Mr. Speaker, Mr. Vice President, Members of Congress, distinguished guests, and fellow Americans:

Tonight I want to begin by congratulating the men and women of the
112th Congress, as well as your new Speaker, John Boehner.
(Applause.) And as we mark this occasion, we're also mindful of the
empty chair in this chamber, and we pray for the health of our
colleague -- and our friend -- Gabby Giffords. (Applause.)

It's no secret that those of us here tonight have had our differences
over the last two years. The debates have been contentious; we have
fought fiercely for our beliefs. And that's a good thing. That's
what a robust democracy demands. That's what helps set us apart as a
nation.

But there's a reason the tragedy in Tucson gave us pause. Amid all the
noise and passion and rancor of our public debate, Tucson reminded us
that no matter who we are or where we come from, each of us is a part
of something greater -- something more consequential than party or
political preference.

We are part of the American family. We believe that in a country
where every race and faith and point of view can be found, we are
still bound together as one people; that we share common hopes and a
common creed; that the dreams of a little girl in Tucson are not so
different than those of our own children, and that they all deserve
the chance to be fulfilled.

That, too, is what sets us apart as a nation. (Applause.)

Now, by itself, this simple recognition won't usher in a new era of
cooperation. What comes of this moment is up to us. What comes of
this moment will be determined not by whether we can sit together
tonight, but whether we can work together tomorrow. (Applause.)

I believe we can. And I believe we must. That's what the people who
sent us here expect of us. With their votes, they've determined that
governing will now be a shared responsibility between parties. New
laws will only pass with support from Democrats and Republicans. We
will move forward together, or not at all -- for the challenges we
face are bigger than party, and bigger than politics.

At stake right now is not who wins the next election -- after all, we
just had an election. At stake is whether new jobs and industries
take root in this country, or somewhere else. It's whether the hard
work and industry of our people is rewarded. It's whether we sustain
the leadership that has made America not just a place on a map, but
the light to the world.

We are poised for progress. Two years after the worst recession most
of us have ever known, the stock market has come roaring back.
Corporate profits are up. The economy is growing again.

But we have never measured progress by these yardsticks alone. We
measure progress by the success of our people. By the jobs they can
find and the quality of life those jobs offer. By the prospects of a
small business owner who dreams of turning a good idea into a thriving
enterprise. By the opportunities for a better life that we pass on to
our children.

That's the project the American people want us to work on. Together.
(Applause.)

We did that in December. Thanks to the tax cuts we passed,
Americans' paychecks are a little bigger today. Every business can
write off the full cost of new investments that they make this year.
And these steps, taken by Democrats and Republicans, will grow the
economy and add to the more than one million private sector jobs
created last year.

But we have to do more. These steps we've taken over the last two
years may have broken the back of this recession, but to win the
future, we'll need to take on challenges that have been decades in the
making.

Many people watching tonight can probably remember a time when finding
a good job meant showing up at a nearby factory or a business
downtown. You didn't always need a degree, and your competition was
pretty much limited to your neighbors. If you worked hard, chances
are you'd have a job for life, with a decent paycheck and good
benefits and the occasional promotion. Maybe you'd even have the
pride of seeing your kids work at the same company.

That world has changed. And for many, the change has been painful.
I've seen it in the shuttered windows of once booming factories, and
the vacant storefronts on once busy Main Streets. I've heard it in the
frustrations of Americans who've seen their paychecks dwindle or their
jobs disappear -- proud men and women who feel like the rules have
been changed in the middle of the game.

They're right. The rules have changed. In a single generation,
revolutions in technology have transformed the way we live, work and
do business. Steel mills that once needed 1,000 workers can now do
the same work with 100. Today, just about any company can set up
shop, hire workers, and sell their products wherever there's an
Internet connection.

Meanwhile, nations like China and India realized that with some
changes of their own, they could compete in this new world. And so
they started educating their children earlier and longer, with greater
emphasis on math and science. They're investing in research and new
technologies. Just recently, China became the home to the world's
largest private solar research facility, and the world's fastest
computer.

