or there's no deal. taking the side of the 99%, the populist side against the 1% on taxes, challenging congress to clean up it own act. maybe an unfair shot, but a good, strong one about insider trading and getting rid of the filibuster. very, very strong and especially talk about give jobs to the soldiers, men and women who come home from fighting our wars. i thought it covered a lot of territory. and what we've learned before in the success of these speeches, they like detail, and they don't mind length if it has information. i thought it was a strong, patriotic, optimistic speech, but it also had punch to it. it said to the republicans, i know where you live, i'm going after you on the filibuster, on inside trading. look out, i can fight.

>> the president's speech tonight, an hour and five minutes long, throughout with an energetic and even loud, at times, tone. not a particularly angry speech, but an assertive one. going into the speech, a lot of us here on this panel in new york and those we've been talking about it with had said that we expected taxes to be the central issue of this speech. taxes certainly part of the speech, but not exactly the spine on which the whole speech hung, lawrence. what do you think about the balance of specifics, poetry, and prose? >> well, taxes was done mostly in poetry. it was all nice-sounding things with absolutely no tax specifics. the closest he came to anything specific, it was a lot of this tax fairy dust that he will sprinkle on corporate america and suddenly that will create a hiring pattern or that will induce manufacturers to behave differently. it's never worked in the past, and most of those pieces of

legislation die in the process anyway. but the one specific thing was that people making over $1 million should not pay less than 30% in effective income tax rates. and even that, when you look at the handout they gave us with some additional specificity to it, they say they want to exempt charitable contributions from being hit by that law. so as soon as you start looking at the first layer of detail on even that one, it is not at all clear how they would do that. and so it's -- what's happened for democrats is they have to use the tax code instead of spending to get to the social policies they want to get to, because of the complexities of budgeting and so that's why they have this new faith that the tax code can create economic behavior in industry that we've never seen it create. >> ezra? >> on the tax issue, i thought the more interesting argument was on the corporate tax side. he argued for something called a global minimum tax. basically, what that is, currently, a company can put their money in ireland, and ireland has a very, very low

corporate tax rate. you don't have to pay taxes on that money until you bring it back, which corporations often never do or don't do until congress passes a special overseas profits tax break. under this, you would have to pay the difference between the irish tax rate and this global minimum tax every year. so you wouldn't be able to just sock your money away and never pay any american taxes on it. that's a big change to our, to the way we treat overseas corporate income, and will be if congress, in fact, does take it up, which obviously is a big if, a huge, huge fight. >> ezra, let me just ask you, on this subject, in terms of the specifics, tax or otherwise, what do you think was the most ambitious specific policy that the president laid out? not just a goal for the country, but a specific policy change? >> the buffett tax. essentially, it sounds like a 30% alternative minimum tax. if once our millionaire, if what you would be paying is less than 30%, this would automatically kick in. and if you eliminate all deductions and subsidies, a home mortgage interest deduction, a health care tax seclusion, for people making over $1 million, you raise an enormous amount of money.

you're talking about $1 trillion or more over ten years. if they were actually able to do that, it would create a flat tax at the top of the code for high earners. if they can manage that, it would be quite a feat. >> for people who aren't wonks, there's a fairness case to be made for it. that is, listen, we've tried to give people tax breaks on, for example, the interest we pay on your mortgage or having a kid, because we as a country think those are good social policies, but zillionaires don't need those breaks and incentives. they can pay for it on their own. reverend sharpton, in terms of the overall substance of the speech, the president started with iraq and killing bin laden. he ended at the end with the same bags idea, is that americans and particularly those in washington should look to the armed forces in order to find a way to work together. what do you think of that as a rhetorical device, and as a big picture idea for the country? >> i think that from just a level of oratorical skills, he

really put his opponents in an awkward position, because by using the military as his example for unity, watching each other's back, talking about the s.e.a.l.s and the flag he had, it puts them in an awkward position to attack that. it almost turns on his head this whole thing of what he proposes un-american. they look un-american. if you don't have each other's back. and he did it, as you said, he sandwiched it in by starting with the iraq, ending with bin laden and the s.e.a.l.s, and in the middle have specifics on energy, specifics on tax, education. i mean, he went into areas that he knows his base will argue with him on. he sandwiched it with some very specific policy things, and then he ended, again, with the military. so i think where he went to poetry, wrapped in the american flag and military uniform, and the prose was very, very

