captioning sponsored by cbs this is a cbs news special report, president obama's state of the union address to a joint session of congress. from washington, here is scott pelley. >> pelley: good evening. one of the duties of the president of the united states spelled out in the constitution is to report to the congress on the state of the union from time to time. and this is one of those times. this will be president obama's third state of the union address. he will be speaking in the house chamber, but the audience he's really aiming for tonight is right there in your house because this is an election year and the president will be going before the voters in just 41 weeks. with unemployment running at 8.5%, the speech will focus if large part on the economy. joining me as we watch the president tonight is bob schieffer, our chief washington

correspondent and anchor of "face the nation." and, bob, george washington ended the very first state of the union speech by telling the house and the senate he would derive great satisfaction from corporating with them. >> schieffer: (laughs) >> pelley: are we likely to see any of that tone tonight? >> schieffer: i think we'll see everybody having a big time. this is my favorite night of the year in washington, scott. you get them all here in one place at one time, kind of enjoying themselves. there is a sort of camaraderie about all of this. there will be a lot of cheers tonight. but tomorrow it will be back to business and, unfortunately, there's such a wide gap, such a wide difference between this white house and this congress. my guess is they're not going to get much done this year. it is an election year. you usually don't get much done in an election year and probably more so this year. >> pelley: bob, let's have a look at a scene you and i saw just a few minutes ago in the house chamber.

gabrielle giffords, the congresswoman who was the target of an assassination attempt last year grievously wounded but now back. i might say looking better than she ever has since this terrible day in arizona, greeting with a standing ovation from the house and the senate assembled in the house chamber and looking very well. tomorrow we are told that congresswoman giffords will officially resign her seat in order to work on her rehabilitation from that terrible, terrible day. as we're waiting for the president to come into the chamber let's go back to the white house to norah o'donnell, our chief white house correspondent. norah, what are you hearing about the speech? >> reporter: tonight advisors to the president say the president will speak about economic fairness as the dominant issue of our time. and i think that the president's

advisors acknowledge that they don't want this election year to be a referendum on the president's economic record so instead they are going to pick a fight on the very issue that they hope dominate this is campaign, and that is the issue of income inequality. so look for the president tonight to spend the bulk of this speech on his economic message and also to talk about tax reform and specifically something called the buffett rule, referencing to warren buffett who said it's not fair he pays a lower percentage rate than his own secretary. turns out, warren buffett's secretary is going to be a guest of the president and the first lady in his box there. that's one thing the president will do and that will create a start contrast with the president's eventual nominee which could be mitt romney who has just, of course, has said he paid less than 15% in taxes. we're hearing tonight the new rule the president will propose would essentially double what mitt romney would pay in taxes.

>> reporter: warren buffett's secretary will be sitting right behind the first lady up there in her box. nancy cordes is inside the capitol. nancy, what are you hearing tonight about the prospects prof cooperation between the president and the congress going forward? >> reporter: we're not hearing high hopes from either side, scott. in fact, just yesterday house majority leader, eric cantor, the number-two republican in the house said he expects republicans to focus this year on government oversight, rooting out waste and fraud in government. that's the kind of thing a leader usually says when they don't expect that the two sides are going to be able to work together on major policy achievements. and democrats say much the same thing. both sides say they'd love to work on tax reform. both sides say they'd love to work on deficit reduction. but it seems that they are resigned that in an election year it's very difficult for two sides to get legislation of that kind of magnitude done. >> pelley: nancy, thank you. the president is making his way

to the chamber. in a moment, we will hear the new house sergeant at arms, paul irving, announce the president of the united states. there's mr. irving now. >> mr. speaker, the president of the united states. (cheers and applause) and so begins one of the longest walks in washington. the president will greet various members as he walks down the aislement let's listen in for just a moment and see if we can hear a little bit about what they're saying to the president. >> good to see you. good to see you. nice to see you, good to see you. >> schieffer: it is one of the

longest walks because it takes him a while but also, scott, it has to be one of the most pleasant. (laughs) this is something... i mean this is... if you're a little down in the dumps or worried about your ego, it all gets taken care of in this one. everybody... i don't care what the president's approval ratings are, everybody wants to get on television, get their picture take within the president as he comes down the aisle there. (laughs) >> pelley: and this would certainly be the best reception he gets from the house of representatives all year long, no doubt. bob, what are some of the things that the president needs to accomplish tonight in this speech? >> schieffer: well, he's going to really kick off this year's campaign. he's going to take it right to the republicans. this is going to be a little something like harry truman in 1948. he's going to take them on. we've been seeing that coming in some of the speeches that he's been making.