So, yes, the world has changed. The competition for jobs is real.
But this shouldn't discourage us. It should challenge us. Remember --
for all the hits we've taken these last few years, for all the
naysayers predicting our decline, America still has the largest, most
prosperous economy in the world. (Applause.) No workers -- no
workers are more productive than ours. No country has more successful
companies, or grants more patents to inventors and entrepreneurs.
We're the home to the world's best colleges and universities, where
more students come to study than any place on Earth.

What's more, we are the first nation to be founded for the sake of an
idea -- the idea that each of us deserves the chance to shape our own
destiny. That's why centuries of pioneers and immigrants have risked
everything to come here. It's why our students don't just memorize
equations, but answer questions like "What do you think of that idea?
What would you change about the world? What do you want to be when
you grow up?"

The future is ours to win. But to get there, we can't just stand
still. As Robert Kennedy told us, "The future is not a gift. It is
an achievement." Sustaining the American Dream has never been about
standing pat. It has required each generation to sacrifice, and
struggle, and meet the demands of a new age.

And now it's our turn. We know what it takes to compete for the
jobs and industries of our time. We need to out-innovate,
out-educate, and out-build the rest of the world. (Applause.) We
have to make America the best place on Earth to do business. We need
to take responsibility for our deficit and reform our government.
That's how our people will prosper. That's how we'll win the future.
(Applause.) And tonight, I'd like to talk about how we get there.

The first step in winning the future is encouraging American
innovation. None of us can predict with certainty what the next big
industry will be or where the new jobs will come from. Thirty years
ago, we couldn't know that something called the Internet would lead to
an economic revolution. What we can do -- what America does better
than anyone else -- is spark the creativity and imagination of our
people. We're the nation that put cars in driveways and computers in
offices; the nation of Edison and the Wright brothers; of Google and
Facebook. In America, innovation doesn't just change our lives. It
is how we make our living. (Applause.)

Our free enterprise system is what drives innovation. But because
it's not always profitable for companies to invest in basic research,
throughout our history, our government has provided cutting-edge
scientists and inventors with the support that they need. That's what
planted the seeds for the Internet. That's what helped make possible
things like computer chips and GPS. Just think of all the good jobs
-- from manufacturing to retail -- that have come from these
breakthroughs.

Half a century ago, when the Soviets beat us into space with the
launch of a satellite called Sputnik, we had no idea how we would beat
them to the moon. The science wasn't even there yet. NASA didn't
exist. But after investing in better research and education, we
didn't just surpass the Soviets; we unleashed a wave of innovation
that created new industries and millions of new jobs.

This is our generation's Sputnik moment. Two years ago, I said that
we needed to reach a level of research and development we haven't seen
since the height of the Space Race. And in a few weeks, I will be
sending a budget to Congress that helps us meet that goal. We'll
invest in biomedical research, information technology, and especially
clean energy technology -- (applause) -- an investment that will
strengthen our security, protect our planet, and create countless new
jobs for our people.

Already, we're seeing the promise of renewable energy. Robert and
Gary Allen are brothers who run a small Michigan roofing company.
After September 11th, they volunteered their best roofers to help
repair the Pentagon. But half of their factory went unused, and the
recession hit them hard. Today, with the help of a government loan,
that empty space is being used to manufacture solar shingles that are
being sold all across the country. In Robert's words, "We reinvented
ourselves."

That's what Americans have done for over 200 years: reinvented
ourselves. And to spur on more success stories like the Allen
Brothers, we've begun to reinvent our energy policy. We're not just
handing out money. We're issuing a challenge. We're telling
America's scientists and engineers that if they assemble teams of the
best minds in their fields, and focus on the hardest problems in clean
energy, we'll fund the Apollo projects of our time.

At the California Institute of Technology, they're developing a way to
turn sunlight and water into fuel for our cars. At Oak Ridge National
Laboratory, they're using supercomputers to get a lot more power out
of our nuclear facilities. With more research and incentives, we can
break our dependence on oil with biofuels, and become the first
country to have a million electric vehicles on the road by 2015.