specific. i think it was very well done. >> in terms of what happens next, in just a few minutes, just a couple of minutes, we're expecting to hear the republican response to the state of the union. it will be delivered tonight by two-term indiana governor mitch daniels. of course, the backstory on mitch daniels is that, number one, he has a, forgive the phrase, hell of a labor fight going on right now in indiana. today democrats in the indiana state legislature did not show up in the legislative chamber to block a quorum so that the state could not be voted into being a right to work state, stripping union rights in the state. the super bowl will be hosted in indianapolis in just a couple of weekends. the nfl players association is among the forces in union politics making a very big stink about this. tonight, as the state of the union is airing in indiana, local indiana stations are also airing an ad, a labor ad, against indiana -- excuse me, against governor daniels, reminding him of the fact that he used to say that he did not support making indiana a right-to-work state.

of course, a lot of republicans witch mitch daniels was running for president this year. karen finney, in terms of the partisan, the partisanship in tonight's speech, how tough was the president on republicans? how brightly did he draw those lines? did you see this particularly combative in partisan terms? not so much combative, but i think to what reverend al was saying, he was very clear in kind of getting these guys in the corner. when he talked about things -- he calls their bluff, for example, on infrastructure. he said, you know, we can do these things, but you've got to send me the bill now. clearly a reference to the argument that republicans have been using against him about keystone. so in very specific places, he talked about very specific things that should and could get done this year, and again, sort of left it to, i'm happy to work with you if i can, but if i can't, i'm going to look for ways to move forward. so he sort of walked that fine line between, i want to work with you, and there was also that sort of team of rivals moment, frankly, when you talk about, hillary clinton ran

against met, bill gates, we should all be able to come together. and it was again reminiscent of, there is no red, there is no blue, there is one america. trying to be very optimistic and very hopeful, but also, like you say, very american. remember, the republican line against him, he is not pro-america enough, he's pessimistic about america. well, that was a very optimistic speech. and i think what we're going to hear from mitch daniels is far less optimistic and more fatalistic, and that contrast was important as well. >> chris matthews in washington, with about 120 seconds until we hear from mitch daniels, that optimism that you and karen finney were talking about bookended with the president talking again like old candidate obama about talking about to change the temperature in washington, change the way things get done. was that a surprise? >> no, i think he's doing it, but he wants it on his terms. he certainly wants to get something done in terms of a trade-off, in terms of entitlements and taxes on the wealthy. of course he wants it done. he does want to end this filibuster stranglehold that has

prevented any president from operating on his or her mandate. that sets a very high standard on getting anything done at all, as we saw in this last three years. so he wants to be an activist president. the ways the rules are working in the congress, they've hamstrung him, and he wants to change him. if that's getting along with his opponents, fine. >> briefly, ezra, when the president specifically proposed a 90-day limit for an up or down vote on all nominees, obviously, he's saying, exclude nominations from the filibuster. has anything like that ever happened or work? >> in 2005, the bush administration tried to get rid of that, obama opposed that. he also had a proposal in his policy proposal tonight to make filibusters talking again. you have to actually hold the floor. he didn't make that specifically in the speech, but that would be a very big change to the senate if it actually got put into place. >> 20 seconds. >> i think, also, he was brilliant in pointing out his

grandfather was in patton's army, his grandmother was on -- >> the assembly line, yeah. >> so all that birther, un-american stuff, he took on early. i mean, the energy that he drew was great. >> it is a great honor in the opposition party to be asked to give the response to the state of the union. that honor this year goes to indiana governor mitch daniels, who is completing his term as indiana's governor. here now is governor daniels. he's speaking from the auditorium at the indiana war memorial building. let's listen. >> greetings from the home of super bowl xlvi. the status of loyal opposition imposes on those out of power some serious responsibilities, the show respect for the presidency and its occupant, to express agreement where it exists. republicans tonight salute our president, for instance, for his aggressive pursuit of the murderers of 9/11 and for bravely backing long-overdue changes in public education. i personally would add to that list admiration for the strong

family commitment that he and the first lady have displayed to a nation sorely needing such examples. on these evenings, presidents naturally seek to find the sunny side of our national condition. but when president obama claims that the state of our union is anything but grave, he must know in his heart that this is not true. the president did not cause the economic and fiscal crises that continue in america tonight, but he was elected on a promise to fix them, and he cannot claim that the last three years have made things anything but worse. the percentage of americans with a job is at the lowest in decades. one in five men of prime working age and nearly half of all persons under 30 did not go to work today. in three short years, an unprecedented explosion of spending with borrowed money had added trillions to an already unaffordable national debt, and yet the president has put us on a course to make it radically worse in the years ahead.