he's going to rally his own party. he's got a lot of people in his own party that think he could have done more and he's got to reinforce them. he's going to hit the road tomorrow really on a campaign-style trip but this signify it is beginning of the general election, i think. >> pelley: the president has been listening to republicans who are running for the nomination and they have been painting him in the most negative and starkest terms as you would imagine. so the president will also use this speech to take some credit for some of the accomplishments of the administration over this last year. i think we'll hear a lot from the top of the speech about the president and what he considers to be his foreign policy accomplishments. >> pelley: you know, he will also, scott, take some of the republicans' language from them. just as bill clinton did in '96 after the republicans had swept in in '94 and that was the year

that the president said "the era of big government is over." he talked about you don't have to have a program for every problem. i think you're going to see barack obama use a similar kind of technique tonight. what was it he said? this will be an era of no bailouts, no something and no copouts. he's going to talk about personal responsibility much the way bill clinton did in '96. >> pelley: the president was just greeting his secretary of defense, leon panetta. the chief justice of the united states said hello. there is justice ginsburg giving the president a hug. >> pelley: you know there was some question as to whether the justices would come back this year because you'll remember that president obama kind of called out justice alito because they'd just... on that campaign finance law thing but it looks to me like i think i saw five of them there.

i do not see scalia, i do not see clarence thomas, nor did i see justice alito. so at least three of the conservatives are not there. but looks like most of the liberals came back. john roberts, the chief justice, is there. the fella's got to feel pretty good. >> pelley: here's gabrielle giffords, bob, right there. >> schieffer: yes, this is it. >> pelley: well, that was a remarkable moment, the president greeting gabrielle giffords, the congresswoman who was shot in that assassination attempt in arizona, giving her a kiss on

the cheek. the president shaking the hand of the vice president and the speaker of the house john boehner. and now the president of the united states. >> schieffer: he'll get introduced a couple more times, scott. >> pelley: there's mark kelly, gabrielle giffords' husband the former nasa astronaut and u.s. navy captain. >> members of congress, i have the high privilege and the distinct honor of presenting to you the president of the united states. (cheers and applause)

>> pelley: and here we go again. >> schieffer: (laughs) >> pelley: this will go on for a little while. >> thank you. thank you. >> schieffer: wow. >> thank you so much. 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. and several thousand gave their

lives. we gathered tonight knowing that this generation of heroes 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. (cheers and applause)

most of al qaeda's top lieutenants have been defeated. the taliban's momentum has been broken and 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're 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 of heroes 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 grandmother who worked on a bomber assembly line was part of the work force 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 understood 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 you are gent. no debate is more important. we can either settle for a country where a shrinking number of people do really well while a growing number of americans barely get by or we can restore an economy where everyone gets a fair shot and everyone does their fair share and everyone plays by the same set of rules. (cheers and applause) what's 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 also made some jobs obsolete. folks at the top saw their 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 had made huge bets and bonuses with other people's money. regulators had 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 into a crisis that put millions of out 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. and we lost another four million before our policies were in full effect. those rethe 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 1990s. together we have agreed to cut the deficit by more than $2 trillion and we've 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 long as i'm presidentially 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 the return to the very same policies that brought on this economic crisis in the first place. (cheers and applause) no, we will not go back to an

economy weakened by outsourcing, bad dead and phony financial problems. tonight i want to speak about how we move forward and lay out a blueprint for an economy that's built to last. an economy built on american manufacturing, american energy, skills for american workers and a 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 responsibility we got workers and automakers to settle their differences. we got the industry to retool and restructure. today general motors is back on top as the world's number-one

automaker. (cheers and applause) chrysler has grown faster in the u.s. than any major car company. ford is investing billions in u.s. plants and factories. and together the entire industry added nearly 160,000 jobs. we bet on american workers. we bet on american ingenuity and 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's left our shore, but right now it's getting more expensive to do business many places like china. meanwhile, america is more productive. a few weeks ago the c.e.o. of master lock told me that it now makes business sense for him to bring jobs back home. (applause) today for the first time in 15 years, master lock's unionized 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. tonight my message to business leaders is simple.

ask yourself what is you can do to bring jobs back to your country and your country will do everything we can to help you succeed. (applause) we should start with our 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 be used to cover moving expenses for companies like master lock that decide to bring jobs home.