(Applause.)

We need to get behind this innovation. And to help pay for it, I'm
asking Congress to eliminate the billions in taxpayer dollars we
currently give to oil companies. (Applause.) I don't know if -- I
don't know if you've noticed, but they're doing just fine on their
own. (Laughter.) So instead of subsidizing yesterday's energy, let's
invest in tomorrow's.

Now, clean energy breakthroughs will only translate into clean energy
jobs if businesses know there will be a market for what they're
selling. So tonight, I challenge you to join me in setting a new
goal: By 2035, 80 percent of America's electricity will come from
clean energy sources. (Applause.)

Some folks want wind and solar. Others want nuclear, clean coal and
natural gas. To meet this goal, we will need them all -- and I urge
Democrats and Republicans to work together to make it happen.

(Applause.)

Maintaining our leadership in research and technology is crucial to
America's success. But if we want to win the future -- if we want
innovation to produce jobs in America and not overseas -- then we also
have to win the race to educate our kids.

Think about it. Over the next 10 years, nearly half of all new jobs
will require education that goes beyond a high school education. And
yet, as many as a quarter of our students aren't even finishing high
school. The quality of our math and science education lags behind
many other nations. America has fallen to ninth in the proportion of
young people with a college degree. And so the question is whether
all of us -- as citizens, and as parents -- are willing to do what's
necessary to give every child a chance to succeed.

That responsibility begins not in our classrooms, but in our homes and
communities. It's family that first instills the love of learning in
a child. Only parents can make sure the TV is turned off and homework
gets done. We need to teach our kids that it's not just the winner of
the Super Bowl who deserves to be celebrated, but the winner of the
science fair. (Applause.) We need to teach them that success is not
a function of fame or PR, but of hard work and discipline.

Our schools share this responsibility. When a child walks into a
classroom, it should be a place of high expectations and high
performance. But too many schools don't meet this test. That's why
instead of just pouring money into a system that's not working, we
launched a competition called Race to the Top. To all 50 states, we
said, "If you show us the most innovative plans to improve teacher
quality and student achievement, we'll show you the money."

Race to the Top is the most meaningful reform of our public schools in
a generation. For less than 1 percent of what we spend on education
each year, it has led over 40 states to raise their standards for
teaching and learning. And these standards were developed, by the
way, not by Washington, but by Republican and Democratic governors
throughout the country. And Race to the Top should be the approach we
follow this year as we replace No Child Left Behind with a law that's
more flexible and focused on what's best for our kids. (Applause.)

You see, we know what's possible from our children when reform isn't
just a top-down mandate, but the work of local teachers and
principals, school boards and communities. Take a school like Bruce
Randolph in Denver. Three years ago, it was rated one of the worst
schools in Colorado -- located on turf between two rival gangs. But
last May, 97 percent of the seniors received their diploma. Most will
be the first in their families to go to college. And after the first
year of the school's transformation, the principal who made it
possible wiped away tears when a student said, "Thank you, Ms. Waters,
for showing that we are smart and we can make it." (Applause.)
That's what good schools can do, and we want good schools all across
the country.

Let's also remember that after parents, the biggest impact on a
child's success comes from the man or woman at the front of the
classroom. In South Korea, teachers are known as "nation builders."
Here in America, it's time we treated the people who educate our
children with the same level of respect. (Applause.) We want to
reward good teachers and stop making excuses for bad ones.
(Applause.) And over the next 10 years, with so many baby boomers
retiring from our classrooms, we want to prepare 100,000 new teachers
in the fields of science and technology and engineering and math.
(Applause.)

In fact, to every young person listening tonight who's contemplating
their career choice: If you want to make a difference in the life of
our nation; if you want to make a difference in the life of a child --
become a teacher. Your country needs you. (Applause.)

Of course, the education race doesn't end with a high school diploma.
To compete, higher education must be within the reach of every
American. (Applause.) That's why we've ended the unwarranted
taxpayer subsidies that went to banks, and used the savings to make
college affordable for millions of students. (Applause.) And this
year, I ask Congress to go further, and make permanent our tuition tax
credit -- worth $10,000 for four years of college. It's the right
thing to do. (Applause.)