the federal government now spends one of every $4 in the entire economy. it borrowed every one of $3 that it spends. no nation, no entity, large or small, public or private, can thrive or survive in tact with debts as huge as ours. the president's grand experiment in trickle-down government has held back rather than sped economic recovery. he seems to sincerely believe we can build a middle class out of government jobs paid for with borrowed dollars. in fact, it works the other way. a government as big and bossy as this one is maintained on the backs of the middle class, and those who hope to join it. those punished most by the wrong turns of the last three years are those unemployed or underemployed tonight, and those so discouraged they've abandoned the search for work altogether. and no one's been more tragically harmed than the young people of this country, the first generation in memory to face a future less promising

than their parents did. as republicans, our first concern is for those waiting tonight to begin or resume the climb up life's ladder. we do not accept that ours will ever be a nation of haves and have-nots. we must always be a nation of th haves and soon-to-haves. we're only a short distance behind greece, spain, and other european counties now facing economic catastrophe, but ours is a fortunate land. because the world uses our dollar for trade, we have a short grace period to deal with our dangers. but time is running out if we're to avoid the fate of europe and those once-great nations of history that fell from the position of world leadership. so 2012 is a year of true opportunity, maybe our last, to restore an america of hope and upward mobility and greater equality. the challenges aren't matters of

ideology or party preference. the problems are simply mathematical and the answers are purely practical. an opposition that would earn its way back to leadership must offer not just criticism of failures that anyone can see, but a positive and credible plan to make life better, particularly for those aspiring to make a better life for themselves. republicans accept this duty gratefully. the roots back to an america of promise and to a solvent america who can pay its bills and protect its vulnerable start in the same place. the only way up for those suffering tonight, and the only way out of the dead end of debt into which we've driven is a private economy that begins to grow and create jobs, real jobs, at a much faster rate than today. contrary to the president's constant disparagement of people in business, it's one of the noblest of human pursuits. the late steve jobs, what a

fitting name he had, created more of them than all those stimulus dollars the president borrowed and blew. out here in indiana, when a business person asks me what he can do for our state, i say, first, make money, be successful. if you make a profit, you'll have something left to hire someone else, and some to donate to the good causes we love. the extremism that stifles the development of homegrown energy or cancels a perfectly safe pipeline that would employ tens of thousands or jacks up consumer utility bills for no improvement in either human health or world temperature is a pro-poverty policy. it must be replaced by a passionate pro-growth approach, that breaks all ties and calls all close ones in favor of private sector jobs that restore opportunity for all and generate the public revenues to pay our bills. that means a dramatically simpler tax system of fewer loopholes and lower rates.

a pause in the mindless piling on of expensive new regulations that devour dollars that otherwise could be used to hire somebody. it means maximizing on the new domestic energy technologies that are the best break our economy's gotten in years. there's a second item on our national must-do list. we must unite to save the safety net. medicare and social security have served us well, and that must continue. but after half and three quarters of a century, respectively, it's not surprising that they need some repairs. we can preserve them unchanged and untouched for those now in or near retirement, but we must fashion a new, affordable safety net so future americans are protected too. decades ago, for instance, we could afford to send millionaires pension checks and pay medical bills for even the wealthiest among us. now we can't. so the dollars we have should be

devoted to those who need them most. the mortal enemies of social security and medicare are those who in contempt of plain arithmetic continue to mislead americans that we should change nothing. listening to them much longer will mean that these proud programs implode and take the american economy with them. it will mean that coming generations are denied the jobs they need in their youth and the protection they deserve in thei later years. it's absolutely so that everyone should contribute to our national recovery, including, of course, the most affluent among us. there are smart ways and dumb ways to do this. the dumb way is to raise rates in a broken, grossly complex tax system, choking off growth without bringing in the revenues we need to meet our debts. the better course is to stop sending the wealthy benefits they do not need, and stop providing them so many tax press conferences that distort our