(applause) second, no american company should be able to avoid paying its fair share in taxes by moving its jobs and profits overseas. (applause) from now on, every multinational company should have to pay a basic minimum tax and every penny should go towards 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 deduction you get for making your products here. if you want to relocate in a community that was hit hard when a factory left town, you should

get help financing a new plant, equipment, or training for new workers. so my message... (applause). ... my message is simple. it is 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 u.s. exports over five years. with the bipartisan trade agreement wes signed into law, we're on track to meet that goal ahead of schedule. (applause)

and soon there will be millions of new customers for american goods in panama, colombia, and south korea. soon there 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 are 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 a thousand americans are working together because we stopped a surge in chinese tires. but we need to do more. it's not right when another country lets our music, movies and software be pirated.

it's not fair when foreign manufacturers have a leg up on ours only because they're 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 unsafe or counterfeit goods from crossing our borders and this congress should make sure 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 do do the job. think about that. openings at a time when millions of americans are looking for work. it's inexcusable and we know how to fix it. jackie bray is a single mom from north carolina who was laid off from her job as a mechanic. then siemens opened a gas turbine factory in charlotte and form add 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 has already lined up more companies that want to help. model partnerships between businesses like siemens and community colleges in places like charlotte and other lando and louisville are up and running. now you need to give more community colleges the resources they need to be community career centers. places that teach people skill it is a businesses are looking for right now. from data management to high-tech manufacturing. and i want to cut through the maze of confusing training programs so that from now on people like jackie have one program, one web site, and one place to go for all the

information and help that they need. it is time to turn our unemployment system into a re-employment 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's 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 have forced states to lay off thousands of teachers. we know a good teacher can increase the lifetime 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 tray trajectory or their li. most teachers work tirelessly with modest pay. sometimes digging into 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. (applause) and in return grant schools flexibility to teach with

creativity and passion and stop teaching to the test and to replace teachers who just aren't helping kids learn. that's... (applause). that's a bargain worth making. (applause) we also know that when students don't walk away from their education, more of them walk the stock exchange to get their diploma. when students are not allowed to drop out... (applause). ... 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 did 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 also need to do their part by making higher education a higher priority in their budgets. and colleges and universities have to do their part by working to keep costs down. recently i spoke with a group of college presidents who've done just that. some schools redesigned courses to help students finish more quickly. some use 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 offal lnted hardworking students in

this country face another challenge. the fact that they aren't yet american citizens. many were brought here as small children, are american through and through, yet they live everyday 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's why my administration has put more boots on the border than ever before. that's 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. (cheers and 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 lance, 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. (cheers and 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 to equal work.

(applause) it means we should support everyone who's 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 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. (applause) 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 also demands basic research. today the discoveries taking place in our federally financed labs and universities could lead to new treatments that kill cancer cells but leave healthy ones untached. new lightweight vests for cops and soldiers that can stop any bullet. don't gut these investment 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 nowhere is the promise of innovation greater than in american-made energy. over the last three years, we've 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 we 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 owl out all of the above strategy that develops every available source of american energy. (cheers and applause)

a strategy that's 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 this resource without putting the health and safety of our citizens at risk. the development of natural gas will 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 out of shale rock. reminding us that government support is critical in helping businesses get new energy ideas off the ground. now, what's true for natural gas is just as true for clean energy. in three years our partnership with the private sector has positioned america to be the world's leader manufacturer of high-tech batteries. because of 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 said he worried at 55 no one

would give him a chance but he found work at a wind turbine manufacturer in michigan called energetics. before the recession, the factory only made luxury yachts. today it's hiring workers like brian who said i'm proud to be working in the industry of the future our experience with shale gas, our experience with natural gas shows us that the payoffs on these 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. i will not walk away from workers like brian. (applause) i will not creed the wind or

solar or battery industry to china or germany because we refuse to make the same commitment here. we've subsidized oil companies for a century. that's long enough. it's time to end the taxpayer giveaways to an industry that rarely has been more profitable and double down on a clean energy industry that never has been more promising. (cheers and applause) pass clean energy tax credits. create these jobs. wethe differences in this chambr may be too deep to pass a comprehensive plan to fight climate change. but there's 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 of a million homes a year. (applause) of course, these t easiest way to save money is to waste less energy. so here's a proposal, help manufacturers eliminate waste in their factories and give businesses incentives to upgrade their buildings. their energy bills will be a hundred billion dollars lower