Because people need to be able to train for new jobs and careers in
today's fast-changing economy, we're also revitalizing America's
community colleges. Last month, I saw the promise of these schools at
Forsyth Tech in North Carolina. Many of the students there used to
work in the surrounding factories that have since left town. One
mother of two, a woman named Kathy Proctor, had worked in the
furniture industry since she was 18 years old. And she told me she's
earning her degree in biotechnology now, at 55 years old, not just
because the furniture jobs are gone, but because she wants to inspire
her children to pursue their dreams, too. As Kathy said, "I hope it
tells them to never give up."

If we take these steps -- if we raise expectations for every child,
and give them the best possible chance at an education, from the day
they are born until the last job they take -- we will reach the goal
that I set two years ago: By the end of the decade, America will once
again have the highest proportion of college graduates in the world.

(Applause.)

One last point about education. Today, there are hundreds of
thousands of students excelling in our schools who are not American
citizens. Some are the children of undocumented workers, who had
nothing to do with the actions of their parents. They grew up as
Americans and pledge allegiance to our flag, and yet they live every
day with the threat of deportation. Others come here from abroad to
study in our colleges and universities. But as soon as they obtain
advanced degrees, we send them back home to compete against us. It
makes no sense.

Now, I strongly believe that we should take on, once and for all,
the issue of illegal immigration. And I am prepared to work with
Republicans and Democrats to protect our borders, enforce our laws and
address the millions of undocumented workers who are now living in the
shadows. (Applause.) I know that debate will be difficult. I know
it will take time. But tonight, let's agree to make that effort. And
let's stop expelling talented, responsible young people who could be
staffing our research labs or starting a new business, who could be
further enriching this nation. (Applause.)

The third step in winning the future is rebuilding America. To
attract new businesses to our shores, we need the fastest, most
reliable ways to move people, goods, and information -- from
high-speed rail to high-speed Internet. (Applause.)

Our infrastructure used to be the best, but our lead has slipped.
South Korean homes now have greater Internet access than we do.
Countries in Europe and Russia invest more in their roads and railways
than we do. China is building faster trains and newer airports.
Meanwhile, when our own engineers graded our nation's infrastructure,
they gave us a "D."

We have to do better. America is the nation that built the
transcontinental railroad, brought electricity to rural communities,
constructed the Interstate Highway System. The jobs created by these
projects didn't just come from laying down track or pavement. They
came from businesses that opened near a town's new train station or
the new off-ramp.

So over the last two years, we've begun rebuilding for the 21st
century, a project that has meant thousands of good jobs for the
hard-hit construction industry. And tonight, I'm proposing that we
redouble those efforts. (Applause.)

We'll put more Americans to work repairing crumbling roads and
bridges. We'll make sure this is fully paid for, attract private
investment, and pick projects based [on] what's best for the economy,
not politicians.

Within 25 years, our goal is to give 80 percent of Americans access to
high-speed rail. (Applause.) This could allow you to go places in
half the time it takes to travel by car. For some trips, it will be
faster than flying -- without the pat-down. (Laughter and applause.)
As we speak, routes in California and the Midwest are already
underway.

Within the next five years, we'll make it possible for businesses to
deploy the next generation of high-speed wireless coverage to 98
percent of all Americans. This isn't just about -- (applause) -- this
isn't about faster Internet or fewer dropped calls. It's about
connecting every part of America to the digital age. It's about a
rural community in Iowa or Alabama where farmers and small business
owners will be able to sell their products all over the world. It's
about a firefighter who can download the design of a burning building
onto a handheld device; a student who can take classes with a digital
textbook; or a patient who can have face-to-face video chats with her
doctor.

All these investments -- in innovation, education, and infrastructure
-- will make America a better place to do business and create jobs.
But to help our companies compete, we also have to knock down barriers
that stand in the way of their success.

