Obama vows to tackle economic inequality

WASHINGTON -- Seeking to energize his second term, President Barack Obama vowed Tuesday night in his State of the Union address to sidestep Congress "whenever and wherever" necessary to narrow economic disparities between rich and poor. He unveiled an array of modest executive actions to increase the minimum wage for federal contract workers and make it easier for millions of low-income Americans to save for retirement.

"America does not stand still, and neither do I," Obama declared in his prime-time address before a joint session of Congress and millions of Americans watching on television.

Draped in presidential grandeur, Obama's address served as the opening salvo in a midterm election fight for control of Congress that will quickly consume Washington's attention. Democrats, seeking to cast Republicans as uncaring about the middle class, have urged Obama to focus on economic mobility and the gap between the wealthy and poor. His emphasis on executive actions was greeted with shouts of "Do it!" from many members of his party.

Declaring 2014 a "year of action," Obama also sought to convince the public he still wields power in Washington even if he can't crack through the divisions in Congress. White House aides say they're redefining success not by what Obama can jam through Congress but by what actions he can take on his own.

Indeed, Obama's proposals for action by lawmakers were slim and largely focused on old ideas that have gained little traction over the past year. He pressed Congress to revive a stalled immigration overhaul, pass an across-the-board increase in the federal minimum wage and expand access to early childhood education -- all ideas that gained little traction after he proposed them a year ago. The president's one new legislation proposal calls for expanding an income tax credit for workers without children.

Republicans, who saw their approval ratings fall further in 2013, also have picked up the refrain of income inequality in recent months, though they have cast the widening gap between rich and poor as a symptom of Obama's economic policies.

"Republicans have plans to close the gap, plans that focus on jobs first without more spending, government bailouts and red tape," said Rep. Cathy McMorris Rodgers, R-Wash., in the Republicans' televised response to the president's speech.

The economy and other domestic issues, including health care, dominated the president's address. He touched briefly on foreign policy, touting the drawdown of American troops from Afghanistan this year and reiterating his threat to veto any new sanctions Congress might levy on Iran while nuclear negotiations with the Islamic republic are underway.

Even as Washington focuses more on income inequality, many parts of the economy are gaining strength, with corporate profits soaring and the financial markets hitting record highs. But with millions of Americans out of work or struggling with stagnant wages, Obama has found himself in the sometimes awkward position of promoting a recovery that feels distant for many.

"The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by, let alone get ahead," Obama said. "And too many still aren't working at all."

The president garnered some of his loudest applause -- at least from Democrats -- when he took on lawmakers who oppose his signature health-care law, which floundered in its initial rollout last fall. Obama said while he doesn't expect to convince Republicans on the merits of the law, "I know that the American people aren't interested in refighting old battles."

The president's speech drew an eclectic mix of visitors to the House chamber. Among those sitting with first lady Michelle Obama were two survivors of the Boston Marathon bombing, as well as Jason Collins, an openly gay former NBA player. Republican House Speaker John Boehner brought business owners from his home state of Ohio who say Obama's health-care overhaul is hurting their companies. Willie Robertson, a star of the television show "Duck Dynasty," also scored a seat in the House gallery, courtesy of Republicans.

Though Obama sought to emphasize his presidential powers, there are limits to what he can do on his own. For example, he unilaterally can raise the minimum hourly wage for new federal contractors from $7.25 to $10.10, as he announced, but he'll need Congress to extend that increase to all of America's workers.

The executive order for contractors, which Obama will sign in the coming weeks, is limited in its scope. It will not affect existing federal contracts, only new ones, and then only if other terms of an agreement change.

Republicans quickly panned the executive initiative as ineffective. Said Boehner: "The question is how many people, Mr. President, will this executive action actually help? I suspect the answer is somewhere close to zero."

White House officials countered by saying many more working people would benefit if Congress would go along with Obama's plan to raise the minimum wage across the board.

"Give America a raise," Obama declared.

Among the president's other executive initiatives is a plan to help workers whose employers don't offer retirement savings plans. The program would allow first-time savers to start building up savings in Treasury bonds that could be converted into traditional IRAs. Obama is expected to promote the "starter" accounts during a trip to Pittsburgh today.

The president also announced new commitments from companies to consider hiring the long-term unemployed, the creation of four "manufacturing hubs" where universities and businesses would work together to develop and train workers, new incentives to encourage truckers to switch from dirtier fuels to natural gas or other alternatives and a proposed tax credit to promote the adoption of cars that can run on cleaner fuels, such as hydrogen, natural gas or biofuels.

The president's go-it-alone strategy is in many ways an acknowledgment he has failed to make good on two major promises to the American people: that he would change Washington's hyper-partisanship and his re-election would break the Republican "fever" and clear the way for congressional action on major initiatives.

Some Republicans have warned the president's focus on executive orders could backfire by angering GOP leaders who already don't trust the White House.

Obama isn't abandoning Congress completely. He made a renewed pitch for legislation to overhaul the nation's fractured immigration laws, perhaps his best opportunity for signing significant legislation this year. But the odds remain long, with many Republicans opposed to Obama's plan for creating a pathway to citizenship for the 11 million people in the U.S. illegally.

Seeking to give the GOP some room to maneuver, Obama did not specifically call for a citizenship pathway Tuesday, saying only, "Let's get it done. It's time."

Opening a new front with Congress, the president called for an extension of the earned-income tax credit, which helps boost the wages of low-income families through tax refunds. Obama wants it broadened so that it provides more help than it does now to workers without children, a view embraced by some Republicans and conservative economists.

Obama singled out Republican Sen. Marco Rubio of Florida, who has proposed replacing the tax credit with a federal wage supplement for workers in certain low-paying jobs. Unlike Obama, however, Republicans have suggested expanding the tax credit as an alternative to increasing the minimum wage.

Pivoting briefly to foreign policy, Obama reaffirmed the U.S.-led war in Afghanistan will formally conclude at the end of this year. But he said a small contingent of American forces could be left behind if the Afghan government quickly signs a bilateral security agreement -- a prospect that looks increasingly uncertain.

The president also warned lawmakers in both parties against passing new economic sanctions against Iran while the U.S. and international partners are holding nuclear negotiations with the Islamic republic. He renewed his commitment to veto sanctions legislation if it passes, arguing that a new round of penalties would upend the sensitive diplomacy.

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Associated Press writers Josh Lederman, Jim Kuhnhenn, Nedra Pickler and Henry C. Jackson contributed to this report.