over the next decade and america will have less pollution, more manufacturing, more jobs for construction workers who need it. 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 her 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 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. (cheers and applause) a there's never been a better time to build. especially sense 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. and while government can't fix the problem on its own, responsible homeownerses 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 runaround from the banks. a small fee on the largest financial institutions will insure that it won't add to the deficit and will give those banks that were rescued by taxpayers a chance to repay a deficit of trust. (cheers and applause)

let's never forget, millions of americans who work hard and play by the rules everyday deserve a got government and a financial system that do the same. it's time to apply the same rules from top to bottom. no bailouts, no handouts, and no copouts. 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 now, there's no question that some regulations are out dated, unnecessary or too costly. in fact, i've approved fewer regulations in the first three years of my presidency than my republican predecessor did in his. (applause) i've 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 next five years. we got rid of run rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that 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. claf claf.

(laughter) now, 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. (cheers and 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. (cheers and applause) and i will not myung-bak 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 payday lender or 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: too look out for them. (applause) we'll also establish a financial crimes unit with highly trained investigators to crack down on large-scale fraud and protect people's investments. some financial firms violate major antifraud 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 attorneys general to expand our investigations into the abuse of lending and packaging of 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 cannot 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. (applause) let's get it done. (applause) when it comes to 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 speak they are summer, i'm prepared to make more reforms that reign in the long-term costs of medicare and medicaid and strengthen social security so long as those programs remain a guarantee of security for seniors. but in return we need to change our tax codes 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 a million dollars 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 a million dollars 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 stagnant 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 america built to last. (applause)

now, i recognize that people watching tonight have differing views about taxes and debt, energy and health care. but no matter what party they belong to i bet most americans are thinking the same thing right about now "fog 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. now, some of this has to do with the corrosive influence of money in politics. so together let's take steps to fix that. send me a bill that bans insider trading by members of congress and i will sign it tomorrow. (cheers and 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. (applause) for starters, i asked the senate to pass a simple rule that all judicial and public service nominations receive a simple upper down vote within 90 days. (applause) the executive branch also needs to change. too often it's in efficient,

outdated and remote. that's why i've asked the congress to grant me the authority to consolidate the federal bur rock soy 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 to end 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 can not do better by themselves and no more.

(applause) (cheers and 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

difference this is year, we can make real progress without 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 lessons we've learned from our actions abroad over the last few years. ending 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 li 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. as the tide of war recedes, a wave of change has washed across the middle east and north africa from tunis to cairo, from sanaa to tripoli. a year ago qaddafi was one of the world's longest-serving dictators. a murderer with american blood on his hands. today he has 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 of the region to decide their fate we will advocate for those values 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 tierney 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 responsibility this is 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. (applause) but if iran changes course and meet its obligations it will 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 iron-clad commitment and i mean ironclad to israel's security has meant the closest military corporation 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. (cheers and 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 cape town 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. (cheers and applause) that's why working with our military leaders i proposed a new defense strategy that ensurings we maintain the finest military in the world while saving nearly half a trillion dollars in our budget. to stay one step ahead of our adversaries i've sent congress this legislation that will secure this country from the growing dangers of cyber threats. (applause) above all our freedom endures because the men and women in uniform who defend it. (applause)

(cheers and 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 v.a. spending every year i've been president. (applause) 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 events. 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've 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 here in the thick of the fight you rise or fall as one unit serving one nation. leaving no one behind. and one of my proudest processions is the flag that the seal 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 was 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 that kept others from entering the compound. the troops who separated the women and children from the fight. the seals 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 am 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. (cheers and applause) >> pelley: and so end the president's third state of the union address. might be considered an opening statement for the president's reelection campaign. election day just over 40 weeks from tonight. the speech was a combination of the president taking credit for accomplishments and making proposals. the president took credit for ending the war in iraq, killing osama bin laden, trade agreements, the fall of moammar qaddafi. one of the principal proposals he made was that no family making a million dollars or more should be allowed to pay less

than 30% in income taxes. bob schieffer, our chief washington correspondent and anchor of "face the nation," as always, is joining us tonight. bob, what did you see in the speech? >> schieffer: well, i think it was very much an election year speech. he laid out the themes of what his campaign is going to be about. obviously the most controversial thing is going to be this idea of making everybody who makes more than a million dollars pay at a 30% tax rate. that's the reason a lot of people in the white house would be delighted to see mitt romney get the nomination for the republicans because they can just use him as the face of what they will say is a very unfair tax code. republicans, of course, will take the opposite tack. you know, it was very much in line with a lot of the state of the union speeches that we hear, scott. you get the soaring rhetoric at the inaugurations and when