economy and do little or nothing to foster growth. it's not fair, and it's not true for the president the to attack republicans in congress as obstacles on these questions. they and they alone have passed bills to reduce borrowing, reform entitlements, and encourage new job creation, only to be shot down time and time again by the president and his democratic senate allies. this year, it falls to republicans to level with our fellow citizens about this reality. if we fail to act to grow the private sector and save the safety net, nothing else will matter much. but to make such action happen, we also must work in ways we republicans have not always practiced to bring americans together. no feature of the obama presidency has been sadder than its constant efforts to divide us, to curry favor with some americans by castigating others. as in previous moments of national danger, we americans

are all in the same boat. if we drift, quarreling and paralyzed over a niagara of debt, we will all suffer, regardless of income, race, gender, or other category. if we fail to shift to a pro-jobs, pro-growth economic policy, there'll never be enough public revenue to pay for our safety net, national security, or whatever-sized government we decide to have. as a loyal opposition who put patriotism and national success ahead of party or ideology or any self-interest, we say that anyone who will join us in the cause of growth and solvency is our ally and our friend. we will speak the language of unity. let us rebuild our finances and the safety net and reopen the door to the stairway upward. any other agreements we may have can wait. you know, the most troubling contention in our national life

these days isn't about economics or policy at all. it's about us, as a free people. in two alarming ways, that contention is that we americans just can't cut it anymore. in word, indeed, the president and his allies tell us that we just cannot handle ourselves in this complex, perilous world without their benevolent protection. left to ourselves, we might pick the wrong health insurance, the wrong mortgage, the wrong school for our kids, why, unless they stop us, we might pick the wrong lightbulb. a second view, which i admit some republicans also seem to hold, is that we americans are no longer up to the job of self-government. we can't do the simple math that proves the unaffordability of today's safety net programs are all the government we now have. we'll fall for the con job that says we can just plow ahead and someone else will pick up the tab. we'll allow ourselves to be pitted, one against the other,

blaming our neighbor for troubles, worldwide trends, or our own government has caused. 2012 must be the year we prove the doubters wrong. the year we strike out boldly, not nearly to avert national bankruptcy, but to say to a new generation that america is still the world's premiere land of opportunity. republicans will speak for those who believe in the dignity and capacity of the individual citizen, who believe that government is meant to serve the people rather than supervise them, who trust americans enough to tell them the plain truth about the fix we are in and to lay before them a specific, credible program of change, big enough to meet the emergency we are facing. we will advance our positive suggestions with confidence, because we know that americans are still a people born to liberty. there is nothing wrong with the state of our union that the american people address this freeborn, matured citizens

cannot set right. republicans in 2012 welcome all our countrymen to a program of renewal that rebuilds the dream for all and makes our city on a hill shine once again. thanks for listening. good night. >> the official republican response tonight, given by indiana governor, mitch daniels. governor daniels is a two-term governor of indiana. he was also george w. bush's budget director, which does cast a little bit of a panumbra of his own reputation. chris, i have to put it to you, because you're the only person in the world to which i know of that i can complain about this, but the city upon the hill does not shine. the city on the hill never shines. i don't understand why it always has to be shining. >> okay. well, i'll have to think about that. >> all right.

fair enough. >> but i really like that speech by mitch daniels. i thought it was really midwestern conservatism, the best kind, honest, fiscally conservative, of course, but recognizing that we have to protect our safety net, and we have to recognize that the rich cannot get all the pension money and all the entitlement money. there's just not enough to go around. we're going to have to have means tested and clean the loopholes. a very responsible look at fiscal conservatism that recognizes that the rich can't plunder the poor anymore. if you're going to have a true conservatism, in other words, a society that will sustain itself. a society that will be at peace with itself, you need to help the people that need to get a break, and that means it's not, what i call, it's not libertarianism at all. there's nothing of ron paul in what that man said. it was a responsible, social policy of the right, which was really, i think, cast in old-time midwest bob taff conservatism, except for some of the bromides and idiomatic crap he threw in there to make people happy, and now i understand why people like mitch daniels.

>> chris, i could not disagree with you more about the speech. >> why, what's wrong? >> i think that mitch daniels was there to say the world is on fire, be afraid, run to republicans. i mean, he's talking about america as a country that is, what was the -- america adrift, going over a niagara? i mean, this was a be afraid, be afraid, this guy is trying to -- >> but he also had solutions. he had gutsy solutions. he wasn't afraid to take on the rich, and that's so rare today on the republican side. >> i will take you on that, chris, absolutely. we will take a quick break. the city on the hill is not shining. that was it. shining thing was a late edition. i'm sorry. bugs me. up next, we'll be talking with valerie jarrett, senior adviser to president obama. we'll be right back. it's not shining. it's not.

