GOP response: Indiana Gov. Daniels blames Obama for economy

WASHINGTON -- President Barack Obama has resorted to "extremism" with stifling, anti-growth policies and sought to divide Americans, not unite them, Indiana Gov. Mitch Daniels said Tuesday in the formal Republican response to the president's State of the Union address.

Eight months after deciding against a bid for his party's presidential nomination, Daniels used his nationally televised speech to lash out at Obama and cast the GOP as compassionate and eager to unchain the country's economic potential.

He took particular aim at Obama's efforts to raise taxes on the rich and castigate them for not contributing their fair share to the nation's burdens. He and other Republicans were hoping to both blunt and shift the focus away from Obama's theme on Tuesday of fairness, which included protecting the middle class and making sure the rich pay an equitable share of taxes.

"No feature of the Obama presidency has been sadder than its constant effort to divide us, to curry favor with some Americans by castigating others," Daniels said, speaking from Indianapolis. "As in previous moments of national danger, we Americans are all in the same boat."

Top congressional Republicans took aim at Obama's proposed tax increases, which included making sure millionaire earners pay at least a 30 percent tax rate, and a refusal to change course.

Senate Minority Leader Mitch McConnell, R-Ky., called Obama's address "a campaign speech designed to please his liberal base," and warned that he should keep legislation advancing his priorities "free from poison pills like tax hikes on job creators."

"Despite the president's rhetoric of fairness, the reality is his tax hikes would hit small businesses on the chin," said Utah Sen. Orrin Hatch, top Republican on the Senate Finance Committee.

Daniels is a rarity in the GOP these days -- a uniting and widely respected figure, contrasting with the divisiveness emanating from the contest for the presidential nomination being waged among former Massachusetts Gov. Mitt Romney, former House Speaker Newt Gingrich and others.

Daniels, President George W. Bush's first budget chief and a two-term Indiana governor, rails against wasteful spending big budget deficits, though critics note he served during the abrupt shift from fleeting federal surpluses to massive deficits early in Bush's term.

"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," Daniels said. He added that while Obama did not cause the country's economic and budget problems, "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 night's rhetoric come at the dawn of a presidential and congressional election year in which the defining issues are the faltering economy and weak job market and the parties' clashing prescriptions for restoring both. Obama and congressional Democrats have focused on the more populist pathway of financing federal initiatives by taxing millionaires, while Republicans preach the virtues of less regulation and smaller government.

Led by Daniels, Republicans fired back at Obama's vision of "an economy built to last," saying it was their party that understood the best way to trigger economic growth was to get the government out of the way.

"The extremism that stifles the development of homegrown energy, or cancels a perfectly sane 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," Daniels said.

Obama has halted, for now, work on the proposed Keystone XL oil pipeline from western Canada to Texas' Gulf Coast. Republicans say the project would create thousands of jobs, a claim opponents say is overstated. The administration has also pursued policies aimed at reducing pollution and global warming.

Republicans in the Capitol and on the campaign trail accused him of three years of higher spending, bigger government and tax increases that have left the economy stuck in a ditch.

"This election is going to be a referendum on the president's economic policies," which have worsened the economy, said House Speaker John Boehner, R-Ohio. "The politics of envy, the politics of dividing our country is not what America is all about."

"The president's latest vision relies on the same failed policies that haven't worked to recover the economy or get people back to work," said House Majority Leader Eric Cantor, R-Va. "When something doesn't work, you change it."

To underscore Obama's decision on Keystone, Boehner invited three officials from companies he said would be hurt by the pipeline's rejection to watch the speech in the House chamber, along with a pro-pipeline legislator from Nebraska, through which the project would pass.

     Obama was delivering his address during a rowdy battle for the GOP presidential nomination that has ended up providing ammunition for Obama's theme of fairness.

     That fight has called attention to the wealth of one of the top contenders, Romney, and the low -- but legal -- effective federal income tax rate of around 15 percent that the multimillionaire has paid in the past two years. Romney, in Florida campaigning for that state's Jan. 31 primary, released his tax documents for the two-year period on Tuesday.

     "The president's agenda sounds less like `built to last' and more like doomed to fail," Romney said in Tampa, Fla. "What he's proposing is more of the same: more taxes, more spending, and more regulation."

     Romney's chief rival at this point, Gingrich, said in a written statement that the top question about Obama's speech was whether he "will show a willingness to put aside the extremist ideology of the far left and call for a new set of policies that could lead to dramatic private sector job creation and economic growth."