For example, over the years, a parade of lobbyists has rigged the tax
code to benefit particular companies and industries. Those with
accountants or lawyers to work the system can end up paying no taxes
at all. But all the rest are hit with one of the highest corporate
tax rates in the world. It makes no sense, and it has to change.

(Applause.)

So tonight, I'm asking Democrats and Republicans to simplify the
system. Get rid of the loopholes. Level the playing field. And use
the savings to lower the corporate tax rate for the first time in 25
years -- without adding to our deficit. It can be done. (Applause.)

To help businesses sell more products abroad, we set a goal of
doubling our exports by 2014 -- because the more we export, the more
jobs we create here at home. Already, our exports are up. Recently,
we signed agreements with India and China that will support more than
250,000 jobs here in the United States. And last month, we finalized
a trade agreement with South Korea that will support at least 70,000
American jobs. This agreement has unprecedented support from business
and labor, Democrats and Republicans -- and I ask this Congress to
pass it as soon as possible. (Applause.)

Now, before I took office, I made it clear that we would enforce our
trade agreements, and that I would only sign deals that keep faith
with American workers and promote American jobs. That's what we did
with Korea, and that's what I intend to do as we pursue agreements
with Panama and Colombia and continue our Asia Pacific and global
trade talks. (Applause.)

To reduce barriers to growth and investment, I've ordered a review of
government regulations. When we find rules that put an unnecessary
burden on businesses, we will fix them. (Applause.) But I will not
hesitate to create or enforce common-sense safeguards to protect the
American people. (Applause.) That's what we've done in this country
for more than a century. It's why our food is safe to eat, our water
is safe to drink, and our air is safe to breathe. It's why we have
speed limits and child labor laws. It's why last year, we put in
place consumer protections against hidden fees and penalties by credit
card companies and new rules to prevent another financial crisis.
(Applause.) And it's why we passed reform that finally prevents the
health insurance industry from exploiting patients. (Applause.)

Now, I have heard rumors that a few of you still have concerns about
our new health care law. (Laughter.) So let me be the first to say
that anything can be improved. If you have ideas about how to improve
this law by making care better or more affordable, I am eager to work
with you. We can start right now by correcting a flaw in the
legislation that has placed an unnecessary bookkeeping burden on small
businesses. (Applause.)

What I'm not willing to do -- what I'm not willing to do is go back to
the days when insurance companies could deny someone coverage because
of a preexisting condition. (Applause.)

I'm not willing to tell James Howard, a brain cancer patient from
Texas, that his treatment might not be covered. I'm not willing to
tell Jim Houser, a small business man from Oregon, that he has to go
back to paying $5,000 more to cover his employees. As we speak, this
law is making prescription drugs cheaper for seniors and giving
uninsured students a chance to stay on their patients' -- parents'
coverage. (Applause.)

So I say to this chamber tonight, instead of re-fighting the battles
of the last two years, let's fix what needs fixing and let's move
forward. (Applause.)

Now, the final critical step in winning the future is to make sure we
aren't buried under a mountain of debt.

We are living with a legacy of deficit spending that began almost a
decade ago. And in the wake of the financial crisis, some of that was
necessary to keep credit flowing, save jobs, and put money in people's
pockets.

But now that the worst of the recession is over, we have to confront
the fact that our government spends more than it takes in. That is
not sustainable. Every day, families sacrifice to live within their
means. They deserve a government that does the same.

So tonight, I am proposing that starting this year, we freeze annual
domestic spending for the next five years. (Applause.) Now, this
would reduce the deficit by more than $400 billion over the next
decade, and will bring discretionary spending to the lowest share of
our economy since Dwight Eisenhower was President.

This freeze will require painful cuts. Already, we've frozen the
salaries of hardworking federal employees for the next two years.
I've proposed cuts to things I care deeply about, like community
action programs. The Secretary of Defense has also agreed to cut tens
of billions of dollars in spending that he and his generals believe
our military can do without. (Applause.)