>> the state of our union is getting stronger. and we've come too far to turn back now. as long as i'm president, i will work with anyone in this chamber to build on this momentum, but i intend to fight obstruction with action. and i will oppose any effort to return to the very same policies that brought on this economic crisis in the first place. roc® . the gold standard in anti-aging. clinically proven to give 10 years back to the look of skin. nothing's better than gold. [ female announcer ] roc® retinol correxion deep wrinkle night cream. [ female announcer ] roc® retinol correxion what's he looking for? i think he's looking for savings. ♪ i can't watch this anymore. stop! there's an easier way! we compare your progressive direct rate to other top companies so you get a great price. no more running around.

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thanks for being with us here on msnbc. as our special coverage of the state of the union continues, we're joined now by white house senior adviser, valerie jarrett. miss jarrett, thank you very much for being with us here tonight. >> my pleasure, rachel. how are you doing this evening? >> i am great. i have to ask you about governor

mitch daniels' address. i know you were able to hear at least some of it. were you able to hear some? >> i was certainly able to hear some of it. >> first, i guess he accused the obama administration of running a grand experiment in trickle-down government. so do you recognize what that might mean? and secondly, doou think there might be a sort of crack of light here for moving forward in a bipartisan way, after governor daniels said that we should crack down on the wealthy having so many tax privileges? >> well, i think, as the president said this evening, we are optimistic. we think that if everybody comes together, there is an opportunity to move forward. i will say i thought -- i agreed with you, rachel, i didn't think that he had a very -- that mitch daniels had a very optimistic vision about our future. so on that, we would disagree. in terms of making sure that we have a system that's fair and equitable, that's sustainable for the long haul, where if you work hard and play by the rules, you'll be able to have a good job, send your kids to college,

retire with dignity. i think that's what the president's message was tonight. and it was one that really believed in america. it believes in our manufacturing, it believes that we can be independent of foreign oil and invest in our own energy. he believes we can train the workforce to be the best for the 21st century. and he believes that we could all really come together and share a sense of values. and i thought at the ending, when he drew the analogy to our navy s.e.a.l.s, who are really all part of a team and their selfless act, it was really a role model for how we should all behave. and i think it was an opportunity for the republicans in the house to come together and work with the president and forge a path forward. >> valerie, it's lawrence o'donnell here. the president wanted to change one parliamentary rule in the senate, the filibuster rule in nominations. but there's another parliamentary rule, it's the only one that's in the constitution. and that is that all tax bills must begin in the house of representatives, which is now controlled by republicans. so much of what the president was talking about tonight involves changes to the tax code. how does the president think he

can get that kind of change initiated in the republican house of representatives? >> because i think it's what the vast majority of the american people want. they're calling for equity, they're calling for fairness. they're saying that, look, just as we saw tonight, warren buffett's secretary, who was sitting in the box, who pays a higher tax rate than he does, that's not fair and i think that's common sense that the average american can understand. so our hope and our expectation is that the american people will have a great deal of influence here and that the republicans will listen to the people who elected them and aim for fairness, aim for equity. we celebrate success in america. we celebrate somebody who can start a business in a garage and turn it into a flourishing global business. but that doesn't happen by accident. the it happens because government is there to provide the roads and the bridges and the railways and the infrastructure and the internet and all of the science and investment that we invest so that businesses can thrive and

grow, and so we can develop new technologies and be able to conquer the diseases that have been intractable. all that is made possible when government is working in partnership with the private sector. that was a part of the president's message tonight. >> white house senior adviser, valerie jarrett, thank you for your time tonight. >> you're welcome, rachel. >> thanks. >> still ahead, we'll be talking with republican congressman reid ribble. msnbc's coverage of the state of the union continues in just a moment. stay with us.

from the blows we've dealt our enemies to the enduring power of our moral example, america is back. anyone who tells you otherwise, anyone who tells you that america is in decline or that our influence has waned doesn't know what they're talking about! >> america is back. president obama, again, echoing ronald reagan tonight. let's turn now to congressman reid ribble of wisconsin. he is a republican in his first term. congressman, we feel lucky to have you tonight. thank you for being with us. >> rachael, i'm glad to be here. thank you. >> ezra klein is our resident wonk, and he has a wonk question for you.