presidents say good-bye. the state of the union messages are a lot like this one we saw tonight. kind of a long list of things, some of which are doable and some of which are probably just thrown out there so he can say the republicans wouldn't corporate. i corporate. i thought it was just generalledly kind of speech you hear at the state of the union. not better, not worse. pretty much average kind of speech that we hear. >> pelley: very early on in the hour and five minute or so speech the president threw down the gaunt throat the congress and said he intended to fight obstruction with action, referring to the republican leadership? the congress. nancy cordes is our congressional correspondent at cbs news. nancy, the president threw a brushback pitch. i wonder how that's going to be received. >> well, scott, he didn't browbeat republicans to the extent that they were expecting

so in that sense this speech was not as aggressively political as they had been predicting but i'll tell you, the central theme of the president's speech, economic fairness, as bob just mentioned, requiring wealthy americans to pay more in taxes is just a complete nonstarter among republicans on capitol hill, in fact, speaker boehner accused the president today of what he called the politics of envy pushing this theme, dividing thes have and the have notes and you'll also hear indiana governor mitch daniels address that when he gives his republican response coming up. >> pelley: ora o'donnell, chief white house correspondent, is there on the white house lawn tonight. norah, i wonder, the president will be taking this message on the road as they typically do. >> >> reporter: the president hits the road tomorrow for a three day, five-state official trip where he will talk about many of the policies involved here in order to push them

further. look, this was an election year state of the union. this is an incredible opportunity according to the president's advisors to reach tens of millions of americans and by looking at this very flawlessly delivered carefully crafted speech you can tell the president was trying to reach independent voters who will ultimately decide this election. so he was at some points reaching out to corporate with republicans while digging in his heels on the agenda and trying to set the agenda for this upcoming campaign. setting up this income inequality so he can draw a razor-sharp distinction with the republican he wants to ultimately run against. he doesn't want to run on his record as a referendum on the economy even though the president talks about 22 straight months of job creation but he is picking a fight with republicans on the very issue of taxes and fairness.

>> pelley: bob, the president seemed to be speaking often to republican leaning independents in the country. he captured a number of republican themes in his speech. >> schieffer: oh, i think he did. and used republican language that we're often hearing associated with republicans. but basically the republicans are going to try to make this election a referendum on barack obama and his presidency so far. john boehner said today "he's going to talk like this is his first year in office. he's been here three years. we want to hold him accountable for that." that's what they want the election to be about. he, of course, wants it to be, as he is saying, fairness and he's going to try to base it on what's ahead and what has to be done now in the years ahead. >> pelley: the president didn't say very much about criticism of health care reform. he saved it for the middle of the speech, he didn't dwell there. he said that he would not be reversed on health care but it wasn't something that he spent very much time on

>> no, he didn't, it's not very popular. >> pelley: the president is making his try the back of the house chamber. and shortly after the president leaves the chamber we will be hearing from mitch daniels, governor of indiana for the republican response. one of the things that the president mentioned to the congress was using a peace dividend from iraq. he told the congress that they should take the money we are no longer spending at war and use it to pay down the debt and do some nation building right here at home. >> we're going to have your

back, mr. president, great speech. great speech. >> thank you. thank you. >> pelley: and so ends the president's third state of the union address. did you know that three men who have given the opposition response to the state of the union address have gone on to become president of the united states? they were gerald ford, george h.w. bush and bill clinton. this year's response will be from indiana inn governor mitch daniels and governor daniels will be coming up next in the broadcast.

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that's not a real word. oh haha it's real. [ female announcer ] delicious, creamy, yoplait light. over 30 flavors each around 100 calories. do the swap today. >> pelley: now that the president has delivered his state of the union address, it's time for the republicans 130 respond. to speak for them, they've chosen mitch daniels, the former

federal budget director who is now serving his second and final term as governor of indiana. a fiscal conservative, he disappointed a lot of supporters when he decidedded not to run for president. for from the war memorial building in indianapolis, here is governor mitch daniels. >> greeting from the home of super bowl xlvi. the status of loyal opposition imposes on those out of power some serious responsibilities: to 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 listed a mir ration 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 has 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 four dollars in the entire economy. it borrows one of every three dollars it spend