I recognize that some in this chamber have already proposed deeper
cuts, and I'm willing to eliminate whatever we can honestly afford to
do without. But let's make sure that we're not doing it on the backs
of our most vulnerable citizens. (Applause.) And let's make sure
that what we're cutting is really excess weight. Cutting the deficit
by gutting our investments in innovation and education is like
lightening an overloaded airplane by removing its engine. It may make
you feel like you're flying high at first, but it won't take long
before you feel the impact. (Laughter.)

Now, most of the cuts and savings I've proposed only address annual
domestic spending, which represents a little more than 12 percent of
our budget. To make further progress, we have to stop pretending that
cutting this kind of spending alone will be enough. It won't.
(Applause.)

The bipartisan fiscal commission I created last year made this crystal
clear. I don't agree with all their proposals, but they made
important progress. And their conclusion is that the only way to
tackle our deficit is to cut excessive spending wherever we find it --
in domestic spending, defense spending, health care spending, and
spending through tax breaks and loopholes. (Applause.)

This means further reducing health care costs, including programs
like Medicare and Medicaid, which are the single biggest contributor
to our long-term deficit. The health insurance law we passed last
year will slow these rising costs, which is part of the reason that
nonpartisan economists have said that repealing the health care law
would add a quarter of a trillion dollars to our deficit. Still, I'm
willing to look at other ideas to bring down costs, including one that
Republicans suggested last year -- medical malpractice reform to rein
in frivolous lawsuits. (Applause.)

To put us on solid ground, we should also find a bipartisan solution
to strengthen Social Security for future generations. (Applause.) We
must do it without putting at risk current retirees, the most
vulnerable, or people with disabilities; without slashing benefits for
future generations; and without subjecting Americans' guaranteed
retirement income to the whims of the stock market. (Applause.)

And if we truly care about our deficit, we simply can't afford a
permanent extension of the tax cuts for the wealthiest 2 percent of
Americans. (Applause.) Before we take money away from our schools or
scholarships away from our students, we should ask millionaires to
give up their tax break. It's not a matter of punishing their
success. It's about promoting America's success. (Applause.)

In fact, the best thing we could do on taxes for all Americans is to
simplify the individual tax code. (Applause.) This will be a tough
job, but members of both parties have expressed an interest in doing
this, and I am prepared to join them. (Applause.)

So now is the time to act. Now is the time for both sides and both
houses of Congress -- Democrats and Republicans -- to forge a
principled compromise that gets the job done. If we make the hard
choices now to rein in our deficits, we can make the investments we
need to win the future.

Let me take this one step further. We shouldn't just give our people
a government that's more affordable. We should give them a government
that's more competent and more efficient. We can't win the future
with a government of the past. (Applause.)

We live and do business in the Information Age, but the last major
reorganization of the government happened in the age of
black-and-white TV. There are 12 different agencies that deal with
exports. There are at least five different agencies that deal with
housing policy. Then there's my favorite example: The Interior
Department is in charge of salmon while they're in fresh water, but
the Commerce Department handles them when they're in saltwater.
(Laughter.) I hear it gets even more complicated once they're smoked.

(Laughter and applause.)

Now, we've made great strides over the last two years in using
technology and getting rid of waste. Veterans can now download their
electronic medical records with a click of the mouse. We're selling
acres of federal office space that hasn't been used in years, and
we'll cut through red tape to get rid of more. But we need to think
bigger. In the coming months, my administration will develop a
proposal to merge, consolidate, and reorganize the federal government
in a way that best serves the goal of a more competitive America. I
will submit that proposal to Congress for a vote -- and we will push
to get it passed. (Applause.)

In the coming year, we'll also work to rebuild people's faith in the
institution of government. Because you deserve to know exactly how
and where your tax dollars are being spent, you'll be able to go to a
website and get that information for the very first time in history.
Because you deserve to know when your elected officials are meeting
with lobbyists, I ask Congress to do what the White House has already
done -- put that information online. And because the American people
deserve to know that special interests aren't larding up legislation
with pet projects, both parties in Congress should know this: If a
bill comes to my desk with earmarks inside, I will veto it. I will
veto it. (Applause.)