so i'm going to hand thing over to ezra. >> hey, good evening. >> governor daniel's speech was mostly about debt. and one of the points he made is that the debt has run up quite a bit under president obama. "the new york times" recently did an analysis, an apples to apples of debt under the two presidents from their policies, not the economic policies around them. they found that under push, the policies themselves amount to $5 trillion under bush and obama, $1.5 trillion. so it seems that daniels has a worse record than obama. >> i haven't seen the analysis, so it's difficult for me to speak to it. you know, i think you can fudge numbers quite a bit a lot if you are debating what the recession actually did. listen, i was no big defender of the bush policies as far as definite and debt spending. i think we have to be serious about how we're managing this country's finances, whether republicans are in the white house or whether democrats are in the white house.

>> congressman, al sharpton. the president laid out some challenges to the congress in terms of tax reform, in terms of energy, in terms of education. what are you prepared, and your colleagues, prepared to do to work with the president on the things he outlined? is there anything that you heard tonight that you're prepared to commit right now to say, i'm willing to work with the president on that? >> oh, you bet. if he's willing to actually do real tax reform, and i'm not talking about just nibbling around the edges, listen, our tax code is over 10,000 pages long. it's overly complex. there's a tax on a tax, for what americans have to pay to have their tax returns done. i'm an advocate of throwing that tax code out and starting over. that would give us the opportunity to eliminate some of the subsidies and tax expenditures that the president spoke of. i think that's a step in the right direction. i was encouraged by his all-in type of energy policy. i would agree with that. so, yeah, i think there are some things that we certainly could reach for and work together with the president.

>> congressman ribble, one of the intangibles the president talked about tonight was the temperature in washington. this idea that the parties have to be locked in mortal combat all the time. does that, as a first-term congressman, as someone who was elected in 2010 when republicans did so well, does that call resonate with you at all? do you think that's at all possible? >> well, i think it's possible. rachel, you know, some of the bickering happens a little bit above my my grade. i sat tonight with kurt schrader, a democrat representing oregon, a very good friend of mine. we're able to work together. i think in the halls of congress, men and women are able to talk across the aisle and get things done. the real test of what the president said tonight is not what he actually communicated tonight, but what he communicates on his own campaign tomorrow. if he's willing to control his own rhetoric on the campaign trail and he's willing to soften that a little bit, he might find a more cooperative congress. >> congressman reid ribble, republican of wisconsin, it's nice to have you here with us

tonight. thank you for your time, sir. >> thank you, rachel. >> appreciate it. karen, in terms of what congressman ribble was just talking about there, when you were in the clinton white house, of course, one of the things you were talking about earlier is how important the next thing is that the president does after the state of the union, in terms of making the message sink in. congressman ribble there saying he would like a softer tone from the president towards republicans. do you expect that? >> i don't think the president has had a harsh tone towards republicans. >> it's been more combative, though, in the last six months. >> you say combative, i say firm. we'll have to agree to disagree. >> i like both. >> but absolutely, this practice of the president on the days after the state of the union sort of traveling around the country to different parts of the country, maybe states that happen to be, you know, important in the election, but talking more about the idea. so he's going to be in las vegas, he's going to be in detroit. in michigan. he's going to be talking about some of the pillars that we heard him speak to tonight. just one thing i want to mention before we go. one of the things that i really liked in terms of the way he talked to corporations and was

not combative, because he said, ask yourself what you can do for your country. what can you do? a very kennedy-esque moment there. >> lawrence, your last thoughts? >> i think the speech writers have to be very careful, because the ending was so strong, that story about the navy s.e.a.l. flag, i wouldn't have let him use that unless the speech writers can tell me they've got something better for the convention speech. that is as strong a finish as the speech could possibly have, and i -- they better have something as strong for the convention. >> i thought it was striking that they chose to begin -- i was shocked, at the very beginning of the speech, when i saw him beginning, there is no more war in iraq and osama bin laden is dead. i thought, you're going to use osama bin laden is dead in the first three seconds before anyone's started to really pay attention. i was thinking, you've got to use that for the great climax of the speech. but to come back to it was unavoidable and i was shortsighted. this is what's going to happen