Obama Seeks to Snap Gloom

President Says Economy Will Emerge Stronger; Push on Health, Energy, Education President Obama waves in the House Chamber on Capitol Hill in Washington prior to an address before a joint session of Congress. WASHINGTON -- President Barack Obama, in his first formal address to Congress, straddled the divide between fear and hope Tuesday night, declaring the "day of reckoning has arrived" for an indulgent nation but vowing to lead a recovery from the deepest recession since World War II. The speech, 52 minutes long, punctuated by more than 60 ovations, was billed as a rhetorical salve to a nation battered by layoffs and plunging stock prices -- and a tempering of pessimistic rhetoric from the Oval Office over the past few weeks. Despite the recession and a large budget deficit, Mr. Obama promised to press forward with major initiatives in health care, energy and education. He warned the nation's major banks, teetering on the brink of collapse, that he will "force the necessary adjustments" to push them back to viability, even as he conceded those banks will likely need even more money from the federal government than the $700 billion in the initial bailout. The president said he'll address the burgeoning costs of entitlement benefits for health care and retirement, and hinted at a Social Security plan that would include tax-free savings accounts for everyone. Insisting that he could pursue his wide-ranging agenda, and at the same time cut the deficit in half, Mr. Obama singled out programs he will try to cut from the budget, from agricultural subsidies to military weapons systems, and taxes he said must be raised, on affluent individuals and businesses that shield overseas profits from the Internal Revenue Service. But the speech was intended to be more about broad themes -- about trying to give Americans some optimism amid the gloom. It was a note he struck early in his address when he declared, to sustained applause from lawmakers, cabinet officials, military leaders and Supreme Court justices in the Capitol's packed House: "While our economy may be weakened and our confidence shaken; though we are living through difficult and uncertain times, tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before." State of the Economy Compare how other presidents before Barack Obama have outlined their proposals in times of economic uncertainty. After speaking of that brightening future, the president tried to turn the page on a past era he hoped would not stain his administration or bring down his ambitious agenda. The blame, he said, lay both in former President George W. Bush's Washington and outside it, and in a time when a budget "surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future." He went on to portray an age when "regulations were gutted for the sake of a quick profit at the expense of a healthy market" and "people bought homes they knew they couldn't afford from banks and lenders who pushed those bad loans anyway." Mr. Obama tried to put a hard stop to what he portrayed as a ruinous decade and to assure listeners that with shared sacrifice and a new sense of responsibility, Americans can emerge stronger than ever. The "day of reckoning has arrived, and the time to take charge of our future is here," Mr. Obama said. "Now is the time to act boldly and wisely -- to not only revive this economy, but to build a new foundation for lasting prosperity." The president spent much of his address explaining what his administration has already done: one of the largest economic-stimulus plans in history; an expansion of children's health insurance; a new effort to rescue the banking sector, and plans to prop up the housing market. How Did Obama Do? Obama sought to build realistic hopes for an economic turnaround while persuading Americans that his ambitious plans will help them. How would you grade his speech? Mr. Obama said he was saving the main policy details of his agenda for his budget blueprint, which is scheduled for release Thursday. But his nods to those policies -- many shaped during the presidential campaign, before the downturn consumed his early agenda -- were ambitious. He vowed to tame health-care costs while expanding access to insurance, and promised to not let the opportunity for comprehensive reform slip away, as has been the case for many presidents before. "Health-care reform cannot wait, it must not wait, and it will not wait another year," he said. On energy, he cheered environmentalists by asking Congress to send him legislation with a market-based cap on carbon production that will control climate change and increase production of renewable energy. And the president talked at length about education, promising to reform the fundamentals of U.S. schools, adding new accountability as well as new dollars, while challenging all Americans to get at least one year of education or training beyond high school. Mr. Obama entered the House chamber with high approval ratings and a series of legislative successes already under his belt. With an audience of 313 Democrats and Democratic-leaning independents in the House and Senate, against 219 Republicans, he played to a friendly crowd. His praise for the $787 billion stimulus plan that passed with virtually no Republican support drew lavish applause from Democrats and stony silence from the GOP. His vow not to saddle future generations with a crushing government debt drew cheers from Republicans, who blame the president's stimulus plan for adding significantly to that debt burden -- then partisan applause from Democrats when he stressed he inherited most of that debt. The Republicans signaled their reaction through Louisiana Gov. Bobby Jindal, who delivered the GOP's official response, pledging to work with the president. The rising Republican star took a pass at criticizing Mr. Obama, saying, "We don't care what party you belong to if you have good ideas to make life better for our people." Instead, he focused his shots at unnamed "Democratic leaders" who passed the $787 billion stimulus bill. "What it will do is grow the government, increase our taxes down the line, and saddle future generations with debt," Mr. Jindal said. The president faces a slate of challenges that even his top aides say they weren't prepared for on Inauguration Day. The Dow Jones Industrial Average has fallen nearly 10% since he took office. The financial sector is in worse shape than previously thought. Consumer confidence has dropped to record lows. That sense of crisis helped propel passage of the president's stimulus package. But now, White House aides said, Mr. Obama wants to restore the same sense of hope that buoyed his campaign. "If we come together and lift this nation from the depths of this crisis...," he concluded, "then someday years from now our children can tell their children that this was the time when we performed, in the words that are carved into this very chamber, 'something worthy to be remembered.'" The speech was an attempt to navigate the tricky politics of the current financial crisis, trying to explain to Americans why they needed to turn hundreds of billions of dollars -- probably beyond the funds already committed -- to financial institutions widely blamed for creating the country's current problems. "I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you, I get it," he acknowledged. But, he added, "we cannot afford to govern out of anger." The president said a U.S. recovery will not arrive until the financial sector is stabilized, noting that "this plan will require significant resources...and yes, probably more than we've already set aside." Still, he nodded to that anger by promising to impose tight strings on executives of financial institutions seeking federal funds. "CEOs won't be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet," he promised. "Those days are over." To help cover the cost of the short-term financial fixes and his longer-term goals, the president mentioned some specific federal programs to cut or consolidate: Cold War-era military weapons, payments for large agribusinesses, and duplicative education programs. In a challenge to businesses already steeling for a fight, he said he will press forward with a promise to end the indefinite deferral of taxation on overseas profits, a policy that he says encourages the sending of jobs abroad. And he said he will make good on rolling back President Bush's tax cuts for families earning at least $250,000. —Laura Meckler and Naftali Bendavid contributed to this article. Write to Jonathan Weisman at jonathan.weisman@wsj.com