The 21st century government that's open and competent. A
government that lives within its means. An economy that's driven by
new skills and new ideas. Our success in this new and changing world
will require reform, responsibility, and innovation. It will also
require us to approach that world with a new level of engagement in
our foreign affairs.

Just as jobs and businesses can now race across borders, so can new
threats and new challenges. No single wall separates East and West.
No one rival superpower is aligned against us.

And so we must defeat determined enemies, wherever they are, and build
coalitions that cut across lines of region and race and religion. And
America's moral example must always shine for all who yearn for
freedom and justice and dignity. And because we've begun this work,
tonight we can say that American leadership has been renewed and
America's standing has been restored.

Look to Iraq, where nearly 100,000 of our brave men and women have
left with their heads held high. (Applause.) American combat patrols
have ended, violence is down, and a new government has been formed.
This year, our civilians will forge a lasting partnership with the
Iraqi people, while we finish the job of bringing our troops out of
Iraq. America's commitment has been kept. The Iraq war is coming to
an end. (Applause.)

Of course, as we speak, al Qaeda and their affiliates continue to plan
attacks against us. Thanks to our intelligence and law enforcement
professionals, we're disrupting plots and securing our cities and
skies. And as extremists try to inspire acts of violence within our
borders, we are responding with the strength of our communities, with
respect for the rule of law, and with the conviction that American
Muslims are a part of our American family. (Applause.)

We've also taken the fight to al Qaeda and their allies abroad. In
Afghanistan, our troops have taken Taliban strongholds and trained
Afghan security forces. Our purpose is clear: By preventing the
Taliban from reestablishing a stranglehold over the Afghan people, we
will deny al Qaeda the safe haven that served as a launching pad for
9/11.

Thanks to our heroic troops and civilians, fewer Afghans are under the
control of the insurgency. There will be tough fighting ahead, and
the Afghan government will need to deliver better governance. But we
are strengthening the capacity of the Afghan people and building an
enduring partnership with them. This year, we will work with nearly
50 countries to begin a transition to an Afghan lead. And this July,
we will begin to bring our troops home. (Applause.)

In Pakistan, al Qaeda's leadership is under more pressure than at any
point since 2001. Their leaders and operatives are being removed from
the battlefield. Their safe havens are shrinking. And we've sent a
message from the Afghan border to the Arabian Peninsula to all parts
of the globe: We will not relent, we will not waver, and we will
defeat you. (Applause.)

American leadership can also be seen in the effort to secure the worst
weapons of war. Because Republicans and Democrats approved the New
START treaty, far fewer nuclear weapons and launchers will be
deployed. Because we rallied the world, nuclear materials are being
locked down on every continent so they never fall into the hands of
terrorists. (Applause.)

Because of a diplomatic effort to insist that Iran meet its
obligations, the Iranian government now faces tougher sanctions,
tighter sanctions than ever before. And on the Korean Peninsula, we
stand with our ally South Korea, and insist that North Korea keeps its
commitment to abandon nuclear weapons. (Applause.)

This is just a part of how we're shaping a world that favors peace and
prosperity. With our European allies, we revitalized NATO and
increased our cooperation on everything from counterterrorism to
missile defense. We've reset our relationship with Russia,
strengthened Asian alliances, built new partnerships with nations like
India.

This March, I will travel to Brazil, Chile, and El Salvador to forge
new alliances across the Americas. Around the globe, we're standing
with those who take responsibility -- helping farmers grow more food,
supporting doctors who care for the sick, and combating the corruption
that can rot a society and rob people of opportunity.

Recent events have shown us that what sets us apart must not just be
our power -- it must also be the purpose behind it. In south Sudan --
with our assistance -- the people were finally able to vote for
independence after years of war. (Applause.) Thousands lined up
before dawn. People danced in the streets. One man who lost four of
his brothers at war summed up the scene around him: "This was a
battlefield for most of my life," he said. "Now we want to be free."
(Applause.)

And we saw that same desire to be free in Tunisia, where the will of
the people proved more powerful than the writ of a dictator. And
tonight, let us be clear: The United States of America stands with
the people of Tunisia, and supports the democratic aspirations of all
people. (Applause.)

We must never forget that the things we've struggled for, and fought
for, live in the hearts of people everywhere. And we must always
remember that the Americans who have borne the greatest burden in this
struggle are the men and women who serve our country. (Applause.)

Tonight, let us speak with one voice in reaffirming that our nation is
united in support of our troops and their families. Let us serve them
as well as they've served us -- by giving them the equipment they
need, by providing them with the care and benefits that they have
earned, and by enlisting our veterans in the great task of building
our own nation.

Our troops come from every corner of this country -- they're black,
white, Latino, Asian, Native American. They are Christian and Hindu,
Jewish and Muslim. And, yes, we know that some of them are gay.
Starting this year, no American will be forbidden from serving the
country they love because of who they love. (Applause.) And with
that change, I call on all our college campuses to open their doors to
our military recruiters and ROTC. It is time to leave behind the
divisive battles of the past. It is time to move forward as one
nation. (Applause.)

We should have no illusions about the work ahead of us. Reforming our
schools, changing the way we use energy, reducing our deficit -- none
of this will be easy. All of it will take time. And it will be
harder because we will argue about everything. The costs. The
details. The letter of every law.

Of course, some countries don't have this problem. If the central
government wants a railroad, they build a railroad, no matter how many
homes get bulldozed. If they don't want a bad story in the newspaper,
it doesn't get written.

And yet, as contentious and frustrating and messy as our democracy can
sometimes be, I know there isn't a person here who would trade places
with any other nation on Earth. (Applause.)

We may have differences in policy, but we all believe in the rights
enshrined in our Constitution. We may have different opinions, but we
believe in the same promise that says this is a place where you can
make it if you try. We may have different backgrounds, but we believe
in the same dream that says this is a country where anything is
possible. No matter who you are. No matter where you come from.

That dream is why I can stand here before you tonight. That dream is
why a working-class kid from Scranton can sit behind me. (Laughter
and applause.) That dream is why someone who began by sweeping the
floors of his father's Cincinnati bar can preside as Speaker of the
House in the greatest nation on Earth. (Applause.)

That dream -- that American Dream -- is what drove the Allen
Brothers to reinvent their roofing company for a new era. It's what
drove those students at Forsyth Tech to learn a new skill and work
towards the future. And that dream is the story of a small business
owner named Brandon Fisher.

Brandon started a company in Berlin, Pennsylvania, that specializes in
a new kind of drilling technology. And one day last summer, he saw
the news that halfway across the world, 33 men were trapped in a
Chilean mine, and no one knew how to save them.

But Brandon thought his company could help. And so he designed a
rescue that would come to be known as Plan B. His employees worked
around the clock to manufacture the necessary drilling equipment. And
Brandon left for Chile.

Along with others, he began drilling a 2,000-foot hole into the
ground, working three- or four-hour -- three or four days at a time
without any sleep. Thirty-seven days later, Plan B succeeded, and the
miners were rescued. (Applause.) But because he didn't want all of
the attention, Brandon wasn't there when the miners emerged. He'd
already gone back home, back to work on his next project.

And later, one of his employees said of the rescue, "We proved that
Center Rock is a little company, but we do big things." (Applause.)

We do big things.

From the earliest days of our founding, America has been the story of
ordinary people who dare to dream. That's how we win the future.

We're a nation that says, "I might not have a lot of money, but I have
this great idea for a new company." "I might not come from a family
of college graduates, but I will be the first to get my degree." "I
might not know those people in trouble, but I think I can help them,
and I need to try." "I'm not sure how we'll reach that better place
beyond the horizon, but I know we'll get there. I know we will."

We do big things. (Applause.)

The idea of America endures. Our destiny remains our choice. And
tonight, more than two centuries later, it's because of our people
that our future is hopeful, our journey goes forward, and the state of
our union is strong.

Thank you. God bless you, and may God bless the United States of
America. (Applause.)